Cardano (ADA) currently experiences significant downward pressure due to declining network growth and user engagement. This week, ADA’s price dropped by 7.4%, trading at $0.338 as of October 25. Consequently, this decline has erased earlier gains from the week. Market analysts warn that this price drop reflects shifting investor sentiment and a broader bearish trend among altcoins.

Impact of Network Activity on ADA Prices

Investors express growing concerns over Cardano’s recent performance. The cryptocurrency has faced a notable downturn in user engagement. Active addresses on the Cardano network have plummeted from 71,270 on March 6 to just 25,680, according to data from IntoTheBlock. This sharp decline indicates dwindling interest in the ecosystem.

Declining Total Value Locked (TVL)

In addition to falling user engagement, Cardano’s total value locked (TVL) has also decreased significantly. According to DefiLlama, the TVL has dropped over 55%, from approximately $480.72 million in March to about $214.8 million now. This trend signifies that fewer users are interacting with the ecosystem, which negatively impacts the demand for ADA tokens.

ADA’s Underperformance Compared to Bitcoin

ADA’s struggles occur alongside its underperformance relative to Bitcoin (BTC). Year-to-date, BTC has surged about 52%, while ADA has declined by 43%. This stark contrast has led to a growing mismatch in the ADA/BTC trading ratio. As of October 25, this ratio dropped to a near-all-time low of $0.00000503, reflecting eroding investor confidence in ADA.

Market Sentiment and Bearish Trends

The prevailing market sentiment exacerbates Cardano’s challenges. Many altcoins face pressure, and ADA’s recent performance mirrors that of others like Ether (ETH) and Avalanche (AVAX). Both experienced price drops of around 2% in the last 24 hours. These trends suggest a bearish cloud hanging over the altcoin market, contributing to negative sentiment surrounding ADA.

In summary, diminishing network activity, reduced TVL, and bearish divergence indicate that ADA grapples with significant challenges. As user engagement continues to decline and investor sentiment shifts negatively, ADA’s price outlook remains uncertain. Investors should closely monitor these developments while considering the larger market dynamics at play.

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