3 Reasons Why Cardano Price Risks Dropping to $0.2

Cardano price showed strong performance in the last two weeks surging from lows of $0.3 to $0.36. The long bottom wick on last week’s candle shows bulls were in charge of the market and pushed on their buying campaign into this week. However, despite the gains, the price of ADA still risks a drop to $0.2, as macro technical analysis indicates. Will bulls be able to avert this crash?

Reasons Why Cardano Price Could Crash

Cardano network has tried to remain up, but the project faces heavy criticism from most crypto community for taking so long to make a substantial move. Some reasons ADA price could drop to $0.2 include:

• Increased transactions per section (TPS) with reduced transaction count.
• Consistently dropping total value locked since March 2024 highs.
• Reducing daily active users with stagnant network density

1. Surging TPS, Falling Usage

A dive into Cardano network activity reveals the blockchain needs help onboarding users despite building the capacity to scale and handle many people. According to Cexplorer, Cardano TPS has been increasing, but transaction count has been dropping, which seems counterintuitive. 

The divergence in these two metrics suggests a reduced network activity, which is bearish for the Cardano price. While the network itself could be pristine, users could be demotivated by crypto market conditions or other external events. 

With lower TPS, the long queue of transactions can give the notion that a network has a higher transaction count. However, when the TPS is increased, there are little to no lagging transactions, which helps to get a clearer picture of whether the network has users. 

2. Cardano TVL Is Steadily Dropping

The Cardano TVL has been steadily dropping from March 2024 highs, when there was a mini-bull run. The spike in TVL during that time was expected as new users were potentially entering the market due to the approved Bitcoin ETF. However, in the following market correction, Cardano could not maintain its users. 

TVL dropped from $490 million in March to $181 million in August, suggesting investors have been slowly pulling funds from the Cardano ecosystem. 

3. Daily Active Users Drop With Growing Network Capacity

The Cardano network capacity has grown in 2024, meaning the blockchain can handle many users, as seen by increasing TPS. The other metric is the network capacity (red), which has been increasing steadily, reinforcing Cardano as a robust network. However, the actual network capacity used (green) has been dropping, which suggests reduced demand for the network and the underlying asset. 

Negative Onchain Metrics Signal Cardano Price Drop

ADA price has been trending downwards since March 2024. From the chart below, the asset is firmly below the 21-day exponential moving average, reinforcing a bearish outlook.

While the crypto asset has experienced a good couple of weeks, there is a strong downward trend-line that acts as a strong resistance to the price. If the price of Cardano fails to break beyond it, the asset could drop 32% to $0.2. This also coincides with the profit target of the weekly chart’s multi-month double-top bearish reversal pattern. 

On the flip side, if Cardano price breaks above the trendline, it would signal extreme market strength that could propel the asset price back to $0.50, where the next significant resistance exists. A break beyond that could catapult the price of ADA to $0.70.

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Evans Karanja

Evans Karanja is a crypto analyst and journalist with a deep focus on blockchain technology, cryptocurrency, and the video gaming industry. His extensive experience includes collaborating with various startups to deliver insightful and high-quality analyses that resonate with their target audiences. As an avid crypto trader and investor, Evans is passionate about the transformative potential of blockchain across diverse sectors. Outside of his professional pursuits, he enjoys playing video games and exploring scenic waterfalls.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.