What happened after Cardano was ‘taken down by a kid?’ Mapping investor confidence

Key Takeaways

What triggered Cardano’s recent sell-off?

A rare partition event exposed vulnerabilities in Cardano’s network, disrupting DeFi activity, stake pool operators, and damaging stakeholder confidence.

How weak is ADA, fundamentally?

ADA has already shed 50% in Q4 and is technically fragile. Analysts suggest another 5× drop could align fundamentals with network strength.

Cardano has been among the worst Q4 performers among large-cap cryptocurrencies so far, shedding 50% of its value. However, looking back, ADA has been bearish since peaking in mid-August above $1.

This means that Cardano [ADA] was already in a technically weak spot before the October crash, with bulls failing to defend key support zones.

That crash further eroded stakeholder confidence, pushing ADA back to pre-election levels.

In such a fragile environment, even a small trigger could spark a major sell-off. Recently, Cardano experienced a rare partition event. The incident was later addressed by founder Charles Hoskinson.

Source: X

In his post, Hoskinson emphasized the seriousness of the issue, noting that “it will take weeks to clean up this mess.” For context, the partition event was caused by a glitch, creating a split in Cardano’s blockchain history.

Hoskinson highlighted the impact of the incident, explaining how the “accidental” action by a user disrupted the network, affecting DeFi activity, stake pool operators (SPOs), and damaging Cardano’s overall reputation.

However, the market reaction largely contradicted this perspective. Many viewed the event as a “much-needed” catalyst that exposed vulnerabilities in the network and sparked debates about Cardano’s resilience.

Community questions Cardano’s technical strength

This partition event has once again put Cardano’s resilience under scrutiny.

Price-wise, ADA has already shaken stakeholder confidence, emerging as one of the weakest top-cap assets. The recent network issue has worsened the situation, further dampening market sentiment.

On-chain data reflects this weakness as well. According to Token Terminal, Cardano’s key metrics are deep in the red. For instance, 30-day trading volume is down 25%, while network fees have fallen by 22%. 

In simple terms, the network was already weak before the incident. 

Adding to this, an X page noted that ADA is overvalued, suggesting that another 5× drop may be needed to bring Cardano’s fundamentals in line with its technical positioning. If that happens, ADA could fall to $0.08.

Source: X

Technically, that would represent a full-fledged price collapse. In this context, Cardano’s recent partition event was more than just a glitch. Instead, it acted as a catalyst that exposed ADA’s perceived overvaluation.