Cardano experienced a decline in price during May 2024, closing at $0.44, which was a 12% drop in the last 10 days. A detailed analysis of on-chain data reveals the factors contributing to this bearish trend.
One of the reasons for the decline in Cardano’s price is the approval of the Ethereum ETF. This event has led to a shift in investor focus towards Ethereum, causing other Layer-1 networks like Solana, Bitcoin, and Cardano to struggle in gaining traction. Retail investors are now looking to Ethereum markets to maximize their profits while the broader crypto markets are experiencing a consolidation phase.
This shift in investor preferences is not limited to speculative markets alone. On-chain data shows that Cardano has experienced a decrease in traction across its native DeFi protocols, resulting in reduced network revenue. The daily fees charged on transactions conducted on the Cardano blockchain network have significantly dropped, indicating lower network activity and revenue for validators.
The decline in transaction fees suggests that Cardano is losing market share to competitors, leading to a decrease in demand for its products and services. As a Proof-of-Stake network, this decline in fees also means less revenue for network validators.
If this trend continues, Cardano stakers may withdraw their assets and shift their focus to more profitable PoS protocols. This could further contribute to the downward trend in ADA’s price.
Based on recent price action, it is possible that Cardano’s price may drop below the critical $0.45 support level and reach $0.40 in the coming days. However, there is a potential roadblock at the $0.43 area, where a significant number of addresses have acquired ADA at the maximum price. If these holders maintain their positions, it could lead to an instant rebound in ADA’s price above $0.45.
Nevertheless, with weakening demand reflected in falling transaction fees, bears currently seem to have control over Cardano’s price, making a reversal towards $0.40 likely. On the other hand, if the market sentiment turns bullish, the $0.46 level could act as a significant resistance level.
It is important to note that this article is for informational purposes only and should not be considered financial advice. Readers are encouraged to conduct their own research before making any investment decisions.