Markets
ADA price is at risk
Cardano price closed May 2024 at $0.44 down 12% over the last 10 days, on-chain analysis examines the key bearish catalysts behind ADA’s ongoing downtrend.
Cardano price falls below the critical support level of $0.45
Since the approval of the Ethereum ETF, rival Layer-1 networks, including Solana (SOL), Bitcoin (BTC) and Cardano, have struggled to find fertile ground. In recent market events, retail investors have shifted focus to the Ethereum markets in an attempt to boost their profits as the broader cryptocurrency markets slide into a phase of consolidation.
This rare market dynamic has been evident in ADA’s recent price action.
Cardano price closed May 2024 at the $0.44 level, marking a 14% decline from the monthly peak of $0.51 recorded on May 21. The negative ADA price action over the past 10 days has coincided with the surrounding bullish momentum ETH Markets.
Cardano network revenue falls to 3-year low
However, this shift in investor preferences has not been limited to speculative markets alone. On-chain data trends show that Cardano attracted significantly less traction on its native DeFi protocols this week, which resulted in a reduction in the network’s revenue.
The IntoTheBlock chart below tracks daily fees charged on transactions conducted on the Cardano blockchain network. This provides detailed information on network activity and revenue accrued by network validators who put their resources into play.
As illustrated above, the Cardano network achieved 11,970 ADA in total transaction fees on May 26, 63% lower than the 2024 peak of 32,480 ADA recorded in March. Notably, historical data shows that these are the lowest daily transaction fees recorded since 2021.
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When a blockchain network sees such a dramatic drop in transaction fees, it signals that the network is losing market share to competitors, leading to less demand for its native products and services.
Additionally, being a Proof-of-Stake network, this drop in Cardano’s fees means less revenue for the network’s validators who put their resources on the line to validate transactioners and secure the network.
The drop in revenue could see Cardano stakers start to withdraw their assets and shift focus to more profitable PoS protocols in the coming days. If this scenario plays out, it could further exacerbate the downward trend in ADA prices.
ADA Price Prediction: $0.40 Trend Reversal?
Cardano price has fallen below the $0.45 support cluster twice in the last 48 hours. With transaction fees trending towards 3-year lows, bears look set to force a decline in Cardano price towards the $0.40 level in the coming days.
However, GIOM data from IntoTheBlock suggests that bears may face a hurdle in the $0.43 area in the near term.
Looking at the chart above, 407,260 addresses acquired 3.83 billion ADA at the maximum price of $0.43. If they hold their positions, ADA price could stage an immediate rebound above $0.45.
However, with weakening demand, as indicated by declining transaction fees, the bears appear to be in control, putting Cardano’s price at risk of an inevitable reversal towards $0.40.
Alternatively, if the markets were to move bullishly, the $0.46 level could be the next significant resistance level to watch.
Disclaimer: This content is informational and should not be considered financial advice. The opinions expressed in this article may include the personal opinions of the author and do not reflect the opinion of The Crypto Basic. Readers are encouraged to do thorough research before making any investment decisions. Crypto Basic is not responsible for any financial losses.
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