Cardano’s native token ADA experienced a significant drop in price due to regulatory concerns, delistings, and negative sentiment. However, underlying network developments and positive indicators suggest the potential for a strong recovery.
The SEC’s classification of ADA as a security in its lawsuit against Binance and Coinbase triggered a 42.5% price decline. Furthermore, delistings on U.S.-based trading apps Robinhood and eToro added to selling pressure. Despite these challenges, Cardano has made progress with increased DeFi activity following the implementation of the Hydra scalability upgrade in May.
Cardano’s DeFi ecosystem is blooming
The total fees paid on the Cardano network have seen an uptick, reaching a one-year high before the SEC lawsuit impact. Additionally, the amount of ADA deposited in DeFi applications on Cardano has surged, surpassing previous peak levels during the 2021 bull market. Trading volumes on Cardano’s decentralized exchanges (DEXs) have also experienced a significant increase since the Hydra upgrade.
A Jarvis Labs report highlights Cardano’s decentralization, as measured by the Nakamoto coefficient, indicating a higher level of control distributed among multiple entities. This decentralization aspect could influence the determination of ADA’s status as a security in the U.S., making it more favorable.
ADA price analysis
On-chain analytics reveal oversold conditions, with profit booking at lower prices, increasing the chances of a bounce. The funding rate data for perpetual swap contracts indicates that most traders held short positions on ADA, betting on a further downturn after regulatory actions. These factors can potentially lead to a contrarian price rally in the short to medium term.
From a technical perspective, ADA/USD has formed higher lows after reaching a bottom in June, indicating buyer interest during dips. A confirmation of a positive trend would occur if the $0.30 resistance level turns into support. The ADA/BTC pair also shows signs of a potential bottom, with the weekly RSI indicator in oversold territory and testing a long-term support and resistance level.
Despite the setbacks faced by ADA, such as regulatory challenges and delistings, the network’s progress and positive technical indicators suggest the possibility of a positive recovery in the future. It is important for investors to conduct their own research and consider the risks associated with investment and trading decisions.