Cardano is a blockchain venture with a remarkable rate of over 70% of its total currency, ADA, staked for network validation. This is partly due to the lack of decentralized applications (dApps) available on its blockchain, which limits the amount of ADA that can be locked in these applications. In contrast, Ethereum has a lower percentage of its total supply locked as validators but has a larger amount of ETH locked in DeFi applications.
Charles Hoskinson, a former co-founder of Ethereum, founded the Cardano project in 2015 to address the issues that Ethereum was experiencing with its Proof-of-Work consensus model.
Cardano has implemented several significant improvements, including using multiple processing layers for handling settlements and computations, a proof-of-stake consensus mechanism, and the ability to easily upgrade its network in the future.
So, what’s new with the crypto as of now?
DeFi Llama's data shows that the amount of cryptocurrency locked within the Cardano blockchain, measured in ADA, has hit a new record high of approximately 341 million ADA. This suggests that more people are starting to use and adopt the platform.
Cardano's ADA is the cryptocurrency that drives the platform's high-performance blockchain, capable of running smart contracts.
Earlier this year, the launch of Djed, an over-collateralized algorithmic stablecoin, boosted the ecosystem and created new yield farming opportunities within the Cardano DeFi space. The website of the Djed project states that the protocol's reserve ratio is 471%, and the circulating supply of the stablecoin is currently approximately 2.1 million.
Cardano’s favorable ties to big names
Cardano has a large team of developers, with about 100 to 150 individuals working on the project at any given time, and they make approximately 700 code changes or "commits" per week.
It has also formed significant partnerships with educational institutions, governmental organizations, and corporations, such as the University of Illinois, Ethiopia, and New Balance. The latter intends to utilize the Cardano blockchain to verify the authenticity of its footwear.
Charles Hoskinson, the founder, has been advocating for adopting blockchain technology in Africa, where he believes it can make a significant impact, mainly because of the large number of unbanked individuals in the region.
USD-denominated TVL Continues to be lower than 2022 Highs
Although the value of the cryptocurrency locked within Cardano's blockchain has reached a new all-time high when measured in ADA, the recent drop in the USD-denominated price of ADA has caused the USD-denominated total value locked (TVL) on the Cardano network to fall below its early 2022 levels.
Around a year ago, the TVL on Cardano reached its highest point, exceeding $430 million.
During Cardano's highest TVL a year ago, the price of ADA was around $3 per token. Currently, the ADA/USD price is slightly above $0.31, which is a decline of approximately 90% from its all-time highs, and a drop of 25% since facing significant resistance around the $0.42 level in February.
The recent significant decline in the cryptocurrency's value is part of a broader trend of weakness in the crypto market, influenced by the strength of the US dollar, US yields, and a decline in equities. This is due to traders anticipating a more hawkish Federal Reserve tightening outlook for the year.
The crypto market is also facing specific issues, such as the recent decline of Silvergate Bank, known for its support of cryptocurrencies, and ongoing concerns about regulatory action in the US.
ADA Price So Far
The value of the ADA coin typically follows the trend of the overall cryptocurrency market. It rose during the rallies of late 2017 and early 2021 but decreased during general market sell-offs. When the ADA price reached its record high of $3.10 in September 2021, anticipation was high for the Alonzo hard fork, which brought smart contracts to the Cardano blockchain.
After the Alonzo hard fork, more than 100 smart contracts were added to the Cardano blockchain. However, shortly after, the ADA token lost value and did not experience the same increase in value during the November 2021 crypto rally that other coins, such as bitcoin and ether, did. ADA began 2022 trading at around $1.36 and briefly rose to approximately $1.60 in January before dropping to about $0.7528.
In May 2022, ADA hit a low of about $0.4065. As the broader crypto market rose, the price rebounded to $0.6823 but then fell to a level of $0.4234 in mid-June. ADA saw some fluctuations but reached a monthly high of approximately $0.5939 in August before dropping to around $0.4570 in August 2022.
After the previous high in August 2022, there was a collapse in the FTX exchange and a subsequent market crash, causing ADA to drop to a low of $0.2973 on 21 November. Since then, the price has fluctuated, currently trading at around $0.31.
What’s Next for Cardano (ADA)?
The recent decline in Cardano's value has caused it to fall below all of its key moving averages. Additionally, the cryptocurrency has been in a downtrend since June 2022. The fact that ADA/USD couldn't break above its 200-Day Moving Average last month suggests there wasn't enough strength for a significant positive change in the short-term price forecast.
The technical analysis suggests that the short-term prospects for the ADA cryptocurrency are unfavorable, and it is highly probable that it will fall below $0.30. This could lead to a decline of up to 24% from current levels to around the late-2022 lows of $0.24. However, the 14-Day Relative Strength Index (RSI) is approaching oversold levels, which means that the downward trend may not be as straightforward as it has been in recent weeks.