Cardano price crashed below an important support level on Tuesday as sentiment crashed. ADA dropped to a low of $0.3870, which was the lowest level since May. It has crashed by more than 87% from its highest level in 2021. As a result, the total market cap has plunged from over $90 billion to about $13 billion.
Why is ADA crashing?
Cardano came in the limelight in 2021 as cryptocurrency prices soared. At the time, the coin became popular as investors started comparing it to Ethereum. As a proof-of-stake (PoS), most analysts believed that it could become a better alternative to Ethereum.
However, the situation has changed since then. Most cryptocurrency prices crashed in 2022. At the same time, Cardano has not achieved a lot of success as most analysts were expecting. This is partly because at its peak, Cardano was a shell that had no smart contract capabilities.
It powered this capability in 2021 through its Alonzo hard fork. Still, in more than a year, the network has not become as vibrant as most people were expecting. Developers have for long insisted that there are thousands of projects being built using the network.
However, a closer look shows that only a handful of these projects are actually in operation. Those that do, like SundaeSwap and MuesliSwap, have a significantly small market share. For example, only $70 million is locked in Cardano’s DeFi ecosystem. And in this, Minswap has a market dominance of 51%.
Cardano also has no meaningful market share in other sectors like NFTs and the metaverse, which explains why its token has crashed. Most importantly, the recently launched Vasil upgrade is not expected to have a major impact. Another important aspect is that the number of Cardano stakers has been falling.
Cardano price prediction
The daily chart shows that ADA price has been in a strong sell-off lately. It has crashed by almost 80% from its highest level on record. As a result, it has remained below all moving averages. The coin also formed a descending triangle pattern. On Tuesday, it managed to move below the lower side of this pattern.
Also, the coin is hovering slightly above the lowest level this year. Therefore, there is a high probability that the coin will now continue falling now that sellers have prevailed. If this happens, the next key level to watch will be at $0.35.