Cardano has strong fundamentals as the total value locked jumps.
Its DeFi TVL has jumped to the highest level on record.
Cardano price had a difficult performance in March as cryptocurrencies recoiled. ADA slipped to a low of $0.36, where it has been in the past few days. This price is about 22% below the highest point in May, meaning it has now moved to a bear market. The coin’s market cap has plunged to about $12.3 billion.
Fundamentals meet technicals
Cardano price struggled in May even after its ecosystem recorded some significant growth during the month. A good way to look at the performance of a chain like Cardano is to look at the performance of its Decentralized Finance (DeFi) ecosystem.
The latest data shows that activity in Cardano’s DeFi ecosystem is doing well. According to DeFi Llama, the TVL in Cardano jumped by more than 9% in May to over $202 million. That increase pushed it to the highest level since May last year.
Notably, the TVL soared to a record high in ADA terms. It is now sitting at 536.84 million ADA, which is higher than the year-to-date low of 263 million ADA. This is a signal that there is strong demand for dApps created in Cardano like Minswap, Indigo, Liquid, WingRiders, and MuesliSwap. MinSwap and Indigo’s TVL has jumped by over 20% in the past 30 days.
The same trend happened in the number of active users. According to DeFi Llama, the total number of active users in Cardano jumped to more than 81.93k in May.
Therefore, Cardano’s underperformance was not because of its weak fundamentals. Instead, it is because of the broader performance of the crypto market. In May, we saw Bitcoin price retreat from the year-to-date high of $31,000 to about $25,500. It dropped because of the debt ceiling issue and the rising hopes that the Fed will maintain its hawkish tone.
Cardano price prediction
The daily chart shows that the ADA price has pulled back in the past few days. It has dropped below the important support level at $0.42, the highest point on February 15. The coin is consolidating at the 50-period moving average.
Most importantly, it seems like it has formed a double-top pattern, which is usually a bearish sign. Therefore, we can’t rule out a situation where the coin drops to the next key support level at $0.298, the lowest point on March 11. A move above the double-top point at $0.422 will invalidate the bullish view.
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