Cardano price is approaching its all-time low as the cryptocurrency sell-off continues. ADA, the platform’s native token, is trading at 44 cents, which is lower than its all-time high of $3. Cardano has a market cap of over $14 billion, meaning that its investors have lost over $76 billion in the past few months.
What is Cardano?
I have been critical of Cardano for almost one year. During this time, I have warned relentlessly about the coin’s overvaluation. You can read one of my previous articles on Cardano here.
For starters, Cardano is a blockchain project that was started in 2015 by Charles Hoskinson, who is also a co-founder of Ethereum.
On its website, Cardano describes itself vaguely as the “blockchain platform for changemakers, innovators, and visionaries.” It adds that it has tools that are needed to create possibilities for the many and the few,
In simple terms, Cardano is an alternative to Ethereum, the market leader in the smart contract industry. It solves most of the challenges that Ethereum has. For example, it was built using proof-of-stake technology, which is usually more environmentally friendly.
Further, Cardano has a higher throughput, meaning that it can handle more transactions per second than Ethereum.
The bearish case for Cardano
A case can be made that Cardano is an overrated blockchain platform. First, as I mentioned, Cardano was started in 2015, meaning that it has been around for seven years. During this period, the developers have successfully completed the Byron, Shelley, and Goguen parts of their roadmap. They are now in the Basho era that is all about scaling the network.
However, Cardano introduced smart contracts in 2021 or 6 years since its launch. In my view, that is an extremely long period. Indeed, within that period, we saw the launch and scaling of many blockchains like Avalanche and Cronos.
Small ecosystem
Second, Cardano’s ecosystem is relatively tiny. One way to look at this is to focus on its DeFi ecosystem. According to DeFi Llama, Cardano has a total value locked (TVL) of just $113 million.
A closer look shows that Wingriders has a market dominance of 42% and has a TVL of $42 million. MinSwap and SundaeSwap have a TVL of $38 million and $23 million, respectively. The other apps in its network have a tiny TVL.
In contrast, Cronos has a market cap of $2.8 billion despite the fact that it has a DeFi TVL of over $1.2 billion. Cardano is bigger than coins like Tron, Avalanche, Solana, and Polygon which have a bigger ecosystem.
Cardano’s developers argue that there are thousands of developers building in the ecosystem. While this may be the case, it is still too early to predict whether they will be successful. In doing this report, I evaluated most of these projects and most of them have a limited chance of success.
Cardano price prediction
The daily chart shows that the ADA price has been in a strong downward trend in the past few months. Along the way, the coin has remained significantly below the 25-day and 50-day moving averages.
This is a sign that sellers are in control. Now, the coin is attempting to move below the important support at $0.4461, which is its all-time low.
Therefore, in my view, I believe that Cardano will continue falling in the near term. If this happens, the next key support level to watch will be at $0.20, which is about 60% below the current level
