Why is Cardano price down today?

Cardano's (ADA) price continued its downtrend on March 31, down 4.5% over the last 24 hours to trade at $0.6529. 

The altcoin is down 10% over the last seven days and 45% from the March 2 high of $1.19.

ADA/USD daily chart. Source: Cointelegraph/TradingView

Several factors are behind Cardano’s underperformance, including:

• Decreasing network activity and declining total value locked.

• Negative funding rates.

• A weakening technical structure.

The bearishness in ADA price today is preceded by reduced network activity and the total value locked (TVL), which has dropped sharply over the last month.

• Cardano’s daily active addresses fell by over 70% from 70,700 on March 2 to less than 20,000 on March 31.

• Similarly, daily transactions decreased by more than 71% over the same period.

DAAs and daily transactions on Cardano. Source: Artemis

• Cardano’s TVL has plummeted from $529.8 million on March. 3, to reach $317.9 million on March 31.

• This metric has again dropped by 13% over the last five days.

Cardano total value locked, USD. Source: DefiLlama

• The decline in daily active addresses, daily transactions and TVL coincides with declines in ADA over the same period.

Another factor hampering ADA’s price is the lack of enthusiasm in its derivatives market, evidenced by low open interest and weighted funding rates. 

Key takeaways:

• ADA funding rates have been stuck below zero over the last four weeks.

• Negative funding rates mean shorts are paying counterparties to keep their bearish bets open, reflecting the dominance of bearish short positions in the market.

ADA funding rates. Source: Glassnode

• Similarly, cumulative open interest (OI) in perpetual futures across major exchanges has been stuck below $1.0 billion since March 4. 

• This is way below the $1.50 billion peak reached on Jan. 18. 

ADA open interest. Source: CoinGlass

• Historically, assets with declining open interest struggle to maintain upward momentum, as there’s less capital and enthusiasm to drive prices higher. 

• For ADA, this could mean that even minor selling pressure could trigger a cascade of liquidations, especially if leveraged positions are unwound, driving prices lower. 

• ADA price risks more losses without renewed interest from institutional or retail traders.

ADA’s slump is part of a prevailing downward spiral that began when the price was rejected from a major resistance zone, as shown in the chart below.

Related: Is Cardano (ADA) a “zombie crypto”?

Key points:

• ADA price was stuck between the 50-day simple moving average (SMA) and the 200-day SMA between March 9 and March 27.

• All attempts at recovery were curtailed by the 50-day SMA currently at $0.7531.

• This means that every time the price attempted to cross this level, more suppliers accumulated within this area, adding to the sell-side pressure.

• On March 28, the price dropped below the 200-day SMA at $0.7262, also flipping it into resistance.

ADA/USD daily chart. Source: TradingView

• The next support level for ADA price to watch below is the $0.60 psychological level. 

• Further down, the main area of interest lies between $0.5794 (reached on Feb. 28) and the $0.5197 low reached on Nov. 13, 2024.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.