Cardano’s DEX Volume Skyrockets, but at What Cost for ADA Holders?

Cardano's DEX Volume Skyrockets, but at What Cost for ADA Holders?

Cardano (ADA) holders are currently grappling with significant challenges as the cryptocurrency’s prices decline. However, the decentralized finance (DeFi) sector is witnessing a surge in interest, which is reflected in Cardano’s decentralized exchange (DEX) experiencing a remarkable increase in its daily trading volume, exceeding 23 million ADA.

Declining Total Value Locked on Cardano

Despite this impressive DEX volume, the total value locked (TVL) on the Cardano network has taken a hit. According to data from Artemis, Cardano’s TVL plummeted from $430 million to $230 million. The lack of interest in decentralized applications (dApps) on the Cardano network caused this decline in TVL. Additionally, the recent decline in the floor price and overall transaction volume of popular non-fungible tokens (NFTs) on the Cardano network could have contributed to this negative trend.

Bearish Price Action for ADA

The declining interest in Cardano’s ecosystem could significantly impact the protocol and negatively affect the price movement of ADA. At the time of writing, ADA is trading at $0.4489, and its price has displayed a clear downtrend, with numerous lower lows and lower highs over the past few weeks. ADA traded within the range of $0.512 and $0.421, with the $0.512 level being tested multiple times.

Technical Analysis Paints a Bearish Outlook

The technical analysis of ADA’s price action suggests that if the cryptocurrency retests and weakens the $0.512 level again, a potential price reversal could occur. However, the current data does not support a bullish outlook for ADA. The relative strength index (RSI) for ADA has shown a significant decline, indicating a drop in bullish momentum. Additionally, Cardano’s Chaikin Money Flow (CMF) has also declined considerably, suggesting a reduction in the money flowing into ADA.

Concerning Indicators for Cardano

Another concerning factor for ADA is the decrease in its velocity, which indicates a significant reduction in the frequency of ADA transactions in the last few days. Moreover, ADA’s market value to realized value (MVRV) ratio has dropped significantly, suggesting that the profitability of most addresses has decreased. The drop in ADA’s Long/Short ratio could also signal a decrease in the number of long-term addresses holding ADA.

In conclusion, Cardano holders are facing challenging times as the DeFi interest rises, leading to a surge in DEX volumes but a decline in the network’s overall TVL and bearish price action for ADA. The technical analysis and various indicators paint a bearish outlook for the cryptocurrency, raising concerns about the future of Cardano’s ecosystem.

Read Also: Cardano’s Founder Reflects on a Pivotal Decision

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Disclaimer: The information in this article should not be considered financial advice, and FXCryptoNews articles are intended only to provide educational and general information. Please consult with a financial advisor before making any investment decisions.

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