Cardano (ADA) is currently experiencing a bearish signal due to a decrease in whale and DeFi activity, while testing important price support levels. Investors are cautious about ADA's short-term price forecast, with uncertainty looming for the upcoming week.

Ecosystem expert Ali Martinez highlighted a decline in whale activity within the Cardano network. He believes that this decrease could result in further consolidation or a drop in prices for ADA's native token. Martinez shared his observations on social media on April 5.

Martinez utilized the Whale Transaction Count indicator to track whale transactions above $1 million in ADA. The daily count has fallen to 202 transactions per day, lower than February's numbers when prices were also lower.

Image Source: @ali_charts

Bearish Price Analysis for Cardano (ADA)

From a technical standpoint, ADA is currently consolidating near a crucial support level at $0.58 per token. This level has historically been vital for price recovery and trend shifts.

Maintaining this support level could lead to a bullish surge for Cardano's token, according to Martinez. However, a potential drop could drive prices lower towards the $0.45 mark. The daily Relative Strength Index (RSI) for ADA also indicates a bearish momentum and a lack of strength for recovery.

Furthermore, the total value locked (TVL) in Cardano's ecosystem has dropped by over 22% in the last 30 days to $378.24 million. As a result, Cardano's TVL ranking has fallen to 17th place according to the DeFiLlama index.

Image Source: DefiLlama

Considering Cardano's TVL in relation to its market capitalization, the ecosystem appears to be overbought. ADA's $20.81 billion market cap is significantly higher than its TVL, suggesting that the asset may be overvalued compared to its peers.

Investors are advised to monitor these indicators closely as they may signal a continued bearish trend for ADA. With a decrease in whale activity and capital outflows from the DeFi ecosystem, ADA is facing challenges in maintaining its price support levels.

Disclaimer: The information provided in this article should not be considered as investment advice. All investments involve risk, and individuals should do thorough research before investing.

Source: The Bit Times