The cryptocurrency market, which saw $500 million in liquidations in the last 24 hours, is in a correctional phase. Cardano (ADA) is among the hardest-hit assets, continuing its downward trajectory amid a broader market pullback.
Drop in user activity and TVL on Cardano network
Data from Artemis shows a sharp decline in user activity on the Cardano blockchain since early December. Daily active addresses dropped from 96,700 to 38,200, and transactions fell from 144,300 to 54,600. The decline in user engagement affects ADA's price, further fueling the downturn. Total value locked (TVL) also fell by 31.5%, negatively impacting the token's value.
Correlation with Bitcoin market movements
Cardano's price movement has largely mirrored Bitcoin in recent months. If Bitcoin continues its correction, ADA is expected to perform worse. The US government may liquidate 69,370 BTC, adding to market uncertainty. This adds complexity in the political theater between the Trump and Biden administrations.
Analysts warn ADA could fall further
Technical analysts are increasingly bearish on ADA. A pseudonymous analyst Kwantxbt warned of ADA's weakness at $0.92. The analyst advises traders to wait for support confirmation around $0.85 before going long. If ADA breaks this level, it may drop to $0.763 or even lower.
Amid negative market sentiment, ADA may continue its decline unless positive changes occur in market dynamics.
