The Cardano (ADA/USD) price has crashed to the lowest level since February 2021 as investors worry about several factors. The coin is trading at $0.81, which is about 75% below its all-time high.
There are three main reasons why Cardano price has crashed harder than other large-cap coins like Bitcoin, Ethereum, and Ripple.
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First, there are serious concerns about Cardano’s ecosystem. As you recall, Cardano enabled smart contracts in August last year, making it possible for developers to start building on the network.
A closer look at the platform’s ecosystem shows some key challenges. For example, SundaeSwap, the biggest platform built using Cardano has a total value locked (TVL) of just $117 million. While this is a big number, it is significantly smaller than DeFi platforms of key chains like Ethereum and Terra.
A closer look at other DeFi, NFT, and metaverse projects built in Cardano shows that most of them are significantly small. Others have no activity at all and most of them are in the development phase,
This is understandable since Cardano activated its smart contract features recently. But in reality, other chains are significantly ahead of Cardano, which means that it needs to invest significantly to compete.
Second, the ADA price has fallen sharply because of the rising competition in its industry. One reason why Cardano became the successful platform it is was that it was seen as the most viable alternative to Ethereum. As a proof-of-work network, Ethereum is known for its energy consumption.
However, many viable alternatives have come up, including Fantom, Terra, Avalanche, and Polygon. Therefore, there is a likelihood that many people will continue to choose Cardano’s alternatives.
Third, the Cardano price has fallen because of the rising risks posed by the Federal Reserve, which is set to hike interest rates this week.
The daily chart shows that Cardano has been in a strong bearish trend in the past few months. As a result, the coin has continued moving below all moving averages. It has also moved below key support levels and formed a descending channel shown in blue. It is currently between this channel.
Therefore, there is a likelihood that the coin will continue the bearish trend as bears target the next key support level at $0.50.
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