Cardano is known for his scientific approach to building a fair, sustainable and decentralized network. A Kraken report called Cardano, a Nakamoto-style cryptocurrency with a Bitcoin-like delivery model that deflates over time. In fact, the Cardano foundation has cited its bullish predictions for its original token. It should be noted, however, that the coin’s price trajectory has willingly forced BTC for over four months now.
No doubt it has been a wild guess for investors as to whether they would cap losses to $1.07. On the downside of waning volume, the coin appears poised for a bear run to reach the $1,013 support. In particular, a sense of concern seems to dominate the market. While it may be difficult to decide what percentage of the portfolio to allocate to ADA, there are certain metrics that can help one make a better decision.
The TVL story
Cardano was one of the most developed chains in 2021 with many contributors to it. It means that the number of developers who collaborated to develop Cardano was the highest in the entire crypto space. The high development activity is essentially a positive sign for Cardano holders. But the real question remains: will it have an impact on ADA’s near-term price performance? Well, total value locked has the answer.
Total Value Locked on the Cardano network skyrocketed to $96.12 million at the time of writing. For the first time in 14 months, analysts claim Cardano is undervalued, with an optimistic view on altcoin. However, it should be noted that the rise in TVL is mainly driven by SundaeSwap.
When SundaeSwap was released in January 2022, the network began to see an exponential increase in Total Value Locked on Cardano. The token betting platform had a 96.94% dominance at the time of writing. However, with the advent of more decentralized applications, the dominance could decrease significantly in the future. Currently, there are only five decentralized applications contributing to Cardano’s TVL. This provides a visual representation of how early we are in the Cardano ecosystem.
Source: Defillama
Gert van Lagen, a crypto analyst and trader, believes Cardano’s price has tested the 2018 highs several times; the next target is $5 before the end of May 2022. However, the token seems to be going with the bears for now. After a big sell-off on January 24, ADA bulls applied pressure, but to no avail.
The currency plateaued for the week ending Feb. 4. Further, the price climbed the ladder only to offer resistance at the $1.21 level. Due to the lack of demand, the coin sided with the bears and has been in a downward trend ever since. To reach the $1.62 level, the bulls will need to break past their two-month resistance at $1,460. Interestingly, at the time of writing, the RSI was in oversold territory at the 31 mark. A trend reversal could be on the map soon. However, the volume oscillator showed no signs of rebound, which remains a concern.
Source: TradingView, ADA/USD
Bull or bear?
Cardano had $17.56 billion in volume transactions in the past 24 hours. So beating Ethereum, which only had $10.50 billion in transactions. It’s a very significant difference, because when comparing both ecosystems, Cardano is still a baby. This sounds like a bullish bugle for ADA in the long run. In fact, Cardano had paid just $51,985 fees for his transaction volume in 24 hours. However, for $10.50 billion in transactions (24-H), investors had to pay 22.21 million in gas fees to use the Ethereum ecosystem. The data proves that the Cardano ecosystem is in high demand.
Source: Messari
While some stats may seem bullish, ADA may still go down the hill due to the lack of high demand. Therefore, investors should do thorough research before deciding to bet on it.
This post Do you want to invest in Cardano? This is how much to allocate based on the TVL
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