Cardano (ADA) has shown signs of weakness in recent days, dropping 7.3% over the past 72 hours and trading around $1.035 as of December 18. The cryptocurrency also saw a 4% decline in the last 24 hours, raising concerns among investors and traders. While short-term volatility is common in crypto markets, several underlying factors may be contributing to this downward movement.
This article explores the key reasons behind Cardano’s current price drop, including declining network activity, reduced Total Value Locked (TVL) across DeFi protocols, technical resistance levels, and emerging chart patterns that suggest further downside risk.
Declining Network Activity on Cardano
One of the most telling indicators of a blockchain’s health is user engagement — and Cardano has seen a noticeable decline in on-chain activity since late November.
The number of active addresses on the Cardano blockchain has dropped significantly, falling from 113,480 on November 23 to just 73,920 at the time of writing. Similarly, new wallet creations have declined from approximately 37,890 to 24,000 over the same period.
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This reduction in user participation signals waning interest or reduced utility within the ecosystem. Fewer transactions, lower staking activity, and declining wallet growth can all contribute to weaker demand for ADA tokens, ultimately exerting downward pressure on price.
Falling Total Value Locked (TVL)
Another critical metric reflecting ecosystem strength is Total Value Locked (TVL), which measures the amount of assets staked or deposited in decentralized finance (DeFi) protocols.
Data from DefiLlama shows that Cardano’s TVL has been on a steady decline over the past two weeks. It dropped more than 27%, from around $708.9 million on December 3 to approximately $517.6 million at publication time.
This decline isn’t isolated to the broader network — individual DeFi projects built on Cardano are also seeing outflows.
Key DeFi Projects Seeing TVL Drops:
- Splash: Experienced a 31% decrease in TVL over the past month.
- Minswap: Saw its TVL fall by 4.5% in just 24 hours, now sitting at $115 million.
As liquidity leaves these platforms, it reduces incentives for yield farming, weakens tokenomics, and diminishes confidence in the ecosystem’s growth trajectory. With fewer users locking up ADA or related tokens, demand naturally softens — a fundamental factor influencing price direction.
Strong Resistance Building Near $1.10
From a technical perspective, ADA’s price action is currently constrained by strong resistance near the $1.10 mark.
The current trading range suggests that bulls are struggling to push prices higher, while sellers remain active just above $1.08–$1.10. This zone aligns with significant historical selling pressure.
On-Chain Data Reveals Profit-Taking Zones
According to IntoTheBlock’s IOMAP model, over 107,710 addresses moved approximately 2.59 billion ADA tokens at an average price of $1.08. This creates a dense supply zone between $1.07 and $1.10, where many holders are likely to sell to realize profits if the price approaches again.
Until ADA can break through this level with strong volume and sustained momentum, upside potential remains limited.
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Technical analyst Sssebi notes that ADA is currently being "pressed" by the 20-day Simple Moving Average (SMA), which sits just above $1.10. However, he also observes growing buying pressure near current levels, suggesting a potential rebound could be forming.
“I believe we’re about to see a breakout very soon, given that there appears to be significant buying pressure building.”
Still, uncertainty remains. Sssebi highlights that the daily chart could resolve into either a symmetrical triangle — often a continuation pattern — or a bearish head and shoulders formation.
“We’re about to find out if ADA is forming a symmetrical triangle or actually a head and shoulders pattern heading downward. If we bounce from $0.97 and make a new high, it might be safe to go long.”
The Inverted V Pattern: A Bearish Warning?
A closer look at ADA’s daily price chart from November 10 to December 18 reveals what some traders describe as an "inverted V" pattern — a formation that often precedes sharp corrections after a rally.
If bearish momentum continues and confirms this pattern, ADA could face a significant drop toward the neckline support near $0.54 — representing a potential 47.6% decline from current levels.
While such a move isn’t guaranteed, it underscores the importance of monitoring key support zones and volume trends in the coming days.
Key Technical Levels to Watch:
- Immediate Resistance: $1.10–$1.11 (SMA & supply zone)
- Upside Target: December high near $1.32 (if bullish momentum returns)
- Critical Support: $0.97 (current short-term floor)
- Long-Term Risk Zone: $0.54 (pattern-based downside target)
Until ADA breaks above $1.11 with conviction, the path of least resistance appears downward.
Frequently Asked Questions (FAQ)
Q: What is causing Cardano’s price to drop today?
A: Several factors are contributing to ADA’s decline: decreasing network activity, falling Total Value Locked (TVL) in DeFi protocols, strong resistance near $1.10, and bearish technical patterns like the inverted V formation.
Q: Is low TVL bad for Cardano?
A: Yes. Declining TVL indicates reduced investor confidence and lower usage of DeFi applications on the network. This can lead to weaker demand for ADA and fewer incentives for stakers and developers.
Q: Can Cardano recover from this downturn?
A: Recovery is possible if network activity rebounds, DeFi liquidity returns, and technical indicators show sustained buying pressure. A breakout above $1.11 could signal renewed bullish momentum.
Q: What price level is critical for ADA right now?
A: $0.97 is a key short-term support level. If broken, it may open the door to deeper losses. Conversely, reclaiming $1.11 could pave the way for a move toward $1.32.
Q: How does on-chain data influence ADA’s price?
A: On-chain metrics like active addresses and IOMAP models reveal real user behavior and potential supply/demand imbalances. For example, large concentrations of sellers near $1.08 increase resistance and limit upside.
Q: Should I buy ADA during this dip?
A: Investment decisions should be based on personal risk tolerance and thorough research. While dips can present opportunities, continued declines in activity and TVL suggest caution is warranted.
Final Thoughts
Cardano’s recent price drop reflects a combination of weakening fundamentals and bearish technical signals. Declining user engagement, shrinking DeFi liquidity, and strong overhead resistance are creating headwinds for ADA in the short term.
However, crypto markets are highly dynamic. If development progress continues, new dApps gain traction, or macro conditions improve, sentiment could shift rapidly.
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For now, traders should monitor key levels closely — especially $0.97 support and $1.11 resistance — while watching on-chain metrics for early signs of reversal.
This article does not contain investment advice or recommendations. All investment and trading carry risks; readers should conduct their own research before making any financial decisions.
Cryptocurrency investments are unregulated in many jurisdictions and may not be suitable for retail investors. Full loss of investment is possible.