Cardano’s native token ADA suffered a significant setback in June after being labeled as a security in the Securities and Exchange Commission’s (SEC) lawsuit against Binance and Coinbase. This announcement caused ADA’s price to drop by 42.5%, from $0.37 to a two-year low of $0.21 within a few days. The token also faced additional selling pressure due to delisting on U.S.-based trading apps Robinhood and eToro.
Despite these challenges, the Cardano network has been making progress with an increase in decentralized finance (DeFi) activity following a scalability upgrade in May. Over the years, Cardano has faced criticism for delays and updates, but the recent implementation of the Hydra scalability upgrade has led to an uptick in network activity. The total fees paid on Cardano reached a one-year high after the upgrade, indicating increased usage. Additionally, the total ADA deposited in DeFi applications on Cardano has risen sharply, reaching two times its peak value during the 2021 bull market.
The Hydra upgrade, a layer-2 scaling solution, has significantly improved Cardano’s transaction throughput and scalability by processing transactions on a sidechain. This upgrade has also contributed to the growth in trading volumes on Cardano decentralized exchanges (DEXs).
Furthermore, a report by Jarvis Labs highlighted Cardano’s decentralized nature based on the Nakamoto coefficient, which measures the number of entities controlling a significant portion of a network’s staked coins. This degree of decentralization works in favor of Cardano when determining its classification as a security in the U.S. The report emphasized that Cardano is alive, thriving, and ready for the next bull run.
Related Post
From a price analysis perspective, on-chain analytics firm Santiment noted a high amount of selling at lower prices in the first week of July as ADA rebounded towards the $0.30 resistance level. This profit booking at oversold conditions may increase the chances of price bounces. Additionally, data from Coinglass showed that most traders held short positions on ADA, anticipating a decline following the regulatory crackdown. This negative sentiment and the subsequent sell-offs could potentially lead to a contrarian price rally in the short to medium term.
On the technical front, the ADA/USD pair has formed higher lows after bottoming out at around $0.21 in June, indicating buyer interest during dips. If buyers successfully flip the resistance level at $0.30 into support, it would confirm a positive trend. Similarly, the ADA/BTC pair shows signs of a potential bottom, with the weekly Relative Strength Index falling into the oversold category and the pair testing key support and resistance levels. If buyers succeed, the pair could experience a 60% price surge towards the 0.00001548 BTC support level.
Despite the challenges posed by the SEC lawsuit, delistings, and negative sentiment, Cardano’s progress and improving technicals, supported by on-chain growth, indicate the potential for a positive recovery in ADA’s price in the future.
It is important to note that this article does not provide investment advice or recommendations. Investing in cryptocurrencies involves risks, and readers should conduct their own research and due diligence before making any investment decisions. The views and opinions expressed in this article are those of the author alone and do not necessarily reflect the views of Cointelegraph.
