 Why is Cardano price down today? 
2024-10-25

Cardano (ADA) has displayed weakness this week after falling 7.4% over the last 72 hours to trade at $0.338 on Oct. 25. 
This price drop has seen ADA undo all the gains made on Sunday, Oct. 20, citing a shift in investor sentiment toward the layer-1 token. ADA is down 2.3% over the last 24 hours.
ADA’s drop mirrors the bearish cloud that continues to engulf many altcoins in the market. 
For instance, Ether ETHUSD, the largest altcoin by market capitalization, has dropped by approximately 2% over the last 24 hours, while Avalanche (AVAX) has lost 2.7% of its value over the same period.
Let’s look at the catalysts driving ADA price down today.
ADA price hits all-time lows against Bitcoin
Cardano has underperformed Bitcoin BTCUSD throughout 2024, with BTC rallying approximately 52% year-to-date compared to ADA’s 43% decline in their respective US dollar pairs.
As a result, ADA has trended lower against Bitcoin in 2024, reducing investor confidence in the token.
High network activity and general positive market sentiment during the 2021 bull cycle saw the ADA/BTC ratio rally 895% from 0.00000588 on Dec. 21, 2020, to reach an all-time high of 0.00005847 on Aug. 23, 2021. 
Since then, the ratio has been on a freefall, dropping 91.6% to reach a near-all-time low of $0.00000503 on Oct. 25. 
Cardano’s underperformance can be attributed to diminishing network activity, which leads to reduced demand for ADA tokens within the ecosystem. This negatively impacts the price.
Reducing network activity underpins ADA price
The Cardano network has witnessed a remarkable drop in user engagement over the last six months. Data from IntoTheBlock shows that the number of active addresses on the Cardano blockchain has dropped from 71,270 on March 6 to the current value of 25,680. S
Similarly, new addresses have declined from 24,860 wallets to 5,920 over the same period.
Additional data from DefiLlama reveals that the total value locked (TVL) on Cardano has also been on a downtrend over the last six months. 
The chart below shows that the TVL fell by over 55% from about $480.72 million in March to approximately $214.8 million at the time of publication.
This drop in network TVL is not solely confined to the Cardano blockchain. The total value locked in DeFil protocols built on Cardano has also contracted significantly, as shown in the figure below. 
Among the leading projects in Cardano’s DeFi ecosystem, Indigo’s collateralized debt protocol stands out, with its TVL dropping by 15% over the last month. The decentralized exchange Minswap has seen its TVL drop by 11% over the last month to $50 million.
The declining network activity and reducing TVL on Cardano indicate diminished user interaction, decreasing demand for ADA tokens and negatively impacting its price. 
ADA’s bearish divergence
ADA’s drop today precedes a period of growing bearish divergence between its price and the relative strength index (RSI).
Notably, ADA’s price rose between Sept. 17 and Oct. 20, forming higher lows. But, in the same period, its daily RSI descended, forming lower lows.
As a rule of technical analysis, a divergence between rising prices and a falling RSI indicates weakness in the prevailing uptrend, prompting traders to sell more at local highs.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.