Cardano price faces a 25% crash after failing to cross an important resistance level. ADA also faces intense pressure as the development activity on the chain drops, funding rate turns negative, and its stablecoin market cap drops.
ADA price today trades at $0.65, its lowest level since April 2022, and 50% below its highest level in December.
Cardano Price Pressured as Development Activity Drops
One reason why Cardano price may crash by 25% is the continued decline in developer activity. According to Santiment, the number of commits submitted to GitHub has been in a strong downward trend since January 23, when they peaked at 92, and have now fallen to 48.
Falling developer activity in a blockchain is a red flag as it signals ecosystem stagnation. Indeed, separate data show that the total value locked in the Cardano network has stalled below $500 million throughout the year. In contrast, newly launched chains like Sonic and Base have accumulated over $1 billion in assets.
Negative Funding Rate Could Hit the ADA Price
Further, Cardano price may retreat because of its negative funding rate in the futures market. Santment data above shows that the funding rate has remained in the negative zone since May 3.
A negative funding rate signals that short-sellers are paying bulls, where the perpetual contract price is below the spot price. Therefore, ADA price will likely remain on edge as long as this finding rate is negative.
Falling Stablecoin Market Cap on Cardano
Stablecoins are the currencies used in a blockchain network. As a result, a higher market cap is a positive sign because it shows that a chain is active. It also helps it generate more revenue, especially when the amount of stablecoins transacted daily is rising.
A good example of this is Tron, a network that handles over $50 billion a day in USDT transactions. This growth has transformed it into the most profitable chain in the crypto industry, making over $1 billion in fees this year.
DeFi Llama data shows that Cardano has only $30 million in stablecoins, which dropped from $31.2 million on May 1. Continued deterioration in this metric may lead to weak sentiment, affecting the ADA price.
Cardano Price Technical Analysis Points to a 25% Drop
The daily chart shows that the ADA price attempted to bounce back but faced substantial resistance at $0.746. This was notable since it coincided with the upper side of the descending channel, and the 100-day Exponential Moving Average (EMA).
The bars of the Awesome Oscillator have turned red and are pointing downwards, which is another red flag for the coin. It has also moved below the 61.8% Fibonacci Retracement level, which is seen as the golden ratio, where reversals happen.
Therefore, a sustained downtrend will lead to more downside, potentially to the psychological point at $0.50, the lowest point in April. This ADA price forecast is about 25% below the current level.
The bearish Cardano price outlook will become invalid if it rises above the resistance level at $0.746, its highest level on April 24.
The post Top 4 Reasons Cardano Price May Crash 25% in May appeared first on CoinGape.
