Cardano’s TVL Growth and its Impact on Price
Despite the underwhelming price movement of Cardano (ADA), the Total Value Locked (TVL) on its DeFi ecosystem has almost tripled in 2023. Here are the key points of how the TVL growth could impact future ADA price action:
1. Cardano Price Doom, DeFi TVL Boom: While ADA’s price has declined by 36% from its peak in April 2023, the Cardano DeFi ecosystem has experienced significant growth. As of August 15, Cardano TVL stands at $177.83 million, representing a 250% increase in 2023.
2. TVL’s Impact on Price: Although TVL may not directly affect ADA’s short-term price action, an uptrend in TVL indicates fundamental growth in adoption. This sustained network demand affirms the utility of the Cardano ecosystem and could assure investors of ADA’s long-term viability.
3. Resilience of Long-Term Investors: On-chain ownership metrics show that Cardano’s long-term investors have remained positive. They have increased their stake in ADA by 4% since the regulatory FUD ensued, indicating their intent to consolidate and diversify within the ecosystem.
4. ADA Price Prediction: The residual demand from TVL growth is expected to help ADA hold the critical support level of $0.25 in the coming weeks. The In/Out of Money (IOMAP) data also supports the prediction that ADA price will consolidate above $0.25, with the possibility of a rebound if holders remain firm.
5. Potential Resistance Levels: If the regulatory pressure subsides, the TVL growth could propel ADA’s price towards $0.35. However, there is a cluster of addresses that bought ADA at the maximum price of $0.32, which could act as a sell-wall and hinder further price increase.
In conclusion, the TVL growth and increase in long-held coins signal Cardano investors’ intent to stay within the ecosystem. This could help ADA hold the $0.25 support level, and if the regulatory pressure subsides, it has the potential to reach $0.35.
Hot Take:
Despite the regulatory challenges faced by Cardano, the growth of its DeFi ecosystem and the resilience of its long-term investors indicate a positive outlook for ADA’s future. The TVL growth provides a strong foundation for the token’s value, and if regulatory pressure subsides, ADA has the potential to reach new highs.
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