Since March 20, Cardano’s price has been consolidating in the $0.61 to $0.64 range, with market indicators suggesting a potential bearish reversal for ADA. This week, Cardano has not performed as well as Solana (SOL) and Avalanche (AVAX), which have seen double-digit price gains.

On-chain data indicates a bearish trend affecting ADA’s price performance. Cardano’s smart contract ecosystem has lagged behind in key market themes such as gas fee optimization, memecoin hype, and rising defi activity.

For instance, Solana has outperformed Ethereum in defi trading volumes, while Cardano’s total value locked (TVL) has decreased significantly from $520 million to $409.9 million within a week. This decline in defi participation on the Cardano network signals a bearish outlook for ADA.

Moreover, Cardano’s open interest in derivatives markets has dropped by $500 million over the past month, indicating a bearish sentiment among traders. The current flat price action of ADA suggests limited profit opportunities for traders, potentially leading to more liquidations in the near future.

With low defi demand and capital outflows, Cardano’s price is at risk of a significant decline towards $0.50 by the end of March 2024. Currently trading above $0.61, ADA faces a crucial support level at $0.60. If traders continue to close positions, ADA prices could drop below $0.60 and head towards $0.55. To turn the market sentiment positive, ADA bulls need to break above the 20-day Simple Moving Average price of $0.70.

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