- A report came out listing reasons why ADA might fall off even if market conditions improve.
- Activity on the Cardano network fell as well as stablecoin usage.
If you are a long-term Cardano [ADA] holder, or you plan to hold for a short while, you’d agree that the token has sometimes underperformed when compared to its peers.
At press time, ADA’s price was $0.53— representing an 11.30% decrease in the 30 days.
The fact that the price increased by 50.65% in the last 365 days meant that it could still be worth holding. However, K33 Research does not agree.
According to the research-led digital investment firm, you should not think twice before selling all your ADA.
Though AMBCrypto believed this to be a hasty conclusion, the firm gave its reasons. In its report released on the 15th of January, K33 noted,
“There’s nothing else going on in the Cardano Network than exchange transfers and a group of bagholders fabricating blockchain activity.”
The research also mentioned that ADA bagholders were “fabricating” blockchain activity, and nothing significant seemed to be going on in the chain.
We took it upon ourselves to check if there was any truth in what K33 mentioned. The first metric AMBCrypto decided to consider was the Total Value Locked (TVL). At press time, DeFiLlama showed that Cardano’s TVL was $359.27 million.
The TVL measures the total value of assets or locked staked in an ecosystem. When compared with other blockchains like Solana [SOL] and Ethereum [ETH], it was obvious that Cardano lagged.
However, TVL is not enough to suggest to ADA holders to liquidate their tokens. But when you consider the availability of stablecoins on the chain, you might give it a rethink.
As of this writing, stables on Cardano were worth $19.18 million. On Ethereum, it was $69.53 billion, while Solana had $1.88 billion. Stablecoins are the preferred exchange cryptocurrency when trading altcoins via DeFi.
So, this value suggests that Cardano lacked significant activity, which the firm believes would make ADA redundant in the near term. Also, the fact that it delayed the USDM stablecoin launch could be a sign of doubt.
Furthermore, AMBCrypto evaluated the active addresses on the network.
As of this writing, the 24-hour active addresses had fallen to 43,100. But on the 12th and 16th of January, the metric grew as high as 70,000 and 60,000, respectively. During those times, there were a lot of users on the blockchain.
However, the recent decrease suggested that the number of participants involved in successful transactions has nosedived. In terms of the price action, this fall is a bearish indicator. If not curtailed, it could affect ADA’s price.
In addition, out of the trio of ETH, ADA, and SOL, ADA remained the one far below its September 2021 value. While SOL was 44% down, ETH was 30% off its price as of then.
However, ADA’s price remained at a -77% fall from its value during that period. This led K33 to conclude that,
“ADA has not rallied in line with other ‘stronger’ smart contract tokens when markets have improved, which is a strong indicator of a dying coin.”
Realistic or not, here’s ADA’s market cap in ETH’s terms
However, you should know that K33 is not the benchmark for deciding which crypto survives or falls off. This is also not to say that the research should be ignored.
But other metrics and future development would tell if selling ADA now or keeping it would be a good decision.