- Cardano has dropped by more than 17% from the highest point in April.
- ADA, like other cryptocurrencies, tend to underperform in May and during summer.
- The Federal Reserve is expected to deliver another rate hike on Wednesday.
Cardano price came under pressure this week even as the platform’s activity in decentralized finance (DeFi) continued improving. ADA dropped to a low of $0.40, which was lower than last month’s high of $0.46.
DeFi TVL hits another record high
Cardano, like other major cryptocurrencies like Bitcoin and Ethereum, has remained under pressure in the past few weeks after they surged to a multi-month high. Bitcoin has moved from the year-to-date high of $31,000 to about $28,000 while Ethereum has moved below the support at $2,000.
Activity in Cardano’s DeFi ecosystem has been vibrant as the total value locked (TVL) in DeFi has soared to the highest level on record. According to DeFi Llama, the TVL has soared to a high of 464 million ADA. It’s previous all-time high was 414 million ADA. Further data showed that revenue in Cardano’s ecosystem has remained quite steady.
Many DeFi platforms in Cardano are doing well. For example, Minswap has seen the TVL jump to $51 million while Indigo, WingRiders, and Liqwid have all seen their TVLs jump to over $10 million.
Read more: How to buy Cardano.
The likely reason why Cardano price has retreated is profit-taking since it had risen by 95% from its lowest level in December. In most periods, cryptocurrencies tend to retreat slightly after a strong rebound.
The other reason is that actions of the Federal Reserve have played a role. Analysts believe that the Fed will decide to hike interest rates even as the health of American economy remains at risk. It will likely signal that the end of the rate increases has reached.
Further, cryptocurrencies tend to underperform for a few months from May. This situation is known as buy in May and go away. For example, most cryptocurrencies remained in a consolidation phase from May in 2022. Cardano dropped by over 65% from the highest point in May to the lowest level in November.
Cardano price prediction
ADA price has been in a downward trend in the past few weeks. It has moved from a high of $0.462 in April to the current $0.38. The coin has moved below the important support at $0.422, the highest point on February 16.
As it dropped, the coin moved below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved below the neutral point at 50. Therefore, the outlook for the coin is bearish for now, with the next point to watch being at $0.35. On the other hand, a move above the resistance point at $0.422 will signal that bulls have prevailed.
