Cardano Market Cap Drops as ADA Falls Out of Top 10 Crypto By Market Capitalization

Cardano’s market capitalization has dropped and ADA has now fallen out of the top 10 cryptocurrencies by market capitalization. This development has seen Tron (TRX) replace ADA, with TRX enjoying a robust 14% increase over the past week. Meanwhile, ADA’s price has only managed a modest 2% gain during the same period, trading at $0.34. This Cardano market cap drop mirrors the broader market downtrend observed over the past week, where the global cryptocurrency market capitalization fell by 2%, now standing at $2.1 trillion.

Cardano Market Cap Drop Signals Broader Issues

The Cardano market cap drop reflects a broader weakening in market activity. On-chain data highlights a sharp decline in ADA’s price-daily active address (DAA) divergence, which has now hit its lowest level in over 90 days. The price-DAA divergence, a key metric for assessing whether network activity supports an asset’s price, now stands at -41.41%. This alarming figure is a clear indicator of the market cap drop and the waning interest in ADA.

According to analysts at Santiment, the Cardano market cap drop and the declining price-DAA divergence suggest that only a limited number of unique addresses are actively participating in transactions relative to the price. This is often seen as a warning sign of speculative activity or potential manipulation by a small group of investors.

Michael Van de Poppe, a well-known crypto analyst, remarked on the Cardano market cap drop, stating, “Cardano’s slip from the top 10 is not just a reflection of market sentiment but also an indication of waning interest in the network’s utility. The divergence between price and active addresses could point to underlying issues that need addressing.”

Despite the modest price increase, the Cardano market cap drop is accompanied by a spike in daily on-chain transaction volume in profit versus loss. The ratio has now reached 2.20, the highest level since January 2023. This figure indicates that for every ADA transaction resulting in a loss, 2.20 transactions have yielded a profit. While this might seem positive, it further highlights the speculative nature of the current market, which is contributing to the market cap drop.

“Profit-taking at this level suggests that short-term traders are dominating the market,” commented Mati Greenspan, founder of Quantum Economics. “It’s a sign that while there might be gains on the surface, the underlying health of the asset is questionable, as indicated by the Cardano market cap drop.”

ADA Price Prediction: Cardano Market Cap Drop Could Continue

As ADA’s price remains around $0.34, the market is closely watching its attempt to cross the 20-day exponential moving average (EMA). This technical indicator is often used to gauge short-term momentum. However, the Cardano market cap drop raises concerns about the sustainability of any potential rally.

Should ADA manage to rally above this key level, it could signal the beginning of a bullish phase, potentially driving the price towards $0.40. Crossing above the 20-day EMA is generally viewed as a bullish indicator, suggesting the potential for continued price growth. However, the ongoing Cardano market cap drop suggests that any rally may be short-lived.

“While a break above the 20-day EMA could provide short-term relief, the overall market conditions, including the Cardano market cap drop, suggest that volatility will remain a key factor,” warned crypto analyst Rekt Capital. “Investors should be prepared for the possibility of further declines, with a reversal potentially pushing ADA’s price down to $0.27, a level last seen during the general market downturn in early August.”

Broader Market Impact of Cardano Market Cap Drop

The Cardano market cap drop is symptomatic of broader challenges facing the cryptocurrency market. With a general downtrend in market capitalization and increasing concerns about speculative behaviour, the road ahead for ADA and other digital assets may be uncertain.

However, some industry insiders remain cautiously optimistic about Cardano’s long-term potential despite the current market cap drop. Charles Hoskinson, the founder of Cardano and CEO of IOHK, recently tweeted, “Market cycles are nothing new. While short-term volatility is always challenging, we remain focused on the long-term vision of Cardano as a robust and scalable platform.”

The Cardano market cap drop marks a pivotal moment for the asset, as it falls out of the top 10 cryptocurrencies by market capitalization. While the immediate outlook is uncertain, with significant price-DAA divergence and increased speculative activity contributing to the market cap drop, the long-term prospects for ADA will depend on how well it can navigate these challenges. The coming weeks will be crucial for Cardano’s future in the highly competitive world of cryptocurrency.

As the Cardano market cap drop continues to evolve, the crypto community will be watching closely to see whether ADA can regain its footing or if this marks the beginning of a more prolonged decline. The Bit Gazette has the latest crypto news and expert analysis.