It has not been a good week for Cardano, as its native token, ADA, is down 5% in the last week. While the crypto market has been on a downward motion this week, ADA has taken a bigger hit than most. What could be causing this sudden price drop?
Crypto Market Influence
It’s likely that the market as a whole has played a role in ADA’s 5% dip. The entire crypto market has been in a downtrend this week, and ADA wasn’t able to buck the trend. There has been some bearish news that has cast a shadow on the market. Top among these is news of Silvergate’s impending bankruptcy. Silvergate Capital Corporation, the parent of the bank that offers digital currency services, Silvergate Bank, said on March 1 that it is evaluating whether it has the capacity to continue operating this year. The crypto bank also revealed that it made losses of $948 million in the last quarter of 2022.
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Subsequently, cryptocurrency firms Coinbase Global, Galaxy Digital, and Paxos Trust announced they would no longer accept or initiate payments through Silvergate Capital Corporation. This type of news creates a lot of uncertainty, which can cause investors to pull out of the market. It is, therefore, not surprising that the crypto market is down taking ADA with it in recent days.
There has also been some news specific to Cardano that could have an effect on the price. One major piece of news is the controversy regarding the proposed dependent staking scheme. Cardano founder Charles Hoskinson developed this proposal to align with regulatory staking standards.
Hoskinson had recommended that businesses that provide crypto-staking services implement this measure as it compiles with KYC standards. However, his calls have received pushback from community members. They believe that is an informal way of implementing KYC on Cardano, making the blockchain centralized.
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In response to criticism, Hoskinson stated that detractors were polarized and depicted his suggested model incorrectly. He clarified that contingency staking does not impose KYC on the blockchain and was targeted toward private pools. Nevertheless, the debate continues, and the proposal has led to negative sentiments regarding the Cardano ecosystem.
Cardano Price Analysis
At the moment, ADA is consolidating on its price chart. In the last 24 hours, ADA is currently up about 1% and trading at $0.3418. Bulls still have a chance to reverse the price action, provided the altcoin manages to trade above a particular price zone.
With BTC losing its bullish strength over the past few days and entering the $23,000 zone, most altcoins have traveled south on their respective charts. The current sentiments surrounding Cardano are negative, and the altcoin could test the $0.30 support levels in the coming days.
Featured image from Economictimes, Charts from TradingView.com