Cardano price prediction: here’s why the ADA price recoiled

By: Crispus Nyaga
Crispus Nyaga
Crispus is an active trader, where he is followed and copied at Capital.com. He lives in Nairobi with his… read more.
on Jan 21, 2022
  • The Cardano price has been under intense pressure lately.
  • ADA investors have lost over $50 billion in value.
  • We explain why the coin declined sharply in the overnight session.

The Cardano (ADA/USD) price suffered a harsh reversal in the overnight session. After holding steady on Thursday, the ADA price declined sharply and reached its lowest level since January 2022. The coin has dropped in the past four straight days and is down by 25% from its highest level during the weekend.

Why did Cardano price retreat?

Cardano is one of the biggest altcoins in the world. It is a popular platform among retail investors who love it because of its proof-of-stake technology. Today, Cardano has a total market capitalization of over $40 billion, making it the eighth biggest coin.

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The ADA price has been in a deep sell-off in the past few months. Indeed, its investors have lost over $50 billion in value since the coin was worth more than $90 billion at its peak.

There are several reasons why this crash has happened. First, investors are worried about the slow uptake of the network after the Alonzo hard fork. This fork introduced smart contracts technology, making it a viable alternative to Ethereum. However, a few months after launch, the number of projects using the technology is a bit low.

Fed and regulations

Second, the Cardano price has been under pressure because of the actions by the Federal Reserve. The bank has started tightening and there is a likelihood that it wil implement four rate hikes this year. Besides, economic numbers are highly supportive. The American inflation rate has jumped sharply while the unemployment rate has also retreated.

Data published on Thursday showed that the housing market is doing well. For example, existing home sales jumped by more than 8% in 2021, the highest growth rate in decades. Building permits and housing starts have also risen.

Third, and most importantly, the ADA price retreated sharply after the latest regulatory news. On Thirsday, it was reported that Russia was considering banning cryptocurrencies. This is a notable development because of the role the country plays in the industry. It is still unclear whether the ban will take effect.

Other countries have also hinted about a crackdown in the sector. For example, in the European Union, a regulator recommended banning of cryptocurrency mining.

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