Cardano has not had a nice week; its native token, ADA, is down 5% over the past seven days. While the cryptocurrency market has fallen this week, ADA has been struck harder than most. What can be the reason for this rapid drop in price?
Crypto Market Influence
The market as a whole most certainly contributed to ADA’s 5% decline. This week, the cryptocurrency market as a whole has been in a downward trend, and ADA hasn’t been able to break the trend. The market has been adversely affected by some negative news. The most important of these is the approaching bankruptcy of Silvergate. The parent company of the bank that provides services for digital currency, Silvergate Bank, Silvergate Capital Corporation, announced on March 1 that it is assessing its ability to continue operations this year. The cryptocurrency bank also disclosed that it suffered $948 million in losses in the final quarter of 2022.
Coinbase Global, Galaxy Digital, and Paxos Trust, three cryptocurrency companies, subsequently declared they would no longer accept or start payments through Silvergate Capital Corporation. This kind of news breeds great uncertainty, which might lead to investors leaving the market. So, it is unsurprising that ADA has been declining along with the cryptocurrency market recently.
Also, some Cardano-specific news has emerged that may impact the price. One big piece of news is the proposed dependent staking scheme issue. Charles Hoskinson, the founder of Cardano, created this proposal to comply with legal staking requirements.
Hoskinson had advised putting this measure in place since it complies with KYC regulations for companies that offer crypto-staking services. Yet, his calls have met criticism from neighborhood people. They consider that a de facto method of centralizing the Cardano blockchain by introducing KYC.
In reaction to criticism, Hoskinson claimed that his opponents were polarised and misrepresented his proposed model. He highlighted that contingency staking was intended for private pools and did not require Verification on the blockchain. Yet, the debate continues, and the plan has led to negative feelings regarding the Cardano environment.
Cardano Price Analysis
On its price chart, ADA is now consolidating. ADA has increased slightly over the previous day and is currently trading at $0.3418. As long as the altcoin trades above a specific price zone, bulls still have a chance to turn the price action around.
Most cryptocurrencies have moved downward on their separate charts due to BTC losing its bullish momentum over the past several days and moving into the $23,000 region. Cardano is now experiencing negative sentiment, and in the following days, the altcoin may test the $0.30 support level.