Cardano’s price journey in April 2024 was marked by significant volatility, reflecting the cautious stance of crypto investors amid Bitcoin’s halving. Mega-cap altcoins like ADA experienced dwindling demand throughout the month.

Despite the community’s optimism surrounding the Ouroboros Genesis rollout and plans for a hardfork aimed at enhancing P2P transactions, bulls remained on the sidelines. ADA’s price dropped to $0.43 by May 1, its lowest since April 13.

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DeFi Withdrawals Amplify Bearish Sentiment

The failure of the Ouroboros Genesis rollout to stimulate demand for ADA hinted at a deeper underlying bearish catalyst. On-chain data reveals that withdrawals from Cardano’s DeFi ecosystems have intensified negative price action.

Related article: Cardano’s ADA Plummets: Analyzing Bearish Signals

The total value locked (TVL) in Cardano’s DeFi ecosystem witnessed a significant decline, dropping from 708.8 million ADA on March 1 to 589.6 million ADA by May 1, 2024. This withdrawal of 119.2 million ADA in just 60 days has added approximately $50 million to the short-term market supply.

_{^{Cardano ADA TVL 60 day trend| DeFillama}}

A prolonged decline in TVL amplifies bearish pressure on ADA for two primary reasons. Firstly, withdrawals from DeFi protocols reduce short-term market supply, potentially leading to increased selling pressure. Secondly, the decrease in TVL indicates reduced liquidity and activity within the Cardano DeFi ecosystem, signaling waning investor confidence.

Bearish Forecast Looms

With the significant withdrawal of ADA from DeFi smart contracts, analysts forecast a potential drop in Cardano’s price to as low as $0.30 in the coming weeks. However, the presence of a sizable cluster of holders who acquired ADA at an average price of $0.39 could offer short-term support at $0.40.

Related article: Cardano (ADA) Witnessing Surge in Large Transactions Amidst Growing Investor Confidence

Despite the bearish outlook, there is a glimmer of hope for Cardano bulls. If they manage to trigger a decisive rebound above $0.50, the trajectory of ADA’s price could once again turn positive.

As Cardano navigates through the challenges posed by volatile market conditions and declining TVL in its DeFi ecosystem, the coming weeks will be crucial in determining its price trajectory. While bears eye a potential drop to $0.30, bulls remain hopeful for a rebound above $0.50.