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Assessing How Cardano (ADA) Price Will Perform in February 2023

3 mins
Updated by Ali Martinez
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In Brief

  • Cardano has surged 63% this year, outperforming all of the top 5 Layer-1 tokens.
  • DeFi TVL on the smart contract blockchain has doubled since Jan. 1, 2023.
  • ADA whales seem primed to HODL as derivatives traders also increase long positions.
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Cardano is a proof-of-stake layer-1 network coveted for its scalability and low transaction fees. ADA price has delivered an impressive year-to-date performance of 63%. Within the same period, its the total value locked (TVL) on the network surpassed $100 million. 

Quite expectedly, this strong January performance has attracted a lot of whale attention. But how high can Cardano go in February 2023? Exploring crucial on-chain data, here is an objective, in-depth analysis of how ADA price will likely perform this month. 

Cardano Strong DeFi TVL Performance Flashes Bullish Signal For ADA

Cardano’s financial performance metrics for last month were predominantly positive. Increased activity across various ADA-native DeFi protocols has culminated in a 63% price increase. 

The network’s TVL has surged by 100% since the beginning of the year. The most significant increase in ADA price occurred in the first week of February after Cardano TVL witnessed an uptick amid mildly-negative sentiment in the Ethereum community

Cardano TVL Chart
Cardano 30-day TVL performance. Source: DeFillama

TVL measures the volume of cryptocurrency locked in a smart contract. An increase in TVL often leads to a boost in the price of the native Layer-1 token

Derivative Markets Singal Massive Buy Pressure Due to Ethereum’s “Shanghai Upgrade” Uncertainty

Evidently, Cardano price has benefited from the flat ETH sentiment, largely driven by investors front-running the “Shanghai upgrade.” ADA’s aggregate open interest across top exchanges rose from $160.98 million to a peak of $195.32 million between Jan. 11 to Feb. 2, 2023.  

CARDANO OPEN INTEREST CHART
Cardano 30-day Aggregate Open-Interest. Source: CoinAnalyze.net  

Open interest for ADA witnessed a spike around Jan. 11, when the Ethereum developer community announced that the Shanghai upgrade, originally scheduled for Sep. 2023, is now slated for Mar. 2023. An uptick in this metric is often considered a bullish signal indicating that an increased volume of derivatives contracts are being created.

Notably to data from Dune Analytics shows almost $19 billion worth of ETH tokens is set to be un-staked. Hence, many investors have turned to the Cardano ecosystem for yield-farming opportunities in the ongoing bull run.

The recent Cardano TVL and open interest growth is expected to translate into more gains for the native ADA token in the coming weeks. 

Ethereum Net-Deflationary Supply Could halt Cardano Rally 

Cardano has been soaring in 2023 partly because of the uncertainty surrounding the Ethereum ecosystem. As the “Shanghai upgrade,” which will finally enable Ethereum PoS validators to withdraw their funds, looms, investors are wary of a potential 11 million ETH dump. 

Ethereum PoS is expected to compete fiercely with Cardano and other Layer-1 PoS networks. Hence, it is worth keeping an eye out for Ethereum’s recent net-deflationary supply trend thanks to the newly-enabled burn mechanism. 

Ethereum 30-day Net-Supply. Source: Ultra.money

According to on-chain data provided by Ultrasound Money, Ethereum closed January in a -0.13% net-deflationary position. If the heightened NFT activity on OpenSea is sustained, Ethereum could close out in a net-negative supply position for the second consecutive month. 

This may be enough to incentivize node validators to HOLD their newly unstaked ETH and likely lead to a gradual Cardano correction. 

How High Can ADA price Go in February 2023?

To a large extent, how high Cardano performs in February will depend on investor outlook about the rival Ethereum proof-of-stake network and its DeFi TVL trend. 

Cardano IOMAP chart
Cardano Wallets IOMAP distribution. Source: IntoTheBlock

In terms of potential short-term price movements, In/Out of Money Around Price (IOMAP) data by IntoTheBlock shows that Cardano has minimal wiggle room. ADA will likely have strong support at $0.3882, but it will face strong resistance when it tries to break above $0.445. 

The IOMAP helps investors to identify potential large buy or sell points by comparing the average purchase price of tokens held in specific wallets to the current market price.

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Disclaimer

In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.

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Ibrahim Ajibade
Ibrahim Ajibade Ademolawa is an experienced On-chain research analyst who began his career in Commercial Banking. He has worked with several Web3 startups and financial institutions —analyzing technical concepts and spectacular events that link the DeFi and TradFi worlds. He holds a Bachelors’ Degree in Economics and is currently pursuing an MSc. in Blockchain & Distributed Ledger Technologies.
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