On Tuesday, Cardano (ADA) rose over 25% to tap $0.68, becoming the biggest gainer in the top-20 coins ranking based on data from CoinMarketCap.
ADA is the native token for Cardano, a proof of stake layer-1 blockchain, and is termed an “Ethereum killer” for its stiff competition against Ethereum. ADA also managed to take out Ripple’s XRP, becoming the sixth-largest cryptocurrency with a market cap of $20.5B. The coin’s trading volume also shot up 275% from the previous day to sit at just around $2.4B.
What Is Driving ADA’s Growth?
Technically, ADA’s sprint on Tuesday was justified on various fronts. First, the coin’s daily and weekly Relative Strength Indicators have been in the oversold region for over a week now. Investors interpreted this as an opportunity to accumulate.
As ZyCrypto reported, whales have been adding to their stash around the $0.40 area in record numbers with the amount of new ADA wallets surging remarkably. It is also important to note that the $0.40 area had been a multi-year support/resistance zone. It is thus expected that a lot of buy orders had been placed around there, and had been triggered with prices declining.
That said, the primary reason for ADA’s strength has however been an increase in DeFi activity on the network. Following the launch of its Alonzo upgrade in August 2021, the layer-1 blockchain has been flaring with activity with the coin surging by almost 120% in less than 30 days after the launch. Since the upgrade, over 94 major projects have already been built on the network according to Cardano showcase. The total number of projects building on Cardano however is to the north of 900 according to IOHK.
In the lead-up to Tuesday’s price surge, most of these projects showed an uptick in inactivity. During the rise, the Total Value Locked (TVL) on Cardano grew by over 30% based on data by DefiLlama, bringing the TVL on Cardano to $195 million compared to Monday’s $149 million. According to data from Messari, the total transaction volume on Cardano also rose steadily from $9.24 billion on Sunday, May 29th to $19.35 billion on Wednesday.
Furthermore, investors are bullish on the upcoming Vasil upgrade with whales getting in before the hype. The upgrade, which is likely to launch before Ethereum’s highly anticipated merge seeks to improve Plutus, the Cardano smart contract platform by allowing greater speed and scalability.
Apart from the Vasil upgrade, Cardano users are optimistic about the Djed token launch. Djed will be Cardano’s native stablecoin and will be powered by COTI, a well-integrated fintech project on the Cardano network.
As of writing, ADA is trading at $0.60 after a 3.36% decline in the past 24 hours.