Cardano’s Biggest Upgrade Yet: Why New User Growth is Stalling

• Cardano’s wallet growth has stagnated at around 4.45 million for over a year despite major network upgrades.
• The number of ADA holders surged during the last bull cycle but has plateaued.

According to the latest data from IntoTheBlock, Cardano (ADA) has seen little growth in the number of wallets holding its tokens, remaining around 4.45 million for over a year. Although the network is gearing up for its biggest technical upgrade, the number of ADA holding addresses has stagnated since 2023.

During the last bull cycle, Cardano saw a surge in ADA holders due to its marketing as a competitor to Ethereum. ADA’s wallets increased from less than 1 million in January 2021 to nearly 4 million in September 2021. This growth was in tandem with the increase in ADA’s market capitalization, which hit $3.1 in September 2021. 

However, after reaching its all-time high, the value of ADA started to drop, while the number of Cardano wallets increased but at a slower rate. This growth has stalled since it reached 4.45 million in 2023. 

Development Activity Plummets on Cardano Network

The development activity of Cardano has been seen to have reduced drastically. Token Terminal reported that Cardano’s code commits were decreased by 74. 5% in August 2024 to stand at 338 from 1,330 in July. This reduction also involves a decrease of almost 9% in the core developers’ count, and they are now 95. 

The current trend of reduced development activity can be noticed even after the recent Chang hard fork, which was aimed at improving the synchronization between the nodes. On the other hand, Ethereum has recorded a 14% rise in code commits in the last month, with the total number of commits standing at 1,110. 

Cardano’s stagnation in wallet growth does not affect the users’ engagement and transactional activity. According to IntoTheBlock, Cardano has a daily on-chain volume of $7. 2 billion, which is higher than many other networks. This high transaction volume leads to a low NVT ratio of 2. 62, which suggests that ADA might be undervalued. 

Also, Cardano’s HODLing sentiment is high. According to data provided, nearly 40% of ADA has not been moved in the last year and is currently stuck in dormant wallets. This high level of long-term holding shows that investors remain committed to the Cardano network even with low rates of new users. 

ADA Price Struggles but Shows Potential Recovery Signs

ADA has not been spared either, as its price has also been affected. ADA has displayed signs of recovering from the 23% decline it had witnessed in the last 30 days on both the weekly and daily charts. However, ADA is still around 90% from its all-time high of $3. The price stood above $0.70 in March and has since dropped to around $0.30 in August, thus experiencing a decline of nearly 60%. 

Crypto analyst Bitcoinsensus has pointed out some recovery signals, including a bullish pennant pattern on the charts. This pattern is usually a sign of a consolidation phase, which may be followed by a breakout. 

$ADA has experienced a significant decline, dropping over 58% from its peak on March 13, 2024. However, it is currently forming a bullish pennant, and there’s potential for a bullish reversal as the RSI on the 3-day chart shows hidden bullish divergence between the last two price… pic.twitter.com/Y5yPGTEnrO

— Bitcoinsensus (@Bitcoinsensus) August 13, 2024