Cardano DeFi Flourishes Despite SEC Classification as Security, ADA Holders Dumping Holdings

Picture Source: BeInCrypto

Despite the Securities and Exchange Commission (SEC) designating Cardano’s native cryptocurrency ADA as a security, the decentralized finance (DeFi) activity on the blockchain has been thriving. The total value of assets locked (TVL) on Cardano has reached a record high, indicating the growing popularity of decentralized applications built on the network. However, many ADA holders have been selling their holdings at a loss, potentially influenced by the SEC’s classification and the struggles in ADA’s price performance.

Cardano DeFi Activities Thrive:

Since the start of the year, Cardano has experienced a significant increase in decentralized finance activity, with more traders utilizing DeFi applications on the blockchain. The top 10 protocols on Cardano have witnessed double-digit growth over the past month, demonstrating the expanding ecosystem. Moreover, the presence of over 1000 Plutus V1 smart contracts in 2023 highlights the surge in activity on the Cardano network.

ADA Holders Selling at a Loss as Price Struggles:

Recent data from blockchain analytics firm Santiment reveals that a considerable amount of ADA was sold at a loss in the past week, following a period of profit-taking by investors. Notably, ADA experienced high sales at lower prices, leading to a substantial number of holders being at a loss. IntoTheBlock data further supports this, indicating that almost 90% of ADA holders are currently selling their holdings below their initial investment.

SEC Labeling and Market Sentiments:

The SEC’s decision to classify ADA as a security in June has potentially influenced some traders’ decisions to sell their holdings. Despite the Cardano Foundation disputing this classification, the labeling appears to have impacted market sentiments surrounding the asset. The resulting uncertainty and regulatory concerns may have contributed to the downward pressure on ADA’s price.

ADA’s Struggling Price Performance:

In addition to the SEC labeling, ADA has faced price struggles over the past several months. The cryptocurrency reached a two-year low of $0.23 after the authorities classified it as a security. This price decline has hindered Cardano’s TVL in dollars, which has remained below $200 million since peaking at $326 million in March 2022, despite the increasing amount of ADA locked within the ecosystem.

Current ADA Status:

As of the latest data from BeInCrypto, ADA is currently trading at $0.286, reflecting a 2.6% increase over the past 24 hours. However, the cryptocurrency’s value is down by approximately 40% over the past year, further indicating the challenges it has faced in maintaining its price stability and investor confidence.

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Despite the SEC’s designation of ADA as a security and the struggles in its price performance, Cardano’s DeFi activity has seen remarkable growth. The increasing TVL and the expansion of protocols on the network illustrate the enduring interest in decentralized applications built on Cardano. Nevertheless, ADA holders have been selling their holdings at a loss, likely influenced by the SEC classification and the overall market sentiment surrounding the asset. As Cardano continues to navigate these challenges, its ability to adapt, innovate, and address regulatory concerns will play a crucial role in shaping its future trajectory.

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