Cardano’s volatility (ada price usd) is determined by market cycles, technological advancements, and external events. Its historical record and present trend show deep aspects of price volatility. ADA’s annual volatility (standard deviation) from September 2021 to August 2024 was 78%, higher than Bitcoin’s (45%) and Ethereum’s (62%), but lower than Solana’s (95%). For instance, in 2021, the price of ADA increased from $0.35 to $3.10 (786% growth), and then dropped to $0.24 (92% decline) during the crypto winter of 2022. The peak drawdown was greater than that of traditional assets (65% for Bitcoin and 25% for the S&P 500 index). In 2024, with the trial of the Hydra expansion plan underway, the 30-day annualized ada price usd volatility declined from 85% during the first quarter to 60% by the third quarter, yet remained above that of typical stocks (the Nasdaq index volatility over the same time frame was 18%).
Short-term fluctuations are amplified by market liquidity and trading activities. In June 2024, ADA’s daily average turnover was 1.4 billion US dollars, of which 42% (600 million US dollars worth of futures contracts and 180 million US dollars worth of options contracts) were derivatives. CoinGlass data show that the open interest high in ADA futures was over 2 billion US dollars during the week, with a median leverage of 12 times, leading to frequent instances of the daily price action being over 15%. For instance, on 12 July 2024, driven by the unexpected US CPI release, the ada price usd decreased from $0.92 to $0.75 within an hour (by 18.5%), and then increased to $0.88 (with volatility of 17.3%) after learning about the European Central Bank’s interest rate cut. The margin calls’ volume in 24 hours was 120 million US dollars, and the positions were long at 67%.
Structural shocks have been caused by technological advancements and environmental occurrences. In the 2023 Alonzo smart contract upgrade, the ADA price went up by 58% within two weeks. However, after the upgrade, due to the non-met expectation of the deployment progress of the DApp, the price fell by 32%. In May 2024, the farm supply chain project of Cardano in collaboration with the Ethiopian government was launched, boosting ADA by 25% over the course of one week. Nevertheless, due to the delay in the project data being recorded on the blockchain (with an average daily rate of transactions only reaching 60% of the target rate), the price declined by 12% subsequently. In addition, on-chain staking ratio changes directly affect selling pressure – as the ratio of ADA staked decreased from 74% to 68% in 2024, net inflow onto the exchange doubled by 80 million (approx. 72 million US dollars) within just one day alone, resulting in a general decrease by 14% in ada price usd over three days.
Macroscopic shocks and regulatory policies increase long-term variance. After being regulated by the EU’s Crypto Markets Act (MiCA) in 2024, ADA was included as a compliant asset, boosting the liquidity of its euro trading pair (ADA/EUR) by 47% and reducing its price volatility from 70% per quarter to 55%. But when the Federal Reserve raised interest rates by 50 basis points in September 2024, the correlation coefficient between the ada price usd and the Nasdaq index rose from 0.35 to 0.62, with a one-day decline of 12%, much higher than that of gold (3%) and US Treasuries (2%). Additionally, in the event of postponing the stablecoin partnership of Cardano Foundation and Central Bank of Brazil in 2025, there would be a tendency to push prices downward on the market (18% chance to drop).
On-chain position composition and volatility measures identify the strength to withstand volatility. As of August 2024, 76% of ADA addresses have held onto their coins for more than one year with an average floating profit rate of 105%. Long-term turnover is just 8% (12% for Bitcoin), partially countering the influence of short-term speculative trading. However, the exchange reserve ratio still represents 9% (approximately 3.4 billion ADA) and can amplify volatility in extreme market conditions. For instance, in October 2024, a centralized exchange was hacked (loss of 230 million US dollars). Although it had nothing to do with Cardano, the ada price usd still dipped by 9% in one day due to fear in the market. The maturity of the DApp ecosystem brings down volatility – when the DeFi locked value (TVL) went up from 1 billion to 2 billion US dollars, the 30-day volatility of ADA declined by 22%, since the aggregation of funds created market stability.
Summing up, ada price usd volatility is jointly driven by high-leverage trading, the tech iteration cycle and external shocks. Though its short-term volatility (60%-85%) is still higher than that of traditional assets, the growth of the ecosystem and the compliance process are narrowing the price spread. Bloomberg Crypto Volatility Index (CVOL) puts the estimated annualized volatility of ADA in 2025 at reaching 50%-65% and into the band of Ethereum. As the long-term holders’ ratio is higher than 80%, it will contribute further to increasing price stability.