Cardano’s Valuation Faces Scrutiny Amid Usage Concerns

Cardano CRYPTO000ADA

As 2025 draws to a close, Cardano (ADA) finds itself under intense market scrutiny. The cryptocurrency's price has retreated, prompting a central debate among investors: does its multi-billion dollar market capitalization still align with the network's actual utility? This pressure has intensified following pointed industry criticism highlighting the growing disconnect between ADA's price and its on-chain activity.

From a technical perspective, the short-term outlook remains challenging. ADA has struggled to maintain a foothold above $0.37 following a broader crypto market correction and Bitcoin's rejection near the $90,500 resistance level.

Currently trading around $0.35, the price hovers just above its recent annual low and remains well below the 50-day moving average of $0.42. The token has shed approximately 15% over the past 30 days. Its Relative Strength Index (RSI) sits at 32.5, indicating weakened conditions that are not yet severely oversold.

Notably, trading volume has stayed elevated despite the price decline. Market analysts interpret this as a sign of position unwinding rather than accumulation, a pattern consistent with the prevailing cautious sentiment.

The "Utility Gap": A Prominent Critique

This week, commentary from Galaxy Digital CEO Mike Novogratz has significantly shaped the discourse. He argued that established projects like Cardano and XRP must move beyond "narrative-driven hype cycles" and substantiate their hefty valuations with demonstrable, real-world use.

His critique centers on key on-chain metrics:

• Approximately 19,000 daily active addresses on the Cardano network
• User figures notably lower than competitors such as Solana
• A Total Value Locked (TVL) in DeFi protocols of around $325 million
• A clear gap compared to larger platforms like Ethereum and Solana

This divergence between market capitalization and network utilization is what critics label the "Utility Gap." The concern is that future market valuations will increasingly prioritize concrete revenue generation and user activity over pure speculative future potential. For ADA, which has already lost about half its value this year, this creates an uncomfortable backdrop.

A Bright Spot: The Midnight Ecosystem

The outlook within the Cardano universe is not entirely bleak, however. Midnight, a privacy-focused partner chain launched in December, is generating positive attention.

The platform, which focuses on privacy-smart-contracts, quickly gained industry notice. Ripple CTO David Schwartz publicly acknowledged the Midnight protocol in late December, a signal that the technology is being recognized beyond Cardano's core community.

Interestingly, the Midnight token (NIGHT) is performing markedly better than ADA. It recently advanced to trade around $0.095, supported by an RSI near 66. This suggests sustained buying interest in this specific niche—a stark contrast to the weak primary token and an indication that specialized solutions within the Cardano ecosystem can attract demand.

Governance, Communication, and Strategic Direction

Significant developments are also occurring in governance and communication. Founder Charles Hoskinson announced he will leave the platform X (formerly Twitter) by month's end, shifting his primary communication channels to Discord and YouTube. This decision follows a public debate with the Canton Network concerning Web3 concepts.

Concurrently, the long-standing "Genesis-ADA" issue has been formally resolved. An audit report cleared Input Output Global (IOG) regarding its handling of pre-sale vouchers, addressing a persistent trust concern from the project's perspective.

Strategically, the focus is shifting toward 2026. A core element of the roadmap is the Leios upgrade, designed to enhance scalability and strengthen bridges to the Bitcoin network. Successful implementation could potentially generate the very usage and revenue streams that institutional critics currently find lacking.

Market Outlook and Key Levels

In the broader market environment, risk assets are not uniformly weak: the S&P 500 continues to set new records above 6,920 points, and the US Dollar Index (DXY) fluctuates near 98. Yet, more established altcoins like ADA have so far gained little from this risk appetite.

For Cardano, the immediate technical focus is on support near the $0.35 level. A sustained break below this zone could, from a chart perspective, open a path toward price regions last seen in mid-year. Conversely, a sustainable recovery will require more than a simple technical bounce. The decisive factor will be whether improvements in on-chain metrics, DeFi volume, and progress on the 2026 roadmap can meaningfully narrow the gap between Cardano's valuation and its tangible utility.