Cardano Price at Risk as NIGHT Token Plunges After Midnight Launch

Cardano price rose for three consecutive days, reaching its highest level since December 4 as market participants focused on the Midnight mainnet launch.

ADA token price rose to $0.4441, slightly higher from this month’s low of $0.3718. Still, there is a risk that the token will retreat as NIGHT plunges by 65% on the first day.

NIGHT Token Price Crashed After Midnight Launch

Cardano has been in the spotlight this week as investors focused on the Midnight network launch. Midnight is a new Cardano sidechain that uses zero-knowledge (ZK) technology to ensure that transactions in the network are private.

Charles Hoskinson and the team behind it believe that the network will be a game-changer. For one, they expect that Midnight will attract developers and assets, solving a challenge that Cardano has had for many years.

Cardano, which has been around for almost a decade, has a limited number of applications and less than $300 million in total value locked (TVL). It also has no partnership with one of the top oracle networks in industry, like Chainlink and RedStone. It has prevented developers from building on it.

Therefore, Hoskinson expects that Midnight will have more developers and assets, which will be categorized as Cardano assets.

However, the main risk is that the NIGHT token has crashed, a day before participants in the Glacier airdrop and the scavenger mine start claiming their tokens. Data compiled by CoinMarketCap shows that the NIGHT token plunged by nearly 70% shortly after launch.

It was trading at $0.035000, down sharply from a high of $0.1190. That erased its market capitalization from over $1.3 billion to $582 million at press time.

The crash is notable because Cardano holders received most of the allocation during the Glacier airdrop and the scavenger mine. These recipients will start receiving their tokens on December 10, with the next three thaws happening in March, June, and September next year.

With the NIGHT token crashing, chances are that most recipients will start selling their tokens once the redemption period happens.

Midnight May Not Boost Cardano Network

In addition to the ongoing NIGHT token crash, there is a risk that the Midnight launch may not boost Cardano’s network as Charles Hoskinson expects. The main reason for this is that most of the recently launched layer-2 and layer-1 chains have struggled to attract users in the long term.

For example, Plasma, a stablecoin focused chain that launched a few months ago has seen the total value locked in the ecosystem plunge from $11 billion in September to the current $5.2 billion.

Similarly, Hyperliquid’s Layer 1 network has seen the TVL plunge from $8.2 billion in September to $3.2 billion.

Linea and Scroll, which are both zero-knowledge networks have also struggled to maintain their assets. The total value locked in Linea has dropped from $2.82 billion in October to $410 million. Scroll’s assets have also moved from $1.2 billion in October last year to $471 million today.

Cardano Price Technical Analysis

The daily timeframe chart shows that the ADA price has been in a downward spiral over the past few months. It fell from a high of $1.0150 in August to the current $0.4490.

Cardano price has plunged below all moving averages, and the crucial support level at $0.51130. It’s the lower side of the inverted cup-and-handle pattern. This pattern is one of the most common bearish continuation signs in technical analysis.

Cardano price remains below all moving averages, while the Supertrend indicator has turned red.

Therefore, the most likely ADA price prediction is where it rises and retests the resistance at $0.5113, and then resumes the downtrend, potentially to the key support level at $0.2769, its lowest level in August last year.