Here's What to Expect for Cardano in July

After a brutal decline of 75% in the last 12 months, Cardano (CRYPTO: ADA) might finally get a bounce to take the edge off.

Here's what the historical data suggests about its performance over the next few months.

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Seasonality might temporarily work in this coin's favor

June is nearly uniformly a terrible month for Cardano; it lost value in all but one of the last eight Junes, with a median decline of 23.1%.

On the other hand, over the past eight Julys, Cardano was green in four of them, and saw a median gain of 5.1%. That bounce has always been short-lived, insufficient to restore the damage of June anyway.

August and September have historically been among the coin's weakest months, with nearly all instances of both months seeing the coin's price decline. So even if July cooperates here, the seasonal tailwind is probably going to reverse by August. That means there's probably not an opportunity to buy the dip here.

This chain has bigger problems than a slow summer

Having a history of weak performance during the summer is far less important to investors than the real issues affecting Cardano at the moment.

In June, the network's founder, Charles Hoskinson, posted a blunt video warning of a coming "wave of failures" among Cardano's ecosystem applications, blaming a combination of governance dysfunctions and a crypto bear market that's exerting economic pressure on developers. TapTools, one of Cardano's longest-running analytics platforms, announced it would shut down after four years. The community also voted against hosting the annual Cardano Summit by refusing to release the funds from the treasury to pay for it.

The on-chain data is even less favorable. Cardano's decentralized finance (DeFi) total value locked (TVL) has collapsed to $82 million from $266 million at the start of last July. That means its only major segment that could credibly provide future growth is actually shrinking rather than attracting more capital. Hoskinson has conceded he has no special authority to fix any of it.

At the same time, that issue is symptomatic of the chain's lack of an advantage over competitors in attracting developers and capital to its ecosystem. Though it focuses heavily on good governance practices and peer review of any changes to its technology platform, those things haven't succeeded in getting new users or money onboarded (and then retained) in its lifetime so far. And with no major initiatives on the radar, it's unclear whether there will ever be any catalysts that change that situation.

So, no matter what happens with the price action in July, don't take it as a sign to buy Cardano unless it comes alongside sweeping renovations to the network and its future goals. The odds are good that the ongoing crypto bear market will give investors plenty of opportunities to load up if anything changes.

Alex Carchidi has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.