As far as cryptocurrencies go, Cardano (CCC:ADA-USD) and ADA token continue to be a top choice for crypto enthusiasts. At the time of writing, Cardano sits in sixth place in terms of market capitalization among all cryptocurrencies, with a total market capitalization of $37.6 billion.
However, investors appear to be honing in on altcoins more than ever as the price action for altcoins diverges from the leadership Bitcoin and Ethereum had previously provided.
Investors now seem eager to search for the next big cryptocurrency. And there are certainly a few things to like about Cardano in this regard.
Here’s what’s been driving Cardano, and why investors appear to be intrigued by this alt coin.
Coinbase Listing a Big Deal for Cardano
The recent Coinbase (NYSE:COIN) IPO provided quite an incredible boost for Cardano this month. Yes, cryptocurrencies remain broadly down as sentiment has slipped somewhat from the anticipation of this IPO. However, the pop this event provided for the sector was a rising tide that lifted all boats.
That said, Cardano’s ADA token has also received a boost of its own due to its announced listing on Coinbase Pro earlier in March. The cachet this listing provides is something investors have pointed to as a key driver of Cardano’s value in recent months. These combined catalysts sent ADA on an impressive ride in recent weeks.
Cardano reached a high of $1.56 on April 14, the day of the Coinbase IPO. Since then, shares have waned somewhat. Today, investors can pick up ADA for a $1.25 or so.
Now, that might seem like a substantial drop in a short amount of time. However, investors need to keep in mind that this cryptocurrency has been a 10-bagger for investors since the beginning of the year.
It appears some of the “Coinbase effect” is wearing off right now for altcoins in general. However, there’s one catalyst investors have pointed to that could lead to outperformance for ADA over the longer term.
Cardano the Environmentally-Friendly Option?
Perhaps one of the biggest slights against Bitcoin is the concern environmentalists have with how much power the Bitcoin blockchain uses. Mining for Bitcoins right now uses a tremendous amount of energy.
Well, according to a University of Cambridge study, Bitcoin mining consumes roughly 0.6% of global energy consumption. That’s pretty incredible when one thinks about it.
Given the global population of roughly 7.9 billion people, Bitcoin uses more energy than 47 million people. It’s already using more energy than Argentina and many other small nations.
As most investors know, electricity production today is relatively dirty, from a carbon emissions standpoint. About 60% of electricity production in the U.S. comes from fossil fuels. Nuclear and renewable sources make up the remaining 40% (in a rough 20-20 split).
These, many ESG-oriented environmentally-friendly crypto investors may be more attuned to Cardano.
The company operates a proof-of-stake blockchain platform.
Cardano doesn’t use proof-of-work (or mining) to verify transactions on its blockchain. Large Cardano holders can stake their holdings to validate a block in the blockchain. This system offers similar rewards to mining but is much more efficient from an energy usage standpoint.
While the Coinbase-fever appears to be wearing off in the crypto space in recent weeks, altcoins appear relatively stable at these levels. Those banking on another breakout may indeed choose Cardano as a top crypto pick right now.
Indeed, one of the big detractors for me from the Bitcoin discussion is the energy consumption issue. Cardano’s focus on its proof-of-stake model is intriguing to me. I think if this model is proven to be as safe (or safer) than Bitcoin’s proof-of-work model, Cardano could be viewed as a leader in this regard.
Ethereum is planning a shift to a proof-of-stake model, so perhaps investors will shift their focus over time. But for now, Cardano’s a crypto choice that could gain some traction.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article.