Hold Cardano and Do Not Trade

Cardano (CCC:ADA-USD) has became an important “altcoin” — a cryptocurrency other than Bitcoin (CCC:BTC-USD), which was the very first cryptocurrency.

Cardano (ADA) token with blue and orange digital background.

Source: Shutterstock

ADA is the native currency of the Cardano blockchain platform. Year-to-date (YTD), ADA is up over 630% and its price is currently shy of $1.30. ADA’s market capitalization (cap) of $41 billion puts it among the top ten cryptos.

By comparison, YTD, Bitcoin and Ethereum (CCC:ETH-USD) have returned more than 80% and 273%, respectively. And their market caps are over $990 billion and $315 billion. Those readers who wonder how some other Wall Street favorites have done so far this year would be interested to see the following numbers:

  • Apple (NASDAQ:AAPL) — up ~ .3% YTD, market cap is ~ $2.2 trillion;
  • General Motors (NYSE:GM) — up ~ 34.5% YTD, market cap is ~ $80.7 billion;
  • Microsoft (NASDAQ:MSFT) — up ~ 13% YTD, market cap is ~ $1.5 trillion;
  • Nvidia (NASDAQ:NVDA) — up ~ 16% YTD, market cap is ~ $376 billion;
  • Plug Power (NASDAQ:PLUG) — down ~ 16% YTD, market cap is ~ $14 billion;
  • Square (NYSE:SQ) — up ~ 13% YTD, market cap is ~ $116 billion;
  • Tesla (NASDAQ:TSLA) — down ~ 5% YTD, market cap is ~ $645 billion;

Given the juicy returns in altcoins, crypto bulls now wonder if the run-up in Cardano can continue in the rest of the year. Interested investors should remember the crypto space is highly volatile, especially in the short-run.

However, I believe the long-term bull run in Cardano is still in its early days. Thus, ADA’s market cap could easily reach new heights soon. Let’s see why.

Cardano Is A Blockchain Platform 

The Cardano platform was set up in 2015 by Charles Hoskinson, co-founder of Ethereum. It was later released to the public in 2017. Every transaction on the platform is permanently recorded on blockchain. Research by Kursat Aydinli of University of Zurich, Switzerland, cites, Cardano[was “developed by the IOHK Foundation, a technology company specialized in peer-to-peer applications and cryptocurrencies.” The Cardano Foundation acts as the custodian that promotes and standardizes the platform.

Cardano is a Proof-of-Stake (PoS) blockchain. On the other hand, Bitcoin has a more costly Proof-of-Work (PoW) system. Cardano has two main layers: the Cardano Settlement Layer (CSL) and the Cardano Computational Layer (CCL). As a unit of account, CCL is where ADA transactions happen fast and with minimal transaction fees.

CCL is the backbone of blockchain technology, and is where the advanced functions regarding smart contracts happen. Blockchain analysts concur that the Cardano platform could become a leading platform in building smart contracts and creating decentralized applications.

For instance, the group is currently launching a smart contract ability, the Goguen Mainnet, whereby “Goguen adds the ability to build decentralized applications (DApps) on Cardano’s solid foundation of peer-reviewed research and high-assurance development.”

In addition, Charles Hoskinson got investors’ interest when he said that Cardano could soon support NFTs, or non-fungible tokens, which show ownership of virtual or physical assets. On a side note, NFTs have become the latest buzz word and cryptocurrency phenomenon worldwide. If Cardano could indeed become a viable candidate in the NFT space, then the ADA price would reach new highs, possibly sooner than later.

The Bottom Line on ADA

Leadership in the altcoin space is likely to alternate between different names. Given the interest in the technology offered by the platform, I expect the price of Cardano to stay strong. The current momentum could easily push ADA over $1.50 and higher.

But the crypto space is risky, as the technology is still in its infancy. It’s too soon to expect Cardano, or other altcoins, to become part of our daily lives fully. Integration into mainstream will take time and money.

Interested investors should watch the price of Cardano with a view toward buying the dips. They should be ready to hold ADA for the long term without worrying too much about weekly price swings. As a new technology, blockchain, and as a new asset class, altcoins will likely provide increasing opportunities for buy-and-hold investors.

On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all three levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.


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