Do you have Cardano (CCC:ADA-USD) in your portfolio? If so, then you’re probably sitting pretty. However, Cardano fans should bear in mind that not every bull run is meant to last forever.
Don’t get me wrong — it’s easy to get caught up in the hype. You might hear people on social media buzzing about “alt season” and the emergence of lower-priced digital assets.
Cardano would certainly fall into that category. But before you back up the truck and buy tons of Cardano, consider having a strategy first.
As we’ll see, there are reasons to ride out the volatility. My main concern is that some folks are so accustomed to the upside, that they won’t know how to handle the downside when it happens.
What’s Special About Cardano?
As a project, Cardano was founded in 2015 by Charles Hoskinson. As a tradable token, Cardano wasn’t launched until 2017.
That wasn’t exactly the best possible timing, as the “crypto winter” bear market started in early 2018.
Still, the token and the project are based on an interesting concept: ensuring that the owners participate in the operation of the network.
We could say that Cardano is “by the people, for the people.”
For instance, as InvestorPlace contributor Muslim Farooque points out, people “who hold the ADA token can vote for any proposed changes in the software.”
Moreover, Cardano really takes advantage of smart contract technology. And as smart contracts are deployed on the Cardano network, this will facilitate the support of decentralized apps, or dApps.
With all of that, the Cardano platform can achieve the goal of redistributing power from unaccountable entities to individuals.
I know it sounds ambitious, but maybe this little coin can help make the global financial system more financially transparent and secure.
In case I didn’t get the message across already, the Cardano project is something that the participants can feel good about.
Here’s an example of what I’m talking about.
This technology will enable the system to:
- identify students and teachers
- perform digital grade verification
- enable remote monitoring of school performance
- “create a tamper-proof” system for recording information related to 5 million students across 3,500 schools
Hopefully, all of this will allow the students to take ownership over their academic achievements, while reducing or eliminating third-party intermediaries.
At the same time, this technology could potentially remove costly inefficiencies from the process — truly a win-win for the stakeholders.
Feeling Good, Feeling Cautious
When it comes to Cardano, I want you to feed good about your investment. That’s why I pointed out some of the project’s best features.
At the same time, I hope that you’ll exercise caution as a trader. The ADA price has absolutely gone parabolic, and there’s no need to get greedy now.
Personally, I feel that the best strategy is to wait for the next dip of 10% or more before jumping into the trade.
A 10% price retracement might sound like a lot to ask for. But we’re not talking about a slow-moving asset here.
From February through April, ADA declined by 10% or more on several occasions. It’s just par for the course.
Being patient and waiting for the next pullback could help prevent you from buying at the top and being a “bag holder.”
The Bottom Line
If that sounds like a public service announcement, then I’m OK with that. My goal is to offer a sensible approach as euphoria sets into the cryptocurrency market.
There’s plenty of money to be made in Cardano, and you can feel good about the project. Just don’t overpay, as the next pullback might be right around the corner.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
David Moadel has provided compelling content — and crossed the occasional line — on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.