Cardano: Deteriorating Price
While there’s still much to like about Cardano and many analysts remain bullish on its long-term prospects, the digital coin’s price has fallen 23% in the past month to its current level of just $1.54. ADA-USD has been dragged down with the broader cryptocurrency market. Continued volatility has brought down the price of Bitcoin (CCC:BTC-USD) by from its all-time high of just over $64,000 to its current price of $39,680. Ethereum (CCC:ETH-USD), the second most valuable cryptocurrency, is 42% below is all-time high reached this past spring.
Much of the volatility is due to ongoing crackdowns on cryptocurrencies in China and the threat of regulations in the U.S. With volatility likely to continue in the near-term and no indications that Cardano has reached a bottom, investors may want to wait on the sidelines until they can get a better sense of where ADA-USD is headed and the future direction of the broader market for digital coins and assets.
That said, it is worth pointing out that despite its recent pullback, Cardano remains up 781% year-to-date. ADA-USD was trading at just $0.17 at the start of January. Investors who bought Cardano at the right time should have no complaints.
While the short-term outlook for Cardano remains unclear, the digital coin that was invented in Switzerland in 2017 by the same person who co-founded Ethereum still has long-term potential as one of the more functional and useful cryptocurrencies. The blockchain technology that underpins Cardano is used for what are known as “smart contracts,” those that execute the terms of a contract or a legally binding agreement. This practical function sets ADA-USD apart from thousands of other cryptocurrencies, the majority of which serve no useful purpose.
Because of its functionality, Cardano is classified as a “utility token.” The company’s open-source blockchain is also peer-reviewed by scientists who work in academia as well as by professional computer programmers. Additionally, Cardano’s blockchain technology is used to support non-fungible tokens (NFTs), which have become popular this year with collectors all over the world. Commonly referred to as “digital art,” NFT sales have exploded this year, with some NFTs selling for millions of dollars at auctions. Exposure to NFTs could further boost the price of ADA-USD.
$49 Billion Market Cap
With a current market capitalization of about $49 billion, Cardano remains one of the largest “altcoins”, defined as a cryptocurrency other than Bitcoin, which is the original and largest digital coin. Ether remains the largest altcoin at the moment. However, with its market capitalization, Cardano sits among the top 10 largest cryptocurrencies. Considering there are nearly 10,000 cryptocurrencies now in existence, cracking the top 10 is significant.