Has Cardano (CCC:ADA-USD) suffered during the crypto crash? Yes, definitely. ADA prices peaked at $2.25 on May 15. Today, July 7, the price is around $1.42. So some poor soul out there is temporarily suffering and has seen around a 37% decline in their position.
Is that reason enough to be doubtful about its long-term prospects? Absolutely not. As I implied above, I think that Cardano is bound to rise, and this decline is temporary. Year-to-date returns are very strong at 717%. Cardano’s trajectory is clearly upward. But that was also true of other less investment-worthy cryptos before this latest industry-wide decline.
Some potential investors might mistakenly assume that Cardano is a house of cards. It isn’t. Cardano is already proving it has utility, a strong team developing the project, and a clear vision.
I think that’s the clear difference between crypto investments like Cardano that are worthwhile, and those that aren’t, like Dogecoin (CCC:DOGE-USD).
And recent price movement tells an interesting story about that difference.
Price Rebound and Good vs. Bad
Investors are starting to understand that the days of massive crypto price increases for every project are winding down. This will be a boon to Cardano. If you juxtapose the price declines and rebounds of Cardano and Dogecoin, a pattern becomes apparent.
As I mentioned, Cardano has shed 37% of its value since mid-May. Dogecoin, during the same period, has shed 54% of its value. That alone indicates that investors believe Dogecoin was more overvalued. When bubbles pop, it is the weakest performers who drop the fastest and the farthest.
Conversely, following a burst bubble, the strongest participants rise quicker. In most cases this indicates the market recognizes the inherent value of such companies. I’d say this is also what is happening as it relates to Cardano and Dogecoin price rebounds.
Cardano’s value is roughly 90% of where it was a month ago, while Dogecoin’s value sits at 70% of where it was at the same time.
My theory — and my sincere hope — is that the latest downturn marks a shift in the crypto landscape. We’re coming out of the Covid-19 pandemic and approaching the beginning of some sense of normalcy. Utility in decentralized finance (DeFi) will be king moving forward. And empty projects that lack utility will stay down until they provide utility. That’s going to be a boon to Cardano, because it has a strong team, a strong vision and some early success in providing utility.
Enterprise Use Cases Will Go a Long Way
Cardano is developing its platform to be a DeFi service that accommodates enterprise use cases across industry verticals. These industry verticals include education, retail, agriculture, government, finance and healthcare. All of these verticals have a few things in common: they’re in need of democratization, and consumers are beginning to demand change.
Cardano recently made headlines back in late April when IOHK announced a deal with the Ethiopian government. IOHK, the developer of the Cardano blockchain and ADA, aims to create a blockchain-based student performance tracking system in the east African nation. Ethiopia is undergoing political strife caused by ethnic tensions and other unrest. Countrywide internet access stands at roughly 15%. IOHK believes that the project is a great testing ground for its ability to build its Enterprise use cases. The reasoning is that Ethiopia is undergoing massive change currently, and if IOHK can build a successful education use case there, it should be able to scale elsewhere.
I remain a firm believer in Cardano and believe ADA will rise moving forward. Investors who want to understand what the promise of cryptocurrency and DeFi looks like could start by checking out Cardano’s website. The company has laid out a clear plan that is very obviously on the right track. I believe that recent price action indicates that the market is catching on. Look for Cardano to bounce back much more quickly than most other crypto assets.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.