Bloomberg reported on Aug. 16 that Cardano (CCC:ADA-USD) had become the world’s third-largest cryptocurrency. In the past day, Cardano has mostly traded between $2.40 and $2.57 and is currently up 130% in the past month and nearly 1,300% in the year to date.
There is no question that Cardano’s Ouroboros proof-of-stake protocol is gaining a lot of supporters in 2021. However, for ADA to keep moving higher, it will have to generate catalysts to drive the price higher.
While Cardano is in motion at the moment, will it stay in motion? That’s the million-dollar question.
Cardano Is Worth $80 Billion
Cardano has spent Aug. 20 mostly ascending but sticking around a market capitalization of $80 billion. Like all crypto assets, this one moves fast, so it could be higher or lower by the time you read this. The last time I wrote about Cardano was in early July. I argued that Cardano’s success or failure would be all about smart contracts and the cryptocurrency’s utility despite some new partnerships.
“I continue to believe ADA is the cryptocurrency not named Bitcoin (CCC:BTC-USD) or Ethereum (CCC:ETH-USD) with the most tangible opportunity. The partnerships ought to be good for convincing others this is the case,” I wrote on July 8.
Since my article, Cardano has appreciated by over 80%. A significant influence in this appreciation is Cardano’s head of delivery, Nigel Hemsley, stating in an Aug. 13 video that smart contracts would be available Sep. 12 as part of its Alonzo upgrade.
Coindesk‘s Frances Yue quoted crypto analyst Yuri Mazur, who said, “any growth in the price of cryptocurrencies is either directly caused by positive news driving up sentiments among buyers or a growth in tandem with the overall market trend. Cardano’s highly anticipated Alonzo upgrade is also a good reason for investors to stack up the coin.”
While the recent bullishness in crypto prices is responsible for some of its appreciation in recent weeks, it would be foolish to discount the importance of the Alonzo upgrade. After all, of the 10 cryptocurrencies with a market cap of $20 billion or higher, Cardano had the third-highest 7-day return at 25.6% through Aug. 20.
As the Bloomberg article suggested, not everyone is convinced that Cardano’s smart-contract capability will attract developers. It quotes a tweet by Galaxy Digital LP CEO Mike Novogratz, who wrote, “I spoke to twenty of the smartest people I know in the space, and zero of them saw Cardano having traction.”
There is certainly skepticism about Cardano’s $80-billion valuation. However, if it were an S&P 500 company, it would be in the top 200 by market capitalization.
Testing Its All-Time High
Cardano’s previous all-time high was $2.46. It hit that mark in May. It surpassed that level on Aug. 20.
However, to stay above $2.46 for a significant length of time, the Alonzo upgrade will have to deliver tangible proof that Cardano’s smart contracts are getting attention from blockchain developers. If not, I don’t see how it maintains this red-hot momentum.
InvestorPlace assistant news writer Brendan Rearick recently discussed some price predictions for Cardano. Of the four mentioned, CoinPriceForecast’s $3.10 prediction by the end of 2021 is the most aggressive. That suggests Cardano has 24% upside over the next 4.5 months.
However, of the four, I would say WalletInvestor’s $3 price target by August 2022 is the most realistic. That gives Cardano and its development team, Input Output Hong Kong (IOHK) time to deliver utility to financial services companies and blockchain developers.
As InvestorPlace contributor Chris MacDonald pointed out recently, not only does the Alonzo upgrade’s smart contracts allow for decentralized finance (DeFi) applications to be used on the Cardano network, non-fungible tokens (NFTs) could also be a very appealing aspect of its smart contracts.
Now, all we need to do is wait for Sep. 12.
While I don’t believe Cardano maintains its blistering pace, I’m not surprised to see it retest the $2.46 level. Unless the Alonzo upgrade is an abject failure, I see Cardano staying in motion, albeit at a more reasonable pace.
On the date of publication, Will Ashworth 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.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.
