In February, Kiss frontman Gene Simmons tweeted that he had bought $300,000 worth of Cardano (CCC:ADA-USD). A week ago, a Coindesk article estimated that his position would now be worth more than $700,000. That’s a gain of more than 130% in less than eight months.
Simmons has become a hardcore crypto trader, with positions in 14 digital currencies, according to a recent interview. He’s apparently in it for the long haul, saying he plans to stay in these positions, including Cardano, for at least 10 years. But is this wise?
Cardano is one of the largest cryptocurrencies in the world. In August, it surpassed Binance Coin (CCC:BNB-USD) to become the third most valuable crypto. It recently fell back into fourth place, as BNB has outperformed ADA. However, on a fully diluted basis, Cardano is still solidly in third place.
Plutus dAppStore Strengthens the Bull Case for Cardano
I’ve long been excited by Cardano’s potential utility. In my most recent article about the cryptocurrency on Sept. 27, I marveled at Input Output Hong Kong’s (IOHK) announcement that it would launch the Plutus dAppStore so that people like you or me could more easily find dApps we might be interested in exploring.
“Without things like the Plutus dAppStore, Cardano and every other blockchain platform will remain hidden from most of the population, thereby severely eroding their value to society,” I wrote in September. “You might not like it, but at some point, Cardano and everyone else hoping to make a name in blockchain has got to come out from the woods and face real scrutiny.”
Clearly, Gene Simmons understands what Cardano brings to the table.
However, as DailyCoin points out, Cardano still needs to add three features to the Cardano Network — Plutus Application Backend, dApp connector and ERC-20 converter — before it can deliver full dApp functionality.
So, the expected spark that the Alonzo upgrade was supposed to deliver for Cardano hasn’t materialized. Yet. Good things come to those who wait, including longtime rockstars.
Cardano Summit Highlights the Importance of Utility
In late September, the 2021 Cardano Summit took place, with speakers appearing online from several locations worldwide. Cardano founder Charles Hoskinson appeared with several others from a stage in Laramie, Wyo., of all places. If that doesn’t suggest the world is changing, I don’t know what does.
This blog post by Anthony Quinn does an excellent job summarizing what happened at the summit. What jumps out at me is Hoskinson’s quote about what needs to be done to deliver blockchain technologies to the mainstream: “How do we take these amazing innovations, born of academia and forged in industry, and bring them together and apply them to our industry in a way that scales down to an agile development team — not PhDs living in a lab with million-dollar budgets, but entrepreneurs, two, three people working together?”
Quinn states that the answer comes down to four things: “utility, governance, impact, and adoption.”
As I’ve said many times, utility drives this train.
Should Simmons Let Cardano Ride?
Simmons has said that his two biggest cryptocurrency positions, by percentage, are Bitcoin (CCC:BTC-USD) and Ethereum (CCC:ETH-USD). According to the Coindesk article I mentioned above, the rocker bought Bitcoin around $10,000. Currently, BTC is trading at $61,700, meaning Simmons has a gain of more than 500%. I’d take that return in a heartbeat. I’d take the 130% gain in Cardano too.
As Jim Cramer likes to say, “No one ever got hurt taking a profit.” Some investors lose sleep over foregone profits when they sell “too early.” Of course, the flip side of that coin is that you lose sleep because you sold too late.
If Simmons wants to let Cardano ride, I have a different piece of advice. Another one of Cramer’s cardinal rules is to stay diversified. I agree. However, owning 14 different cryptocurrencies seems a bit excessive. If I were Simmons, I might sell all of my cryptocurrencies except for Bitcoin, Ethereum and Cardano. A focused portfolio generally does better than one that’s too diversified.
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.