Cardano (CCC:ADA-USD) has been sliding down since the all-time-high of almost $3.10 hit in early September.
ADA-USD trades at this writing at $1.24, ranking it the world’s seventh-largest cryptocurrency with a market capitalization of over $43 billion. Despite several attempts to rebound, the “Ethereum (CCC:ETH-USD) killer” altcoin has not been able to create a positive price momentum in the final weeks of the year.
In November, the Luxembourg-headquartered cryptocurrency exchange, Bitstamp, announced it would start listing ADA. But the positive news was overshadowed when the Israel-based trading platform eToro said it would delist Cardano in the U.S. due to regulatory concerns. As a result, investors hit the sell button.
Yet, despite the recent decline, ADA-USD, the native cryptocurrency on the Cardano blockchain, is up around 611% year-to-date and has returned 690% in the last 12 months.
By comparison, Bitcoin (CCC:BTC-USD), Ethereum and Binance Coin (CCC:BNB-USD), the three largest and widely followed cryptos, have returned around 63%, 424% and 1,286% in 2021. Their market caps are about $926 billion, $478 billion and $95 billion, respectively.
This has been the year of digital assets. As the global investment community warms up to cryptocurrencies, we see new tokens and different blockchain projects come into the limelight regularly. The total market capitalization of all cryptocurrencies has gone over $2.3 trillion, surging about 200%, so far this year.
According to the Global Cryptocurrencies 2022 Outlook, “Some normalization in stock-market returns and a continued decline in U.S. Treasury bond yields may shine on Bitcoin and Ethereum in portfolios.”
However, despite the potential positive outlook for digital assets, there is no denying that the crypto market has lately been under pressure.
Cardano Is a Third-Generation Blockchain Platform
Launched in 2017 by the Ethereum platform co-founder Charles Hoskinson, Cardano is a leading open-source blockchain platform that facilitates decentralized applications (DApps) and smart contracts in addition to its digital currency functions. It is founded on considerable peer-based research.
Cardano defines itself as a third-generation blockchain network following the first-generation Bitcoin, and second-generation Ethereum. The crypto uses the decentralized proof-of-stake (PoS) blockchain platform, which is more sustainable, scalable, and eco-friendly compared to the proof of work (PoW) mechanism utilized by Bitcoin, Ethereum and many other cryptocurrencies.
Cardano has a five-step roadmap to become a DApp development platform. The first three steps, including the capability to execute smart contracts, are complete. Looking ahead, the team will focus on scalability and governance as the fourth and fifth stages.
In this regard, the platform plans to implement a second layer named Ouroboros Hydra, on top of the existing Cardano layer to enhance scalability up to 1 million transactions per second (TPS). Currently, the Cardano blockchain supports 250 TPS.
ADA-USD Stands Out Among Peers
Cardano has recently achieved a milestone by exceeding the 20 million transaction mark with no downtime in over 1,500 days of operation. According to the Cardano-tracking site, pool.pm, the blockchain now has more than 1 million wallet holders, which highlights the growing popularity of staking ADA coins to earn rewards.
Another innovative feature is the new rewards token on the BSC (Binance Smart Chain), namely the ADACash. In two weeks after its launch, ADACash hit a $30 million market cap, with over 10,000 holders.
Cardano team keeps on developing new projects, such as a non-fungible token (NFT) marketplace, a digital art marketplace, a decentralized exchange for Cardano tokens, and a peer-to-peer crypto trading platform. As it stands, the network has a clear investment case and a strong community following. Therefore, Cardano is a long-term promising bet.
However according to those who are skeptical, it could take several years for its steps and services to come to fruition. Put another way, it is too soon to tell whether the bulls or the bears might have the upper hand in 2022.
The Bottom Line
Despite increasing acceptance and interest, the future of cryptocurrencies looks volatile. Like many other digital assets, Cardano may not necessarily be an appropriate choice for most retail investors, especially in the short run. Yet, as one of the solid crypto options, ADA-USD offers the potential in the growth of third-generation blockchain technologies.
Readers who prefer to invest in the broader blockchain space instead of individual altcoins could also consider blockchain exchange-traded funds (ETFs). Examples include:
- Capital Link NextGen Protocol ETF (NYSEARCA:KOIN): up 18.4% in 2021
- First Trust Indxx Innovative Transaction & Process ETF (NASDAQ:LEGR): up 15%
- Siren Nasdaq NexGen Economy ETF (NASDAQ:BLCN): up 9.7%
On the date of publication, Tezcan Gecgil 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.
Tezcan Gecgil, Ph.D., has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all three levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.