Cardano (CCC:ADA-USD) is currently ranked #6 on CoinMarketCap and cryptocurrency enthusiasts now face an interesting dilemma. Will ADA-USD rise from its current price of $1.10 and bounce back to January 2022 numbers near $1.63? Or will there be a consolidation and a move to even lower levels as the momentum in the cryptocurrency market in 2022 has disappeared with intense velocity?
Searching for a crystal ball in investing is a naïve investment philosophy. Technical analysis is helpful for investors and traders, but it is not foolproof. External factors like persistent inflation shift the risk-on, risk-off moods too fast. We are already in an era of rising interest rates, but we do not yet know the timing and the exact magnitude of the U.S. Federal Reserve’s intentions to fight inflation. Will Cardano be hit by higher interest rates? Or is it going to excel and turn into a coin that will provide a hedge against inflation and soar?
In this article, I will refer to Cardano’s priorities for 2022.
Before doing this, I am concerned about an imminent crash in financial assets like equities, which should bring down the broader cryptocurrency market, as well. WTI crude oil is now trading above $90 per barrel, the highest price since 2014. And it continues to move up. This fuels higher inflation not just in the U.S., but globally. If there will be a huge crush of financial assets, I do not see Cardano being able to keep its floor price near $1. I predict tons of drama and a much lower price.
What are the Top Priorities for Cardano in 2022?
Cardano has several worthwhile priorities in 2022.
Its main goal is to “become the future financial and social operating system for generations to come” and to “ensure Cardano is the blockchain for good.” This seems to be a great marketing line, but it is also rather vague to me. What does Cardano mean exactly by “for good”?
The whole concept of decentralization in the finance industry as an alternative to the traditional banking system and the regulations imposed has one severe drawback. There is high credit risk as users of blockchain rely on the internal security systems of the blockchain ecosystem for secure, fast, and cheap transactions.
Take, for example, futures versus forwards. Forwards have a much higher credit risk compared to futures because they trade over the counter, being private and customizable agreements. Futures have standardized terms and are traded on an exchange, adding a high level of security.
I like all of the core priorities Cardano has for 2022. They are:
- Educate the audience
- Equip its community
- Collaborate with regulators
- Have a positive impact
- Increase interoperability and scalability
- Grow the Cardano team
I find the priority of collaborating with regulators indicative of the great seriousness behind the Cardano network. Cardano mentions that “blockchain will benefit from regulation in many ways, but it cannot come at the cost of innovation.”
There is much need for further regulatory clarity and global regulation of the cryptocurrency market. Cardano wants to be a leader in the global blockchain regulatory landscape, working with regulators to provide a constructive dialogue.
Improving its ecosystem and educating its audience are other important factors as Cardano applies a peer-review process. Ensuring academic scientific quality is innovative among other myriad cryptocurrency tokens or coins.
Increasing interoperability and scalability are essential as competition is stiff among cryptocurrency coins to survive and adapt to new technological breakthroughs. If I had to choose out of these six priorities the one that intrigues me most, I would pick the concept of creating a positive impact.
Positive Impact: More than Words
Cardano aims at providing a “solution to global Environmental, Social, and Governance (ESG) challenges.” When other meme coins hardly have any reason of existence, this statement by Cardano is profound. Investors should monitor more developments in this topic.
In the end, is Cardano cheap or expensive now? Having a market capitalization of $37.17 billion is too hard to justify.
Cardano has potential. However, its price will be subject to wild swings, making it too risky even with a plethora of positive factors for its path to mainstream adoption.
On the date of publication, Stavros Georgiadis, CFA 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.
Stavros Georgiadis is a CFA charter holder, an Equity Research Analyst, and an Economist. He focuses on U.S. stocks and has his own stock market blog at thestockmarketontheinternet.com/. He has written in the past various articles for other publications and can be reached on Twitter and on LinkedIn.
