Cardano Has Good Long Term Prospects as a Crypto, But Right Now It’s Difficult

Cardano (ADA-USD) should survive just fine over the long term. This is based on a number of growing fundamental aspects of the cryptocurrency. But right now things don’t look so good for ADA crypto as it has gone through such a rough time. And there is no way to know when things will turn around.

Cardano (ADA) token with blue and orange digital background.
Source: Stanslavs / Shutterstock

As a result, it makes sense for investors in Cardano, who already have a stake in the crypto, to take a long-term view.

For example, once the Russian war on Ukraine is over, it’s likely that the ongoing pressure on ADA crypto will ease.

However, the fundamentals are on the side of Cardano. At just over 80 cents per ADA token, Cardano now has a market capitalization of $27.3 billion. This makes it the 8th largest cryptocurrency, according to Coinmarketcap.com.

Where the Fundamentals Stand With Cardano

Cryptopotato magazine recently underlined some of the positives behind Cardano. For one, the magazine referred to the recent increases in total value locked (TVL) at Cardano. For example, Defillama.com shows that the TVL at Cardano has been climbing in the last month.

TVL refers to the total amount of cryptocurrency deposited in a centralized finance exchange or protocol (such as a smart contract). Coindesk says that this has emerged as a key metric for gauging interest in any particular crypto. The types of protocols that cryptos can be deposited in include digital wallets, staking, lending, and liquidity pool contracts.

The Defillama.com chart referred to above shows that the TVL in ADA crypto has skyrocketed since Jan. 20. It’s up from $3.2 million on Jan. 20 to close to $200 million ($197.9 million) as of March 15.

Other fundamentals showing Cardano’s appeal seen by Cryptopotato include growth of long-term holders, staking value, and smart contracts on Cardano. The magazine wrote that this could cause positive price movements in the mid to long term.

For example, Cryptoslate.com recently reported that the number of transactions on Cardano had surpassed 30 million in total. They said that this was a new milestone.

Smart contracts running on the Cardano blockchain have shot up since the launch of the Alonzo hard fork in September 2021. That was when smart contracts were first able to be supported on the Cardano blockchain.

Technical Reasons Why Cardano Could Rise

Other analysts and magazines are also reporting that Cardano looks oversold. Cryptobriefing recently wrote that the ADA crypto looks “ready to rebound.” It argues that the crypto has reached a key support level and is primed to rebound above $1.00.

Since peaking recently on Jan. 17 at $1.6245, ADA crypto has drifted down to just above 80 cents as of March 16. That represents a decline of just over 50% in just 2 months. That seems overdone, especially, as I have pointed out above, the fundamentals seem to be improving.

However, the Cryptobriefing article also indicates that the 75 cents level is a crucial support line. If the price goes below that, it could face another sell-off to 50 cents.

What To Do

Long-term investors in cryptocurrencies should take a second look at Cardano, especially given the increase in its fundamental and technical aspects and features.

Investors who are inclined to invest in cryptos are very used to volatility. This can be much higher than those in stocks and bonds. As a result, the novice investor who is looking to put some money into ADA crypto should also be careful to not over-allocate both to cryptos or to this one in particular.

The other action that most investors should be prepared to take is to average down into the currency over a period of time. That way the investor can find they are buying in at lower prices as the crypto falls and even higher ones as it rebounds. The resulting average price will help the investor from trying to time markets, which generally does not work.

Bottom line: Cardano looks like it is at a good entry point here for long-term investors.

On the date of publication, Mark Hake did not hold (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.


Article printed from InvestorPlace Media, https://investorplace.com/2022/03/ada-crypto-could-be-near-a-trough-given-its-fundamental-and-technical-features/.

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