Cardano Should Rise in Tune With the Increase in ADA Crypto Wallets

ADA crypto - Cardano Should Rise in Tune With the Increase in ADA Crypto Wallets

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Cardano (ADA-USD) has been sliding for some time. In fact, ADA crypto is still down 35% from the end of 2021 when it closed at $1.37.

This means that Cardano, the ninth largest crypto, has to rise over 54% just to get to par with last year. That shows how volatile ADA crypto has been and how much it has to rise just so everyone who bought at the end of last year gets even.

Ethereum (ETH-USD) only has to rise just 25.2% to get back to par with last year. That is less than half the amount ADA crypto has to move. But of course, Ethereum is over 10 times larger than Cardano. ETH crypto has a market cap of $363 billion vs. $30 billion at Cardano. This implies that the larger the market cap, the more stable the crypto becomes. The higher the performance the less the volatility.

Investors should keep that in mind as Cardano’s price gains momentum this year. For example, I wrote in an earlier article that ADA crypto looks undervalued in relation to its Total Value Locked (TVL). TVL comes into play for smart contracts. TVL represents the total amount of money tied up in staked crypto assets like smart contracts and deposits with yield and staking apps.

Metrics Supporting a Rise in ADA Crypto

For example, both Cardano and Ethereum support smart contracts, non-fungible tokens and dApps (decentralized apps). This is especially the case in the financial arena where staking and yield farming contracts, known as DeFi (decentralized finance) apps, are used. DefiLlama.com shows that the TVL at Cardano is now up to $208 million. By comparison, as of Jan. 20, it was only $3.2 million.

The point is that as the TVL for Cardano goes up, expect to see ADA crypto rise as well. There seems to be a direct correlation between TVL and the price of Cardano. For example, one recent Defi app called WingRiders, which is based on Cardano, gained almost 8,000% of its TVL in the last seven days, according to network-tracking service DeFiLIama.

Another way to measure the popularity of Cardano is by counting the number of wallets that hold ADA crypto. For example, as of April 25, there were 3,286,970 wallets holding ADA, according to Google Data Studio. A month ago on March 27, there were 3,181,172 wallets with Cardano in them. That is a gain of 105,798 wallets in one month or 3.32% in the past month.

At this rate, the number of ADA crypto wallets could grow at a compounded growth rate of 48% over the next year. That implies that ADA crypto could rise at least 80% of that amount or 38%, given the buying pressure that comes with purchasing ADA crypto.

These metrics show that investors in Cardano can expect to see a higher price in ADA crypto over the coming year.

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.

Mark Hake writes about personal finance on mrhake.medium.com, Newsbreak.com and Beehiiv.com.


Article printed from InvestorPlace Media, https://investorplace.com/2022/04/cardano-should-rise-in-tune-with-the-increase-in-ada-crypto-wallets/.

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