Cardano's 1.43% Price Increase to $0.2647: Key Insights for August 29, 2023

Cardano's ADA token rose 1.43% over the past 24 hours to $0.2647, demonstrating a bit of positive momentum for the 6th largest cryptocurrency by market capitalization. With a current market cap of $9.28 billion, Cardano remains one of the top altcoins to watch despite declining over -24% in the past 6 months.

In the past day, trading volume for ADA was $104.43 million. While this points to solid liquidity, it is also down significantly from Cardano's 2021 highs. Let's analyze the key percentage shifts across various timeframes:

  • In the past hour, ADA dropped -0.24%, indicating some very short-term bearishness. Intraday volatility is common.
  • The 1.43% gain over 24 hours shows traders now have an appetite for Cardano after weeks of decline.
  • ADA has risen 1.41% in the past week, confirming buyer conviction may be returning.
  • However, the 15.16% 1-month drop demonstrates medium-term selling pressure persists.
  • Longer term, Cardano has plunged -24.8% over 6 months, which is a concerning technical signal.

To summarize, negative longer-term price action is weighing on Cardano, but the latest uptick could mean the bleeding is slowing as ADA nears its 2022 lows. Bulls want to see if strong support can hold.

What Factors Are Impacting Cardano Right Now?

As for what's driving recent Cardano price action, a few important factors stand out:

  • Bear market headwinds - All cryptocurrencies remain under pressure from macro uncertainties, inflation, and tightening monetary policy. This has disproportionately impacted higher risk assets.
  • Tech adoption - Cardano's development activity continues growing, but practical real world usage is still lagging rivals, tempering price gains.
  • Competitive landscape - Alternative smart contract networks like Solana and Polkadot have outperformed ADA, raising questions over Cardano's long-term positioning.
  • Whale activity - Large ADA holders have been selling into weakness, accelerating the downtrend. Their future appetite is uncertain.
  • Leadership changes - Charles Hoskinson stepping away from Cardano's development caused fears, though new leadership aims to accelerate progress.

With Cardano's fundamentals still developing and macro conditions unfavorable, significant upside may have to wait. But the recent stabilization could provide the foundation for a trend change.

Will Cardano Revisit Its All Time High This Cycle?

I do not believe Cardano's ADA token will revisit its all-time high of around $3.00 in the current crypto cycle ending in 2025. Here is my rationale for being bearish on the prospect of new highs:

  • Cardano is still early-stage, with few active dApps to drive sustainable adoption and thus token demand.
  • ADA faces fierce competition from faster, lower cost smart contract alternatives like Solana.
  • Ongoing deleveraging and risk aversion will weigh on speculative assets.
  • As monetary tightening continues, investors will discount future cash flows from crypto projects at higher rates.
  • Cardano may fall out of favor if leadership and technical challenges persist post-Hoskinson.
  • Once the bull market returns, Bitcoin and Ethereum are likely to attract capital first as the blue chips.

While nothing is certain, the evidence suggests Cardano reaching a new peak above $3 this cycle is unlikely. A more reasonable upside target seems to be the $1.50-$2.00 range, implying potential returns of approximately 400-660% from current levels.

What's the Best Way to Invest in Cardano Long-Term?

For investors who see value in Cardano as a long-term blockchain project, there are a few options to gain leveraged exposure:

  • Buying ADA - Simply owning the native token is the easiest way to directly benefit from potential price appreciation if adoption grows. Staking can earn yield.
  • Providing liquidity - Supplying ADA liquidity to decentralized exchanges like SundaeSwap earns trading fees and incentives for supporting network activity.
  • Yield farming - Depositing ADA into yield farming pools or vaults can generate very high APY returns from leverage and staking rewards.
  • Lending ADA - Lending protocols like AAVE enable earning interest on ADA holdings by allowing borrowers to use them as collateral for loans.
  • ADA futures - Futures contracts on ADA can allow speculating on both bullish and bearish outlooks for the token's price. Margin trading magnifies potential gains and losses.

A blended approach of owning ADA for long-term exposure while utilizing DeFi protocols for yield seems prudent. This provides multiple ways to profit while supporting the ecosystem.

Should You Buy Cardano After the Recent Declines?

Following Cardano's steep 80% decline from its highs, investors face the age-old question of whether ADA is now a bargain buy or could fall further. The arguments for each case:

The case for buying:

  • Current prices reflect excessive fear and offer attractive value relative to potential.
  • Staking ADA yields over 5%, cushioning any volatility through passive income.
  • Cardano's development roadmap and leadership remain strong long-term advantages.
  • Once the macro environment improves, developers and users should flock to the network.

The rationale for waiting:

  • ADA could easily drop another 50% from here if Bitcoin falls below $10k.
  • Real-world adoption is still lagging competitors, muting any rally.
  • Technical charts signal strong downtrends persist across all timeframes.
  • Insider sales by Charles Hoskinson introduced credibility fears.

With conflicting signals, dollar cost averaging seems prudent. Investors can buy now to gain a foothold, but leave ample capital to deploy at lower prices if Cardano continues declining. Timing any bottom is impossible, but preparing for either outcome is wise.

Does Cardano Still Have a Future Despite Competition?

As one of the early smart contract platforms, Cardano once seemed destined to become the top alternative to Ethereum. But with the emergence of faster and cheaper blockchains like Solana, Cardano's future prospects appear less certain to some critics. Nonetheless, there remain strong arguments for its long-term viability:

The bull case:

  • Cardano has strong fundamentals with peer reviewed research and high development activity.
  • Its Ouroboros proof-of-stake consensus mechanism enables greater scalability and energy efficiency.
  • Founder Charles Hoskinson's vision and engineering talent instill confidence in the project's direction.
  • Real-world adoption is starting to accelerate, especially across developing nations in Africa.

The bear case:

  • Ethereum maintains a dominant developer network effect advantage that Cardano lacks.
  • Many other networks now also use proof-of-stake, closing Cardano's early mover edge.
  • Interoperability between chains mitigates the need for one dominant smart contract platform.
  • Cardano's academic rigor leads to very slow progress that opens the door to competitors.

Overall, Cardano still seems to hold promise as infrastructure for DeFi and decentralized applications matures. But its ultimate success likely depends on execution and ability to carve out a niche use case rather than becoming the largest blockchain platform.

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