The Recent Middling Performance of Cardano Is an Opportunity
InvestorPlace - Stock Market News, Stock Advice & Trading Tips As continued upgrades could increase its usage, and in turn, its token price, Cardano is an altcoin you shouldn't pass...
Two months after its most recent major upgrade, buzz around Cardano (CCC:ADA-USD) has cooled. Crypto investors today are more focused on other opportunities. For instance, the so-called “pupcoins,” like Dogecoin (CCC:DOGE-USD), Shiba Inu (CCC:SHIB-USD), and Floki Inu (CCC:FLOKI-USD).
Crypto investors are also in some more serious competitors, like Solana (CCC:SOL-USD). As you likely know, both cryptos are seen as “Ethereum killers,” that is, names that could usurp Ethereum’s (CCC:ETH-USD) position as the dominant DeFi (decentralized finance) blockchain. Lately, Solana has become the “favorite” to grab the DeFi crown from ETH, due to advantages such as fast transaction speeds.
Yet the “Ethereum killer” horse race is still far from reaching the final stretch. It’s a bit early to say ADA-USD is out of the running. Even if it never eclipses Ethereum, it still has a solid chance of seeing a big increase in usage.
Add in other upgrades ahead that will make it more competitive and the prospects of this token experiencing another big run-up in price remain solid. While stuck today at around $1.86 per token, you may want to consider buying it.
Cardano Vs. Solana
Before, the phrase “flippening” may have been used to describe what ADA could one day do with ETH. Yet in recent weeks, this would-be “killer” has been flipped itself by SOL.
With a market capitalization of around $65.9 billion, versus $62.3 billion for Cardano, Solana has slightly moved ahead of it in terms of valuation. Like recent headlines suggest, the rivalry is heating up. Founder Charles Hoskinson may be brushing off the idea that its altcoin rival is now more valuable than his creation.
However, investors appear onto something assigning a higher valuation to the crypto best known for its jaw-dropping high speeds. As my InvestorPlace colleague Mark Hake recently argued, this crypto is falling behind. Its Alonzo upgrade, which added smart contract capabilities, may have given it a big boost a few months back.
But now it has its work cut out in terms of attracting dApp (decentralized app) and NFT (non-fungible token) developers. Solana for now is doing a much better job winning over Web 3.0 developers. This makes it seem more likely to be the one that knocks Ethereum from the top of the heap.
Then again, like I mentioned above, the horse race between the many possible “killers” of ETH is far from over. ADA could still pull ahead of SOL once more. Better yet, it doesn’t need to leave Solana in the dust, or Ethereum, for that matter, to see its price continue to see another eventual big move in its price.
Upside Potential Remains Ample
With greater focus on Solana now, Cardano may seem to some like it’s topped out. After rising more than ten-fold in less than a year, many may believe it’s only gradual gains at best going forward. However, giving things a closer look, I wouldn’t jump to that conclusion.
There’s still a path for it to continue gaining substantially in price. This is mostly due to its planned scalability upgrade. As our Brenden Rearick reported Nov. 3, its Hydra upgrade could be as game-changing for it as the Alonzo upgrade. With this layer-2 scaling solution, Cardano’s network could see its transaction speed see a massive increase.
How massive? Each Hydra node can handle 1,000 transactions per second. There are 1,000 Hydra nodes in the works to be deployed. Do the math, and in theory, this network could eventually handle as many as 1 million transactions per second. Bear in mind that this upgrade is still a work in progress. But it does demonstrate that this crypto still has potential to make up for ground lost to Solana and make its way toward the level of Ethereum in terms of usage.
Again, this may not mean it’ll move ahead of Ethereum someday. But as it continues to become a more appealing platform (greater scalability, lower transaction fees), Cardano still appears very likely to see much higher usage in the years ahead. Like I discussed last month, this could result in ADA moving to a valuation on par with ETH, which would give it a token price of $6, over three times what it trades for today.
Bottom Line: An Altcoin You Shouldn’t Pass Up On
Short-term traders may remain focused on fast-profit opportunities in “pupcoins.” The bulk of long-term crypto investors may be placing their chips on SOL instead of ADA. But instead of seeing its recent middling performance as a sign to stay away, it should be seen as an opportunity.
As continued upgrades could increase its usage, and in turn, its token price, Cardano is an altcoin you shouldn’t pass up on.
On the date of publication, Thomas Niel held a LONG position in Ethereum. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.
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