Cryptocurrency has been on a crazy run so far in 2021, with trillions of dollars coming into the asset class. As cryptocurrency becomes a more mainstream asset class, many folks want to find projects that match their values. For those that want a fair and scalable blockchain, many turn to Cardano.
So, what can we expect from this blockchain in the coming months? Will Cardano have a breakout run and reward investment in the short term? Let’s look at what Cardano has been up to and whether it shows signs of gaining value.
Cardano is a proof-of-stake blockchain intended to be developed through technological research and peer-reviewed methods. As an open-source, decentralized project, Cardano tries to bring cutting-edge blockchain capabilities to individuals, rather than institutions.
Cardano uses its own proprietary blockchain that uses the ADA coin as fuel for transactions on the blockchain. The Cardano name comes from the Italian polymath Gerolamo Cardano. The name for the native token ADA is inspired by Ada Lovelace, the name of the first person regarded as a computer programmer.
Charles Hoskinson, one of the founders of the Cardano project, is a software developer that is currently the main face of the project. He helped found the Ethereum project alongside folks such as Vitalik Buterin but went on to help found Cardano to better solve fairness and equity problems with blockchain technology.
In addition to the development team, there is also the Cardano Foundation. Founded in 2017, the Cardano Foundation is a non-profit organization that tries to promote the Cardano blockchain and increase the rate of adoption of the blockchain.
Most recently, Cardano unleashed its Alonzo upgrade in September 2021. This update was a hard fork of the project to introduce smart contract capabilities to the blockchain, much like what Ethereum and other blockchains have. With this update, dApps (decentralized applications) can start to be built up, turning the Cardano blockchain into a truly decentralized ecosystem.
Currently, Cardano is the sixth-largest cryptocurrency by market capitalization, totaling almost $50 billion. There are a total of 45 billion ADA in supply, with a circulating supply of roughly 32 billion.
Because of the Alonzo update to the blockchain in September, Cardano is on its way to becoming a blockchain with real-world use. As applications build on the Cardano ecosystem, ADA will see use as the fuel for the blockchain.
Right now, the main use for ADA is as an exchange of value on the Cardano blockchain. People can exchange ADA between addresses as payment, assistance, or any other purpose that cash would be used for. As the ecosystem builds up, this use for Cardano will probably drop.
As a proof-of-stake blockchain, ADA can also be used as a way to validate transactions on the blockchain using the staking feature on-chain. By staking ADA, you commit ADA to a master node that uses transaction history from the commit coins to approve transactions that meet the right criteria.
As a reward for staking, you receive rewards in the form of more ADA tokens. This is an easy way to hold onto your Cardano tokens while also earning a little bit more in interest.
Finally, ADA tokens can be used for governance on the Cardano blockchain. Holders of the coin can use those coins to vote on community proposals that developers and other community members put forward.
These proposals receive votes from the community by having community members commit their coins in governance protocols. If a community proposal receives enough votes, the proposal passes and moves forward with development.
Compared to the all-time high price of $3.09 back in September 2021, the ADA Cardano has seen a slight dip, but still maintains an average price of between $1.37 and $1.58 per token.
The Cardano price has seen a 52 week range of between 0.1045 and 2.6173 Euro.
2021 has been an incredible year for Cardano when it comes to its valuation. Before 2021, a one-dollar ADA token was nearly unheard of. The token briefly reached the one-dollar mark at the height of the 2017 cryptocurrency bull run but quickly sank back down below that level for the next four years.
Leading up to 2021, ADA hovered around $0.17, with a slight upward trend as it followed the rest of the cryptocurrency market. At the apex of the May 2021 run-up, Cardano touched a $2.30 price point before sinking with the rest of the cryptocurrency market over the summer.
News about the Alonzo upgrade for the Cardano blockchain drove a lot of trade volume into the cryptocurrency. This volume brought the price up from $1.31 at the beginning of August to $3.09 at the beginning of September.
However, the rollout of applications on the blockchain has been slow. There’s been a pullback over the last couple of months resulting in a drop from the high end token cost of $3.09.
Most of the recent price action for Cardano has been based on speculation, as is the case for much of the cryptocurrency market. As these projects develop their blockchains and have an ecosystem built up, investors right now are buying in based on what they believe the value of the ecosystem will be. Cardano is no expectation.
Cardano saw a huge price increase based on the smart contract update announced a few months ago. The token price has since corrected back to slightly above its initial price in August. However, we see a resistance band at the $1.50 mark, which is above the $1.36 price it was at previously.
Cardano has also recently had a huge burst in trade volume. If this volume pushes the price of Cardano up, it can create another breakout run back above the $2 mark.
The question is whether this run-up would be justified. Because of the Alonzo smart contract update, a wide range of applications are under development in the ecosystem. If these applications can launch soon and start providing value for users in the Cardano ecosystem, then you could expect more users to enter the space.
As they eat up ADA supply, the price of the asset will climb.
Overall, the fundamentals of Cardano haven’t changed much over the last year. Cardano has been looking to add smart contracts to their platform for several years now. While there has been a lot of price action based on the release of the capability, the ecosystem still isn’t fleshed out just yet.
So, there’s reason to believe Cardano will see another breakout sometime in the next few years. As the ecosystem grows and sees more applications, the all-time high could become the new normal, assuming things continue to go smoothly.