ADA price has rebounded in the past few days, moving from the year-to-date low of $0.5098 to $0.7215 today. This rebound coincided with the ongoing cryptocurrency bull run, which pushed Bitcoin and most altcoins up by double digits. This article examines whether Cardano cryptocurrency is a suitable investment option today.
Is Cardano Crypto a Good Investment?
Cardano is a popular layer-1 blockchain network founded by Charles Hoskinson, who was also a co-founder of Ethereum. Its popularity surged in 2021 as investors sought a viable alternative to Ethereum, which was then a proof-of-work network.
Investors loved Cardano because it was a proof-of-stake network, which made it less carbon-intensive. They also bought into the idea that Cardano was the only peer-reviewed network in the crypto industry. Unlike Ethereum, it was also fast and cost-effective.
The hype pushed ADA price to a record high of $3 and its market capitalization to over $90 billion. However, this surge was short-lived as it emerged that Cardano was not ready to disrupt Ethereum. Other competitors, such as BNB Smart Chain (BSC) and Solana, have also emerged.
Today, Cardano is often referred to as a ghost chain because its network lacks a viable ecosystem. For example, Cardano’s ecosystem comprises a stablecoin supply of $32 million, with the biggest ones being USDM, USDA, iUSD, and Djed. Top stablecoins, such as PYUSD, RLUSD, USDC, and USDT, are not part of Cardano’s ecosystem.
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Cardano’s DeFi network has a total value locked of $419 million, with the top dApps being Liqwid, Minswap, and Indigo. Some of the largest developers, including Aave, Uniswap, and Compound, have chosen to avoid the network.
Cardano’s developers are working to solve these issues through various initiatives. For example, they are working on Midnight, a privacy-focused sidechain, whose NIGHT token will be airdropped soon.
They are also working on Leious, a major upgrade that will boost its speed to 1,500 transactions per second (TPS) and introduce a concurrent blockchain structure. It has input blocks, endorsement blocks, and ranking blocks. Input will carry transaction data, while endorsement will validate transactions, and ranking will finalize the ledger order.
The challenge, however, is that these initiatives may not result in increased developer activity.
ADA Price Technical Analysis
The daily chart shows that the Cardano price has been in a strong downtrend over the past few months, declining from last year’s high of $1.3258 to $0.7325 as of today. On the positive side, the token has remained slightly above the 50-day and 100-day Exponential Moving Averages (EMAs).
It also formed a double-bottom pattern at $0.5585, its lowest swing in April and June. Its neckline was at $0.8637, its highest point on May 12. This pattern suggests further upside in the near term.
On the negative side, ADA price has formed a descending triangle pattern, a popular bearish continuation sign whose lower side is at $0.5585. This pattern means that the coin may resume the downward trend.
Therefore, Cardano is a fairly risky investment due to its weak ecosystem growth and the fact that its technical indicators are sending mixed signals.
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