Back on December 18, we published this piece on Cardano (ADA). At the time, the coin had run from around $0.10 a share to just shy of $0.50 a piece in a week or so and we asked the question – can this action continue near term?
We took a deep dive into the coin, it’s platform and what was going on behind the scenes and came to the following conclusion: that we may see a near-term dip-type correction as shorter-term operators took profits off the table but that this dpi might be a nice opportunity to pick up some cheap coins ahead of a long-term return to the overarching upside momentum.
Fast forward to January 3 and ADA just ran more than 100% to break the one-dollar mark. The coin’s current market capitalization currently sits at more than $25 billion and volume over the last twenty-four hours alone hit $500 million. Keep in mind here that we’re talking about a coin that barely did $5 million in daily volume as recently as early to mid-November. That’s a 100X volume increase in less than eight weeks.
So what’s going on? And more importantly, what’s next?
Cardano is one of those platforms and technologies that the industry is billing as the third generation of this space (despite the fact that it’s not really that new – it’s been around since 2015. Basically, it’s an attempt to build on the technology that underpins the Ethereum platform to create a smarter, more robust smart contracts platform.
Well, that’s a bit misleading. The Cardano team aren’t building on the Ethereum platform – it’s an entirely new technology – but there are similarities between the way Cardano and Ethereum afford applications functionality.
Both rely on smart contracts, for example, and both can be used to develop functional, secure, decentralized applications.
In fact, some are calling Cardano the Ethereum of Japan, given that more than 95% of the platform’s investors at the early stages were Japanese.
Anyway, let’s get back to the present – what’s driving the action?
Well, this is a sort of chicken and egg scenario.
The sharp upside appreciation is translating to an increased visibility for the company and its offerings and this increased visibility is resulting in a wave of exposure from some of the more well known global media outlets.
Take a look here for an example. In that piece we just linked to, Forbes featured Cardano and, specifically, ADA, as a major runner in the cryptocurrency space and quoted an analyst as saying that ADA could double near term. The assumption that ADA could double wasn’t based on anything overly substantial but the suggestion was planted and that’s enough for people to pull the trigger on a buy position.
So what’s next?
We think this really could just be the start of a long-term bull run in ADA. These so-called third generation platforms and applications of blockchain technology are tussling to become what’s going to be the next Ethereum (and this isn’t just a sound bite, Ethereum is almost certainly going to be superseded by something more advanced and more secure) and, of those companies in the race as things stand, Cardano leads the pack.
As such, our conclusion as to where we expect this one to go next pretty much reiterates where we stood as we concluded our previous coverage of this coin and the platform that underpins it – that we expect Cardano to grow as a platform and that, concurrently, we expect that ADA will appreciate in value in line with this growth.
Let’s see how things play out.