Cardano (CCC:ADA USD) is one of the world’s largest cryptocurrencies by market capitalization. In fact, ADA is currently the #6 largest coin out there, peaking at #3 sometime in 2021.
However, despite its notable success, Cardano has entered a bear market. The price of ADA fell from more than $3 per coin at its peak to just $1.20 today. That’s a drop of nearly two-thirds in just a few months.
While other crypto leaders like it Bitcoin (CCC:BTC USD) and ether (CCC:ETH USD) also collapsed, Cardano’s loss was significantly larger than that of its competitors.
Cardano’s intended use case
This was arguably due in large part to the slow adoption of Cardano. For a year now, it has felt like Cardano is on the verge of widespread adoption. Especially when Cardano overcame the skeptics and launched its smart contracts, it felt like ADA was finally ready to go.
Instead, Cardano’s momentum slowed. ADA failed to accommodate a mass influx of developers or users. Instead of this, Solana (CCC:LINKS USD) stole the show with its fast and ultra-cheap network.
Cardano backers were absolutely right that the world wanted an alternative to proof-of-work coins like Ethereum. Ethereum transaction fees are so high that they choke the market for all but the most expensive non-fungible tokens (NFTs) and other such on-chain applications. If things like micropayments and crypto-based gaming currencies are to take off, transaction fees need to be much, much lower.
Cardano could be an ideal solution for this. Its revolutionary Proof-of-Stake algorithm massively reduces the computing power required to run the network. This lowers overhead and allows users to send each other ADA for a tiny fraction of the cost of a similar transaction on BTC or ETH.
Cardano defends itself against Solana
There is a perception that while Cardano is developing high quality solutions, it is taking too long to get things to market. Competing networks like Solana have clear shortcomings in terms of the stability and robustness of their networks. But an imperfect solution that works today may be better than a perfect one that takes eons to implement.
Solana has gained massive market share for NFTs and other such art because it’s already operational and offering rock-bottom prices. Sure, Solana had issues with network outages. But they have always been resolved and the core product is good and reliable enough for most uses.
Cardano is now stepping up its game. A new decentralized exchange (DEX) called SundaeSwap is scheduled to launch on Cardano shortly. If it gains significant trading volume, it could give Cardano an important tool in its efforts to reclaim its role as Ethereum’s main competitor.
SundaeSwap is scheduled to launch on January 20th and will offer Initial Stake Offering (ISO) and yield farming among other immediate applications. Cardano has always promised sophisticated technology with low transaction fees. Now it’s time to observe this in real financial transactions. Skeptics say Cardano’s network will not have enough capacity to handle all the transactions SundaeSwap will generate. However, if this bearish argument is disproved, ADA could fly.
The verdict on Cardano
Everything about ADA remains a matter of execution. Cardano has a great brand and a charismatic leader in Charles Hoskinson. ADA is one of the few cryptos that spiked and crashed in 2017 and emerged stronger today. In the crypto world, surviving a cycle or two gives a lot of credibility to a project’s long-term future. On paper, all the pieces are in place to make Cardano one of the central pillars of the cryptocurrency ecosystem for years to come.
However, as always, the promise remains more attractive than the actual product that has been offered to consumers to date. However, Cardano has live projects like SundaeSwap that could finally turn this potential into reality.
If Cardano gets the user experience right, ADA’s price could climb back up to $3. This is one of the most attractive dip buy setups in the cryptocurrency space. All that matters is whether Cardano can deliver the product needed to attract users and developers to adopt its ecosystem.
At the time of publication, Ian Bezek held no position (neither directly nor indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s publicity guidelines.
Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a junior analyst for Kerrisdale Capital, a large hedge fund based in New York City. You can reach him on Twitter at @irbezek.