Sturdy fundamentals make Cardano a Purchaser after its share worth crash – entrepreneur

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While the risk-off pivot continues, cryptocurrencies continue to stall. Just like a few weeks ago, this is especially true for Cardano (CCC:ADA-USD). The last time I wrote about this altcoin on December 8th, it was trading at around $ 1.40. Today? It changes hands for around $ 1.21.

Cardano (ADA) tokens with blue and orange digital backgrounds.

Source: Stanslavs / Shutterstock

At the current level, it has returned all of its winnings related to the September Alonzo upgrade, and more. Sure, that’s not just due to the current state of the crypto market. Developments like eToros Plans to restrict trading with it on its platform from December 26th also contributed to its decline. Are you working harder against it than for it right now? In the short term, ADA-USD may struggle to recover. Or worse, slide further towards $ 1 per token.

So what’s the best step now? It depends on your approach to crypto. Traders looking for fast money trades may still want to keep their distance. Getting in early, whatever replaces “Metacoins” as the hottest area in cryptocurrency, can be the best move. But if you’re a long-term crypto investor, are you confident that DeFi (decentralized finance) will go mainstream at some point? This remains one of your best options.

The market can be mad about it. It can never suppress ether (CCC:ETH-USD) as the leading DeFi ecosystem. Nevertheless, there is still a prospect of much greater use in the coming years. This in turn sends its token price to much higher levels.

Cardano continues to take the right steps

Today’s market environment may make you question the value of a position in ADA-USD. But it is important to remember that the developers of this crypto continue to take the right steps. Even if investors do not currently appreciate this fact. What do I mean by “right moves”?

Cardano founder Charles Hoskinson recently argued in an ask-me-anything (AMA) session that every key crypto health metric has improved in the past two years. This includes active users, amounts used, transaction volume and the distribution of dApps (decentralized apps) within the ecosystem. In the same AMA meeting, Hoskinson also indicated that “major updates” will take place over the next year.

One big update he may have pointed out could be the introduction of Cardano’s scaling solution, Hydra. As Cryptoslate.com reported on Dec. 17, a GitHub post from Sebastian Nagel, a software engineer for crypto, could suggest it will go live earlier than the previously estimated launch in late 2022.

Hydra, which could potentially enable transaction speeds of up to 1 million per second, could be there to move forward Solana (CCC:LEFT USD) and become the undisputed “Ethereum killer”. In short, such a development could be more than enough to skyrocket ADA significantly after months of heavy losses.

Another deflation of the “crypto bubble” remains a major risk for ADA-USD

A launch of Hydra next year could give Cardano a partial recovery. Over a longer period of time, the possible profits could be even more massive. If that upgrade allows a large chunk of the DeFi economy to hit, it may one day join the ranks of the ranks Bitcoin (CCC:BTC-USD) and Ethereum with a market capitalization well over $ 100 billion (market capitalization is around $ 41.2 billion today).

On the other hand, this bull case makes one big assumption: that crypto will re-enter bull market mode after its recent downturn. It’s hardly set in stone. What if investors continue to invest in less risky assets? The prices of speculative assets like crypto could continue to fall.

Even if the dust settles, future returns could be far less impressive than what we got used to over the past year. It could take many years for cryptos to return to their respective high water marks. Just as it took many tech stocks nearly a decade to hit new all-time highs after the dotcom crash.

That said, I wouldn’t say it’s set in stone, that’s how the story will rhyme. But if you are not sure that this time around, you may not want to take a position in this or any cryptocurrency right now.

Bottom line: if the future of crypto is optimistic, buy Cardano

Again, short-term traders should stay away from ADA-USD. This altcoin could continue to deliver disappointing returns in the meantime, making it a poor trading tool. So should be long-term investors who, as I discussed above, don’t quite believe that “this time around”.

However, what if you are optimistic about the future of crypto? You might want to buy it. If the blockchain continues to gain critical mass, Cardano could rise to many times what it is being traded for today.

At the time of publication, Thomas Niel held LONG positions in Bitcoin and Ethereum. He did not hold any of the other securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s posting guidelines.

Thomas Niel, contributor for InvestorPlace.com, has been writing individual stock analyzes for web-based publications since 2016.

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