Cardano’s (CCC:ADA-USD) price action has been confined to a tight range for over one month. Meanwhile, Bitcoin’s (CCC:BTC-USD) price soared to a new high of $66,893 after several weeks of positive price momentum. Exchange-traded funds (ETFs) allow more people access into this exciting space without having any special knowledge or expertise needed – which is why it was no surprise that investors saw huge returns after ProShares released their first-ever bitcoin-linked ETF. Similarly, other altcoins have done very well recently. The only major coin left behind is Cardano.
To get a better idea of where ADA may be headed next, we have to closely look at past price action. The last two attempts by bears on this currency’s behalf sent it back towards the key support level of almost $2. That means patience is key when trying out your own trading strategies in these volatile markets.
A confident push from the bulls would take this cryptocurrency beyond key resistance and closer towards an all-time high at $3 bucks per ADA token. From the point where we’re currently sitting, though, bears will want to drag this one down back to between $1.70 and $1.80.
Plenty of Reasons to Invest in Cardano
On Sept. 12, Cardano’s new smart contract update took place. This is known as the Alonzo hard fork, and IOHK has confirmed its success at Epoch 290, officially kickstarting the Goguen era for this cryptocurrency. In the runup to upgrade, we saw the price of Cardano increasing handsomely.
But then the price stabilized in the current range. Also worth noting is that the use cases for Cardano are increasing. When we compare this token to the galaxy of meme coins out there, this is what sets it apart.
Cardano uses a proof-of-stake protocol named Ouroboros, a public blockchain platform. Alongside this unique structure, peer review is very much of how platform updates are mapped out. Unlike many blockchain protocols that rely heavily on miners for validation and security, this one uses mathematicians.
With prices up over 1,000% this year, it’s safe to say that ADA has been very lucrative for investors. And it is difficult to predict where a cryptocurrency will be in six months. However, a strong economic moat and multiple use cases mean the future is bright for Cardano.
Cardano is a blockchain with two layers, helping it with transaction speed and volume — the cardano settlement layer (CSL) and the cardano computational layer (CCL). The first layer is similar to Bitcoin and records transactions. The second, designed for Ethereum (CCC:ETH-USD)-like smart contracts, enables applications to run on the blockchain.
Cardano and Contracts on Its Blockchain
ADA is a revolutionary way to send and receive money digitally in a relatively faster, easier way. It does this through encryption, which makes it faster than other methods like credit card transactions or using cash in-person. Transactions happen between two parties directly without an intermediary third party such as a bank, which charges fees for various services.
Cardano is a more sophisticated blockchain than Bitcoin. The latter offers simple, smart contracts and has low transaction rates. Meanwhile, Cardano allows developers greater flexibility in writing sophisticated smart contracts. Smart contracts are self-executing, decentralized applications (DApps) that will allow developers to create any program they want on the network. And they are a big reason for the success of both Ethereum and Cardano.
In addition, through using a proof-of-stake system, Cardano gets brownie points from environmentalists. For example, Bitcoin is a proof-of-work system that needs miners to verify transactions, and in return, the miners receive coins. Critics of this type of consensus say that energy consumption is too high, leading many companies away from supporting Bitcoin.
Ethereum Offers Stiff Competition to Cardano
Cardano is among the Ethereum killers vying to take down its predecessor. A PoS system is more efficient than Ethereum’s proof of work (PoW) because it only requires energy and hardware for the protocol while allowing smart contracts.
It’s not surprising that with its infancy, Cardano is still catching up to Ethereum. The two cryptocurrencies share many features, but it can be tough to compare their track records and popularity among users. There are many ways in which Cardano could have the edge over Ethereum, and if it continues to grow at the same rate as this year, then there’s no reason why ADA can’t catch up. But Ethereum remains very popular among developers, giving it the edge at this stage.
Buy the Dip
Cryptocurrencies are risky investments. The technology used to create cryptocurrencies is still in its infancy. So, even if you’re willing to take on the risk now, there’s no guarantee it will continue being worth anything down the line — which means crypto investing is not for the faint of heart.
Having said that, there are several reasons to remain bullish on Cardano. As it continues to build out functionality, it sets itself apart from the sea of cryptocurrencies. Hype can only take you so far, which is why ADA should break out soon.
On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience analyzing the stock market and was a former data journalist at S&P Global Market Intelligence.