What happened
One of the biggest movers in the crypto market over the past seven days has been Cardano (ADA 3.87%). In fact, as of 12:15 p.m. ET, this token has soared 30.4% over this time frame, marking the largest move among all top-25 cryptocurrencies by market capitalization.
A confluence of factors was responsible for this impressive rise in Cardano over the past week. Chiefly among the catalysts, investors are pricing in reports that Cardano will be rolling out massive updates to improve the network's comparability, sustainability, and self-determination. These updates are expected to further improve Cardano's scalability, making this network highly competitive with competing lightning-fast networks.
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Additionally, Cardano received a massive boost from news that Grayscale would be launching a smart-contract fund, with Cardano being the largest position in said fund. It's expected Cardano and Solana will both receive a 24% weighting in this new fund, signaling to investors that institutional capital is seeking out Cardano as a key investment right now.
So what
These announcements are a big deal for investors looking at Cardano in the context of the altcoin market. For Cardano to compete with its peers, these updates are necessary. As noted in an interview with Cardano founder Charles Hoskinson: "All these updates are coming that are massively improving the scalability and expressiveness of the system so that you'll get the same type of performance you're seeing from systems like Solana and so forth. Or at least in the same orders of magnitude." These updates are expected to be rolled out between June and October, providing a big catalyst.
Additionally, institutional capital flowing into the crypto sector continues to be a key driver of investor interest in specific tokens. For Cardano, the inclusion in this new Grayscale fund is perhaps less important than this token's impressive weighting. It appears those with their finger on the pulse of the crypto sector are pointing to Cardano and Solana as two key winners in the race for market share in the decentralized finance (DeFi) space.
Now what
Cardano's rapid rise higher over the past week should not be ignored by investors. This is a cryptocurrency with some clear catalysts that could realistically drive valuation expansion with this token. As investors look for winners in this sector, Cardano is likely to continue to drive interest over the medium term.
That said, like all digital tokens, Cardano carries a higher level of risk. This investment is not for the faint of heart. As we've seen in the past, the crypto sector can correct in a hurry. Accordingly, investors ought to check their risk tolerance level before jumping in, while ensuring proper risk management protocols are in place, when investing in any digital currency such as Cardano.
