Throughout 2023, Cardano (CRYPTO: ADA) has almost kept pace with market leaders such as Ethereum (CRYPTO: ETH) and Bitcoin (CRYPTO: BTC). Cardano is now up almost 50% for the year, while Ethereum is up 56% and Bitcoin is up 63%. But is Cardano ever going to have a breakout moment when it starts outperforming the broader crypto market?
According to Cardano founder Charles Hoskinson, that moment could be coming soon. He recently released an updated outlook for Cardano, and it was remarkably bullish. In fact, he thinks Cardano might soon be able to outperform market leaders such as Bitcoin. Let's take a closer look.
Recent successes
Certainly, Cardano has turned in some noteworthy achievements over the past five months. Transaction volume, for example, is up more than 205% year to date. And Cardano continues to make headway on new initiatives designed to make the blockchain more secure, more scalable, and more efficient.
Image source: Getty Images.
But the real success in 2023 has been in decentralized finance (DeFi), where Cardano is making some legitimate moves to become a DeFi leader. There have been new product launches, such as a new stablecoin, and there have been new product innovations, such as Cardano Bitcoin, a crypto token designed to make it possible to use Bitcoin on the Cardano blockchain. That, in turn, has led to the growth of the Cardano DeFi ecosystem.
Greater DeFi activity directly translates into higher total value locked (TVL), a key metric tracked by investors. As a result, Cardano has seen a jump in TVL this year. This immediately has attracted the attention of investors, because TVL is a blockchain metric that is publicly measured and tracked. At a glance, it's possible to see how Cardano compares to other blockchains. Cardano's TVL is now at a 10-month high, and all signs point to this metric increasing in the future.
Upcoming changes
In his video update ,Hoskinson discussed a few pending moves that he thinks could provide a huge boost to the Cardano ecosystem. One of these is something that might not be obvious to the casual crypto investor: concerted efforts by Cardano to reduce its overall regulatory risk.
Long story short -- if the Securities and Exchange Commission ever decides that Cardano is a security, then it's game over. So Cardano is making changes to its blockchain governance structure to make sure that it is as decentralized as possible, and that no one managerial entity controls the future direction of Cardano. By making these changes, Cardano would make it almost impossible for the SEC to classify it as a security.
But is it enough?
Of course, we've heard much of this from Cardano before. So is this time really going to be any different? Last year, for example, we heard about how much success Cardano was having in the area of non-fungible tokens (NFTs), but Cardano is still only a distant third in the NFT market. In fact, with the recent success of Bitcoin NFTs, Cardano is at risk of falling behind Bitcoin as an NFT innovator.
And that's really the problem that I have with Cardano. The blockchain seems to be doing everything right. It has a very measured approach to innovation and is very cautious about moving too fast. It has a long-term roadmap for success. It has largely avoided the hype and speculation of many short-lived crypto manias, including the meme coin mania. But it has never been No. 1 in any category. Even with all of its recent successes in DeFi, Cardano still only ranks No. 17 among all blockchains.
Until Cardano becomes No. 1 in a category like NFTs or DeFi, I really don't see how it is going to outperform the market. From my perspective, investors are only going to get excited about Cardano when it finally becomes the clear market leader in some category. Throughout its nearly six-year history, Cardano has never had a true breakout moment. In fact, Cardano is currently trading at almost exactly the same price as it was five years ago.
Should you buy Cardano?
Long-term, I remain bullish on Cardano as a buy-and-hold investment. Slow and steady wins the race, as they say. Plus, Cardano does have some clear upside potential. Even if Cardano only makes it back to the $1 mark, that's still a nearly a threefold return on your investment, given the current price of $0.37.
But you may have to hold on to Cardano for a long time before it ever outperforms the likes of Ethereum and Bitcoin. As I see it, Cardano can be a great way to diversify your portfolio while getting some long-term upside potential. But just don't expect Cardano to be a rocket ship headed to the moon in 2023 or 2024.
