- Cardano's price is up 30% this week, putting it into seventh place in the crypto charts.
- People are starting to invest in applications on Cardano's ecosystem.
- Cardano was the top crypto in Grayscale Investments' latest fund.
Cardano's broken the $1 barrier, can it hold those gains?
Popular cryptocurrency Cardano (ADA) has gained over 30% in the past seven days, putting it back into seventh place in the crypto charts (market cap). Like many cryptos, Cardano has struggled recently, but many hope this week's price surge could be the start of a new chapter.
To put Cardano's gains in perspective, crypto king Bitcoin (BTC) gained about 4% in the same time period, according to CoinMarketCap data. A week ago, Cardano was trading at around $0.84. It then broke the all-important $1 barrier and at time of writing is priced at $1.17.
Cardano is a well-established cryptocurrency with big ambitions. It wants to use blockchain technology to bring about positive global change and has a strong focus on the developing world. It takes a slow and steady approach to development, carefully testing each step in its development before rolling it out. This has frustrated some crypto investors who've become more accustomed to projects that race to be first and quickly gain market share.
What fueled Cardano's price rise
One reason for Cardano's dramatic growth this week is that the crypto market as a whole is showing signs of recovery. We're by no means out of the woods yet, but after a slump of several weeks, crypto prices are starting to push upward.
Nonetheless, Cardano has performed better than most. Here are three reasons why:
1. Cardano is the top crypto in Grayscale's new fund
Grayscale Investments launched its 18th investment product this week, the Grayscale® Smart Contract Platform Ex-Ethereum Fund. The fund featured Cardano prominently, providing an influential counterbalance to those who've criticized Cardano's slow smart contract rollout. Smart contracts are tiny pieces of code that live on the blockchain and make it programmable.
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Here's the weighted breakdown of Grayscale's fund at launch:
- Cardano, 24.63%
- Solana (SOL), 24.27%
- Avalanche (AVAX), 16.96%
- Polkadot (DOT), 16.16%
- Polygon (MATIC), 9.65%
- Algorand (ALGO), 4.27%
- Stellar (XLM), 4.06%
2. Cardano's ecosystem is growing
Not only are more and more applications launching on Cardano's system, the amount of money people are investing in those apps is growing too. Cardano's site shows there are over 550 apps at various stages of development. Founder Charles Hoskinson says many of these will launch after a technical upgrade in June.
According to DeFi Llama, there's now over $300 million in total value locked (TVL) on Cardano's network -- up about 175% in the past month. Cardano still has a long way to go before it can compete with top-ranked blockchains like Ethereum (ETH) and Terra (LUNA) with TVLs of around $125 billion and $27 billion, respectively. But the recent growth is a step in the right direction.
3. Coinbase launched Cardano staking
Staking is a way to earn rewards on your crypto. Some cryptocurrencies use a proof-of-stake model to validate transactions, and investors who are willing to tie up their tokens to participate in the process can earn rewards. Top crypto exchange Coinbase announced this week that it would add Cardano to the list of stake-able cryptos.
Coinbase said it estimates an APY of 3.75% on staked Cardano assets, to be paid every five to seven days. Cardano will join Ethereum, Dai (DAI), Tezos (XTZ), and Cosmos (ATOM) on Coinbase's list of yield-earning cryptos. Coinbase said in its latest earnings report that it hopes to increase its staking options even further.
What this means for investors
If you invest for the long term, short-term gains or losses are unlikely to have a big impact on your position. The important thing is to only invest money you can afford to lose, and to consider where you think Cardano may find itself in five to 10 years. That way, it will be easier to wait out the continued volatility caused by wider economic and geopolitical factors.
All the same, Cardano's rally is a positive sign, as is the broad rise in crypto prices. Cardano's gains reflect increased confidence in a cryptocurrency that sometimes struggles to keep investors in the green. After its overhyped smart contract launch in September, critics questioned Cardano's ability to deliver and raised concerns about the slow roll out of applications. This month's developments help address those worries. Cardano remains an important cryptocurrency that deserves a place on most investors' watchlists.
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We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
Emma Newbery owns Cardano, Bitcoin Solana, Avalanche, Polkadot, Polygon, Algorand, Stellar, Ethereum, Terra, Cosmos, and Tezos.
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