Cardano has fallen from grace in 2022. After surging to an all-time high of $3.1 in 2021, Cardano price has collapsed to $0.30. Along the way, its total market cap has collapsed from an all-time high of over $90 billion to about $11 billion. This means that its investors have seen over $79 billion of their profits wiped out.
Cardano is a cryptocurrency that became popular during the Covid-19 pandemic. Its popularity grew because of the developer’s claims that the network was the first one to get peer-reviewed. Most importantly, it was popular because of the platform’s founder who made his name as a co-founder of Ethereum.
Cardano price and rankings surged as investors predicted that its proof-of-stake (PoS) technology would make it an attractive alternative to Ethereum. At the time, there were concerns about the carbon emissions in Ethereum and other Proof-of-Work platforms.
Cardano had a major flow as it made a parabolic rally. It did not have smart contract features, meaning that it was not possible for developers to build on top of its technology. This changed in October 2021 when the developers launched the Alonzo hard fork that introduced these features.
However, since then, Cardano has received a mild reception from developers. Its DeFi total value locked (TVL) stands at about $70 million, making it smaller than that of other chains like Cronos, Mixin, Kava, Acala, and Near Protocol.
Its NFT ecosystem has also been relatively smaller than that of other chains like Flow, Immutable X, and Ethereum. Therefore, there are concerns about whether Cardano will gain widespread adoption in the future. For one, it appears that most investors have opted for mainstream DeFi protocols like Uniswap, Curve, and Maker.
The four-hour chart shows that ADA price has been in a strong sell-off in the past few months. Most recently, the coin has formed an ascending channel pattern that is shown in black. It has also moved below the 25-day and 50-day moving averages while the Relative Strength Index has moved below the neutral point at 50.
Therefore, I suspect that Cardano price will end 2022 much lower than where it is today. If this happens the next psychological level to watch will be at $0.300. A move above the resistance at $0.3100 will invalidate the bearish view.
2023 could be a different year for Cardano and other cryptocurrencies if the Fed decides to turn dovish. As such, I will not be surprised if Cardano makes a surprise recovery in 2023 in sync with other cryptocurrencies. In the past, we have seen cryptocurrencies like Shiba Inu, Internet Computer, and Zilliqa rise from the dead.
If a recovery happens, Cardano price will likely retest the important resistance at $1, which is about 226% above the current level.
At this stage, it is relatively difficult to predict where Cardano will be in 2025. In the past, cryptocurrencies have been very volatile. As such, anyone who predicts where the coin will be in two years time will be lying. In my view, I believe that Cardano is a highly-risky coin that has a shaky ecosystem. As such, I would select other coins like BTC and ETH for long-term investments.
Cardano has been a terrible investment this year. It remains significantly overvalued when you compare the ADA market cap vs other chains with a DeFi presence like ETH and Tron. Therefore, I believe that Cardano is not a good investment for now.
This post was last modified on Dec 07, 2022, 08:28 GMT 08:28