Cardano (ADA) has recently experienced a significant price surge of 23.9% on July 13, leaving investors curious about its potential for further gains. This surge comes on the heels of a favorable judicial decision regarding XRP, leading many to question if Cardano can break above the $0.40 mark.
There are three reasons to support Cardano’s bullish momentum. Firstly, the potential for Cardano to integrate with other blockchains has sparked interest. Charles Hoskinson, the founder of Cardano, proposed incorporating Algorand (ALGO) as a Cardano sidechain. While it may seem unlikely, this proposal gains relevance amid AlgoFi’s shutdown announcement on July 11, following allegations of security-like characteristics against Algorand by the SEC. By becoming a sidechain of Cardano, Algorand could avoid regulatory scrutiny and boost the adoption of Cardano’s ecosystem. In addition, smaller altcoins could be incentivized to become Cardano sidechains, leveraging Cardano’s treasury and marketing potential.
Secondly, increased activity in decentralized applications (DApps) and the non-fungible token (NFT) market on Cardano has contributed to its bullish momentum. Smart contract activity is crucial for the success of blockchains designed for DApps, especially as Ethereum struggles with soaring transaction fees. Cardano’s total value locked (TVL) in ADA terms has increased by 10% month-on-month, reaching 550 million ADA on July 14. Moreover, decentralized exchange volumes have seen a 6% increase over the past seven days. Cardano’s NFT sales have surged by 56% to $3.1 million, outperforming leading platforms like Solana and Ethereum.
However, despite these positive indicators, there are still risks to consider before investing in Cardano. The recent XRP decision helped alleviate regulatory risks, but it’s important to note that Cardano’s initial coin offering (ICO) was not explicitly cleared by the court ruling. The ongoing XRP trial will further determine Cardano’s regulatory status. Additionally, ADA’s TVL of $200 million lags behind other layer-1 smart contract alternatives such as Tron, BNB Smart Chain, and Avalanche, suggesting limited demand for ADA’s services.
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To solidify its position and potentially surpass the $0.40 mark, Cardano needs to continue growing and delivering on its promises, including the planned updates for 2023. Two important upcoming updates include the Hydra L2 solution, which uses sidechains to offload transactions from the main chain, and Basho, an L1 scalability and performance improvement proposal. These updates aim to improve Cardano’s block structure, parallelization, and pipelining capabilities.
In conclusion, Cardano’s recent price surge and positive indicators in terms of integrating other blockchains, increased DApp activity, and decreased regulatory risk have contributed to its bullish momentum. However, there are still risks to consider, such as ongoing regulatory uncertainty and limited demand for ADA’s services. Cardano’s upcoming updates will play a crucial role in solidifying its position and potentially surpassing the $0.40 mark. Investors should closely monitor these developments to make informed decisions about investing in Cardano.
