This Oft-Overlooked Cryptocurrency Deserves More Attention

During the past year, Cardano (ADA) has seen its price decline by about 13%. In contrast, Bitcoin (BTC) and Ethereum (ETH) rose by 9% and 2%, respectively. Despite this downturn, Cardano remains the world’s 10th most valuable cryptocurrency, with a market cap of around $18 billion. Alarmingly, it still languishes over 80% below its all-time high, even as Bitcoin and Ethereum reach new heights. However, while bulls may be shunning Cardano, many analysts believe this underrated token could potentially double in price to $1 within the next year.

Why Does Cardano Have Room to Grow?

Founded by Ethereum co-founder Charles Hoskinson, Cardano operates on a proof of stake (PoS) consensus mechanism, differing from Bitcoin’s energy-intensive proof of work (PoW). Unlike PoW, PoS doesn’t allow for mining; instead, users can stake their tokens to earn rewards. This mechanism also facilitates the development of smart contracts, enabling the creation of decentralized applications (dApps) and other crypto assets.

Cardano’s coins are minted through its own proprietary PoS protocol, Ouroboros. With staking features launched in 2020 and smart contracts rolling out in 2021, Cardano ensures formal peer reviews of its projects to guarantee scalability and security—a method not uniformly adopted by other blockchains, including Ethereum.

The speed and growth potential of Cardano’s developer ecosystem are often cited as key advantages. Its Layer-1 (L1) blockchain can process 250 transactions per second (TPS), while Ethereum’s L1 averages only 15 to 30 TPS. Cardano boasts even higher transaction speeds—up to 1,000 TPS—through its Layer-2 (L2) Hydra “heads,” processing transactions off-chain to reduce congestion. In a landscape where scalability is a critical issue, such characteristics set Cardano apart, allowing it to compete effectively against Ethereum and others.

Another compelling aspect of Cardano is its tokenomics. With a circulating supply of approximately 36 billion tokens and a fixed maximum supply of 45 billion, Cardano stands in stark contrast to Ethereum, which has no supply cap. This scarcity could enhance Cardano’s value proposition similar to Bitcoin, which has a maximum supply of 21 million tokens.

What Catalysts Could Drive Cardano’s Price to $1?

A significant factor to consider is that more than 70% of Cardano’s circulating supply is staked. This means less than 30% of the tokens are available for trading, indicating that increased purchases and staking could lead to further price appreciation. Several catalysts could ignite a long-overdue rally for Cardano.

The first catalyst lies in the expansion of Cardano’s developer ecosystem. While it doesn’t currently attract as many developers as Ethereum, Cardano’s L1 blockchain has quicker transaction speeds and fixed fees that are often lower than Ethereum’s gas fees, especially during periods of network congestion. As more developers turn to Cardano for their dApps, demand for ADA could rise.

The gradual rollout of Hydra heads will also enhance Cardano’s speed and scalability, putting it in a stronger position against other PoS blockchains like Solana (SOL), known for its quick transaction processing. Yet, Solana grapples with certain challenges, such as frequent outages and high hardware requirements, which may affect its decentralization. Cardano’s broader validation capability across less powerful devices could prove advantageous.

As Cardano upgrades its ecosystem, it can attract more developers who create additional dApps that utilize ADA, potentially stabilizing and propelling its price higher. If a price increase materializes and aligns with decreased supply, ADA could witness upward momentum. Even achieving a price point of $1 would only raise Cardano’s market cap to $36 billion.

Another possible catalyst could be the loosening of Cardano’s rigorous peer-review process, making it easier for new developers to launch projects on the platform. Additionally, the emergence of spot price exchange-traded funds (ETFs) for Cardano could stimulate investor interest. If the Federal Reserve continues to cut interest rates, it may drive more investors toward smaller cryptocurrencies like Cardano.

While Cardano’s price may fluctuate, the potential for hitting the $1 mark in the next 12 months is worth considering. It may not bask in the limelight like Bitcoin and Ethereum, but it remains a fundamentally sound choice not to be dismissed alongside weaker meme coins that lack substantial long-term catalysts.

In summary, Cardano’s unique blockchain capabilities, its commitment to security and scalability, and various potential growth catalysts position it as a cryptocurrency that merits more attention from investors and enthusiasts alike.