Cardano (ADA) is one of the most prestigious third-generation cryptocurrencies. However, even with its impressive performance in the crypto market, the altcoin’s capitalization does not stand out.
This move lower by Cardano goes against everything the altcoin offers and has yet to deliver. The value of being present in places where the traditional financial system does not reach is very important.
Also, being a smart contract platform that has scalability should be a big factor in making cryptocurrency soar.
Even though ADA is in the top 10 of the largest-cap cryptocurrencies on the blockchain market, it is still coming under pressure from investors who have not seen the altcoin trade above $1 since April 2022.
With a powerful blockchain with the potential to excel in non-fungible tokens (NFTs) and decentralized finance (DeFi), what’s stopping Cardano from reaching new highs?
The year 2022 was not one that Bitcoin (BTC) and altcoins could be proud of, as not much capital entered the crypto market.
In this way, cryptos were strongly affected by the outflow of money, and ADA was one of them. The altcoin has seen a 90% drop from its all-time high of September 2021.
However, this does not mean that there was a direct Cardano failure. The fundamentals of cryptography remain intact. Even BTC, which remained decentralized, with an uncensored network and miners validating its transactions, traded in the hands of bears this year.
Another factor that has a negative impact on Cardano is the high supply that the altcoin has. The maximum issuance of ADA is 45 billion units, while that of Bitcoin, for example, is 21 million. Despite different proposals, the number of coins in circulation directly affects the price of a cryptocurrency.
ADA competitors such as Ethereum (ETH) and Solarium (SOL) have much smaller units in circulation than Cardano. Although ETH and SOL do not have a maximum issuance limit, the number of tokens available on the market is less than that of ADA.
- Ethereum: 122.3 million tokens in circulation;
- Solana: 535.5 million tokens in circulation;
- Cardano: 35.2 billion tokens in circulation.
For comparison, SOL in 2022, after losing 50% of its capitalization, is still above $10, a target that ADA, while larger capitalized, has never managed to achieve.
failure of expectations
Another factor preventing Cardano from growing in the market is the failure of expectations for its upgrades. With the advent of the Alonzo hard fork, for example, this became remarkably clear.
The update was developed to bring smart contracts to the Ethereum competitor blockchain. Expectations were extremely high, as there was hope that decentralized applications (dApps) would immediately appear on the altcoin.
However, the reality was quite different. During 2021, the year of Alonzo’s arrival, few applications were launched on Cardano. As a result, investors started giving up on ADA, causing the altcoin’s price to drop sharply.
In 2022, the most anticipated cryptocurrency hard fork was Vasil. This update brings scalability improvements to Cardano. It allowed the launch of new projects. However, the delays in its launch have made the rush to buy Cardano cool.