Cardano (CCC:ADA-USD), whose underlying blockchain technology is used in increasingly popular decentralized finance (DeFi) networks, has been on quite a tear lately.
Since July 25, Cardano’s price has skyrocketed 117%, rising from $1.21 to around $2.83 per token.
That run has led Cardano to become the third biggest cryptocurrency after Bitcoin (CCC:BTC-USD) and Ethereum (CCC:ETH-USD). The sky very well may be the limit for the third-largest cryptocurrency in the world.
Cardano now has a market value of more than $70 billion. The digital token’s 1,400% jump over the past year exceeds the returns of both Bitcoin and Ethereum.
And indications are that Cardano still has more runway ahead of it. Cardano’s current bull run, which saw the price jump 50% in the second week of August alone, has been spurred by rising optimism that a new technological enhancement called the “Alonzo hard fork” will be completed by the forecasted target date of Sept. 12.
The upgrade will enable smart contracts to be executed on the Cardano blockchain and allow ADA’s network to offer lucrative services such as decentralized finance and compete against Ethereum, the current leader when it comes to DeFi and smart contracts.
Decentralized finance, or DeFi, places financial functions onto digital ledgers. This allows people to do things such as lend or borrow funds and earn interest in savings-like accounts without the need for traditional intermediaries such as banks and brokerages.
Recent rallies in Bitcoin, Ethereum and Cardano have helped the cryptocurrency market move back above $2 trillion in value for the first time since their previous peak in May of this year.
Cardano and the $3 Threshold
Expectations are running high among cryptocurrency enthusiasts that ADA will crack the threshold of $3 per token. So far, the price has gotten as high as $2.90 but failed to vault above the $3 mark.
While some market analysts are forecasting a pullback in the price of Cardano by as much as 40%, others see the cryptocurrency’s price continuing to run higher until the Sept. 12 launch date of its technological upgrade, at which point the token could see a sell-off.
The upcoming DeFi upgrade is important for Cardano as it will give the cryptocurrency some much needed utility and move it away from the thousands of other digital coins and tokens that exist in name but serve no real purpose.
The market for decentralized finance is growing by leaps and bounds and is seen by many as the future of financial transactions. The World Economic Forum estimates that nearly $60 billion is now locked up in blockchain-based decentralized finance, with that amount growing each day. Governments and the private sector are taking notice.
That Cardano could soon be competing head-to-head with Ethereum for a piece of the DeFi market has investors excited and spending heavily to buy ADA.
Decentralized Finance has a host of potential applications, including decentralized exchanges, non-fungible token marketplaces, lending and borrowing platforms, and derivative platforms.
The rise in interest in DeFi has caught the attention of Securities and Exchange Commission (SEC) Chair Gary Gensler, who has discussed its applications and the potential need for future regulations.
Buy ADA for Its Growth Opportunity
It’s not currently easy to buy ADA. Investors looking to physically possess the digital token can only do so through an account at a cryptocurrency exchange. Unlike Bitcoin and Ethereum, there are currently no exchange traded funds (ETFs) that track the price of Cardano.
However, investors who are keen on crypto and want to target a digital asset that has massive growth potential may find the hassle worth it to get their hands on Cardano.
While the cryptocurrency’s price might pull back in the near term, its long-term outlook remains bright.
With a lot of future growth likely ahead, ADA is a buy.