Cardano: Big Things Happening

Summary Cardano has surged 200% recently, driven by improvements in scalability, smart contracts, and the introduction of the Voltaire era and Hydra. ADA’s decentralization and technical advancements, such as the Chang Hard Fork and Halo 2, set it apart from Ethereum and Solana. On-chain metrics show increased unique addresses and developer activity, indicating genuine interest and growth in the Cardano network. ADA is a strong long-term hold, but new buyers should be cautious; expect resistance at $2.3 and the potential for a meaningful retracement. Thesis Summary Cardano (ADA-USD) has been on a monster rally over the last month, comparable to the likes of Ripple (XRP-USD). The once-forgotten cryptocurrency is making headlines, and for good reasons. Over the past few weeks, ADA has made notable improvements to its scalability and smart contracts. Crypto investors have been impressed, and this is reflected in the on-chain metrics and technical outlook. The way I see it, ADA could easily rally above $2 in the coming month, but what happens after that will depend on the broader crypto market. Reviewing The Basics; Introducing Voltaire Altseason is upon us, and we’ve seen plenty of action in the space. Cardano, which for a while had been lagging the market, has now staged a 200% rally. It’s been a while since we talked Cardano, so let’s quickly review the basics. ADA Roadmap (Cardano.org) Cardano is a Layer 1 blockchain that is comparable in many ways to competitors like Ethereum (ETH-USD) and Solana (SOL-USD). ADA uses a Proof-of-Stake consensus mechanism based on the Ouroboros algorithm and a dual-layer system . But what I’ve always liked the most about ADA is its clear roadmap. From the beginning, the project laid out the different stages of development, which are divided into eras. As of right now, we are currently in the final stages, the Voltaire era. The Chang Hard fork was introduced back on September 1st, incidentally, very close to the bottom in ADA prices. Through the Chang Hard Fork, the governance of the chain has now shifted to the ADA holders, who now have voting rights. Furthermore, it also introduced some technical improvements to smart contracts. Achieving decentralization helps set ADA apart from Solana and Ethereum, which I’d label as quite centralized right now. Add to this the massive improvements in TPS, and you have a true contender to the throne for L1 networks. Hydra And TPS Cardano recently introduced Hydra, a layer 2 scaling solution that has now allowed the network to process 1 million TPS. Notably, the Cardano team launched the 90’s FPS game Doom on Hydra in August, with each frame of the game a transaction on the protocol. Source: thecryptobasic With this new development, ADA is arguably one of the fastest networks out there, and it opens the door to thousands of real-world applications that are now practical. On top of that, we’ve also seen Cardano recently introduce zero-knowledge contracts through Halo 2. Halo 2 was developed as an extension and improvement of the original Halo protocol, designed by Sean Bowe at Electric Coin Company. By building on modern cryptographic primitives, Halo 2 enhances the overall security of zero-knowledge proof. Source: Cryptoslate The hype behind Cardano is not just based on speculative buying. There’s been real updates happening and this is also reflected in the on-chain metrics. On-chain metrics First off, we’ve seen a huge explosion in unique addresses. Cardano Unique Addresses (thecryptobasic) Clear evidence of renewed interest in the network, though still far below its peak numbers in 2021-22. Plutus Scripts (Cardano developer portal) Plutus scripts, which are used to build Dapp have been moving up since the beginning of November, also great evidence that more developers are using ADA. Cardano TVL (DeFi Lama) Of course, TVL (blue) and Volume (green) have exploded in the last month, but this is also due to the much higher price of the underlying asset, ADA. Technical Analysis All of this makes ADA a convincing altcoin to hold long-term, but short-term we may encounter some resistance. ADA TA (Trendspider) Since ADA bottomed in July, we can identify an initial impulse, a deep retracement and now another impulse. We are approaching the 1.618 ext of the initial impulse measured from the bottom of the retracement, and this is a possible target for this rally. Note, we also have some important volume resistance at this level. I’d expect some consolidation here, but once this level is broken, then we could quickly rally to the 2.618 ext at $2.3. This is close to the previous highs and also an important area of prior trade which will provide resistance. For those that bought near the bottom, that’s near a ten-bagger. Final Thoughts ADA has made great efforts to make itself a real contender as an L1 network. It’s definitely a coin worth holding, but the current rally limits the upside for any new buyers. I’d expect this to keep rallying until $2.3 and if we could get a meaningful retracement after that we might have a good opportunity to buy. Still, investors must consider that altcoins are volatile and cyclical.

Source: Seeking Alpha