At first, the Federal Reserve classified the surge in inflation as temporary. But now that it’s obvious that the central bank made a terrible mistake, interest rates are going up quickly. And this is scaring investors, particularly those in cryptocurrencies.
The overall market for digital assets has lost more than half of its value this year, while the S&P 500 is down 21% in 2022. But for astute investors who can look past the near-term uncertainty, there are still some opportunities to be had.
If you’re searching for a new cryptocurrency to buy, take a close look at Cardano (ADA -1.10%).
A promising blockchain
Cardano was launched in September 2017 by former Ethereum (ETH -0.61%) co-founder Charles Hoskinson, with the goal to improve on some of Ethereum’s weaknesses around scalability. Cardano has produced a superb return of 1,570% over its history. But thanks to the bear market we’ve seen in 2022, it now sports a market cap of $14.5 billion, making it the eighth most valuable cryptocurrency in the world. And as of this writing, there were 34.99 billion ADA, Cardano’s native token, in circulation, with a unit price of about $0.42.
What makes Cardano unique is its phased development approach. New updates are peer reviewed by computer scientists and researchers from top universities all over the world. While this system translates to longer wait times for the introduction of new features, it helps to ensure that all of the potential bugs are considered.
The most recent update, called the Vasil hard fork, went live on Sept. 22. This was meant to boost Cardano’s scalability. The hope is that the Vasil hard fork will attract much more developer activity to the platform, especially for the growth of decentralized finance services.
Another exciting attribute of Cardano is Hydra, a Layer 2 solution built on top of Cardano’s main blockchain. Hydra’s goal is to dramatically increase throughput to the tune of 1 million transactions per second (TPS) with the addition of sidechains that run parallel to the main blockchain. For comparison’s sake, Ethereum processes less than 15 TPS right now.
In my opinion, the more real-world utility a cryptocurrency can provide, the better the odds of its ultimate success and viability. That’s because with more users entering the ecosystem, the demand for and, ultimately, the price of ADA should rise. And in terms of use cases, Cardano is making inroads in a variety of applications, like identity verification in the financial services industry and supply chain tracking in the agriculture sector.
With the more development of the network, expect Cardano to continue building utility. In fact, more than 1,000 different decentralized applications are running on the network today. That’s not on Ethereum’s level, but it’s still impressive.
Focus on the long term
As I touched on earlier, rising interest rates, a trend that probably won’t end anytime soon, are leading some market experts to predict that a recession is on the horizon in the U.S. Therefore, crypto investors should temper their expectations in the face of heightened macroeconomic uncertainty. Things could get worse before they get better, and it’s best to be prepared for volatility.
Nonetheless, it’s refreshing to see that Cardano doesn’t depend on — and actually avoids — trying to make splashy headlines to quickly boost the price of its token. Thousands of cryptocurrencies already do that. Instead, adopting a deliberate and thoughtful approach can only help to ensure Cardano’s long-term survival.
It would be a mistake to hope for the same monster returns from Cardano that a top cryptocurrency like Ethereum was able to produce. Cardano is focused on the next decade, not the next month, and its owners should internalize this mentality as well.
For investors who are itching to find that next potentially lucrative buying opportunity, Cardano, which is down 68% in 2022, looks like a worthy candidate.
