Cardano is a much-talked-about cryptocurrency on the crypto market. Despite being low-priced, crypto experts have faith in the currency. With everyone cheering for Cardano, why is it so cheap?
Cardano is a cheap cryptocurrency because its supply exceeds demand, lowering its price per share. It is also relatively new with an evolving ecosystem. Another reason for the lower price is the overall dip in the entire crypto and stock markets.
There are other factors impacting Cardano’s price. However, despite its recent dip, the digital currency hopes to create a stable ecosystem. This article explains the factors contributing to Cardano’s lower price.
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Factors Contributing to Cardano’s Price
Starting at $0.0024, Cardano or ADA hit its peak at $3.10 in 2021. Though expected to go over $10, the altcoin has been trading at lower prices since the 2021 peak. We can’t put all the blame for this free-fall on the project. Both external and internal factors contribute to Cardano’s current price.
Let’s try to understand these factors better:
1. Supply and Demand Chain
The primary factor why Cardano (ADA) has a low price value is its current supply and demand chain. It is a limited currency with 45 billion tokens available. But the limit is not too limited compared to Bitcoin, which caps out at 21 million. ADA’s current circulating supply isn’t running low.
Whenever supply is more than demand, the Price per Share goes down. So, the limited supply that may take Cardano’s value to a higher level one day now contributes to its low price.
2. A Relatively New Ecosystem
Even though it is one of the more stable assets on the crypto market, Cardano’s ecosystem is relatively new, contributing to its low price. Many crypto analysts and experts consider it a good option for short-term and long-term investments. Therefore, as its ecosystem evolves, Cardano’s demand will likely soar.
The ADA ecosystem consists of two layers:
- Cardano Settlement Layer
- Cardano Computation Layer
Both these layers enable ADA to bring about changes for faster and more reliable transactions. The entire ecosystem has five eras or phases. Once the eras are complete, the digital asset will become decentralized, leading to a more stable and independent ecosystem.
3. Competitor Projects
Another reason for Cardano’s low price is its competitor projects. Some of them offer better returns to the crypto community. They are also quick to deliver their roadmaps and launch projects, which helps their ecosystem stabilize faster.
In comparison, ADA still has many new projects it hasn’t launched yet, and its policies might confuse the community.
4. The Current Crypto Market Dip
The current crypto market is on a downward trend, which may continue for a while. The market leader, Bitcoin, is currently below the $17,000 mark as of Jan 10, 2023.
Why is this important? Altcoins, including Cardano, move with BTC’s volatility.
Bitcoin is currently hovering between $16,500 & $17,000. Which is almost 75% lower than its all-time high. This is another key reason why Cardano is selling cheap. As we know, altcoins’ value is relative to BTC volatility – if BTC goes down, all cryptos go down.
If we study BTC Halving cycles, there is still a chance of a 40% drop from the current price. This could be very dangerous for altcoins liquidity, including Cardano. Hence, the value could go further down.
No one can time the market bottom. But the good news is that the prices are still very low for those accumulating BTC, ETH, and other blue-chip cryptocurrencies like Cardano. Despite the dip, they are likely to survive the bear market.
Cardano is currently 88% down from its all-time high, marked at $3.09. The current price of under 37 cents is very cheap for accumulation. It may drop even further by 50-80 % if BTC goes down.
Factors That Could Improve Cardano’s Outlook
Let’s look at some of the factors contributing to a bullish outlook for Cardano.
1. Proof of Stake
Cardano is one of the best proof-of-stake blockchains founded by Ethereum co-founder Charles Hoskinson. Ethereum recently converted from proof-of-work to proof-of-stake after the merge.
Proof-of-stake means Cardano goes easy on the environment, and this will make a big difference. It doesn’t use energy-driven mining and leaves behind a small carbon footprint. With the most pressing concern regarding climate change being the need for eco-friendly technologies, Cardano is likely to do well.
Besides, the cryptocurrency has already overcome significant issues like interoperability and scalability. Plus, it is environmentally friendly in comparison to other proof-of-work protocols. Both these factors make it one of the most sustainable digital assets currently.
2. Hype Is There
We talked about new projects by Cardano that await launching. Though this makes the evolution slower, it also keeps the hype up. The coin has gained the attention of experts and analysts, leading to its mass adoption.
Cardano is famous as an altcoin and enjoys a strong network. The network also grows at a good pace, which can result in a price hike in the future.
3. A Promising Future
Cardano has a bright future because of its community and the ecosystem they are building. Its current market cap is around 12.5 billion dollars while the near future prediction is between $5 to $8.
In the next bull run, it could easily achieve an all-time high if its market cap grows to 104 billion dollars.
The market cap in the last bull run touched 77 billion dollars. If some portion of the stock market investments can flow into the crypto market, Cardano’s and other cryptocurrencies’ market cap could soar. We are talking about trillions of dollars. Imagine Bitcoin touching $150,000 in the next bull run rally. It could easily take Cardano to $5 to $8.
Conclusion
During its launch, Cardano received much attention and hype. It is not as volatile as some of the bigger players in the crypto market, which isn’t a bad thing. Furthermore, some factors contributing to its current low price could be the reason for its future price hike.
Writing Cardano off because of its current cheap price may not be a good idea. Many would argue that it is the right time to accumulate the asset and wait for long-term gains.
In this article, we discussed why Cardano is so cheap at the moment along with the main catalysts that can determine the direction of the coin’s price in the future.
Becoming a millionaire, however, doesn’t happen overnight, unfortunately! It’s always recommended to create a steady flow of income so you can invest in a diversified portfolio, and never invest more than what you cannot afford to lose!
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Cheers,
Odeh Ahwal
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