• Why is Cardano still strong after the market crash?

  • Cardano’s ADA token has experienced wild price swings since its launch in 2017. There are several reasons why Cardano’s value is holding up now that a support level appears to have been established.

    Cardano Has a High Level of Support

    Following a historic run at the beginning of 2021, Cardano surpassed its previous all-time high of $1.18 set in 2018. Since then, crypto markets have experienced a correction, and Cardano is no exception. Top ten projects like Ripple have taken a beating, with XRP losing up to 70% of its value since April. Polkadot, the ninth-largest cryptocurrency by market capitalization, has fared slightly worse, falling more than 73%.

    While the ADA token dropped along with the rest of the market in May, its previous all-time high appears to be acting as support. Cardano has lost less of its gains since the market peaked than the other top ten coins, falling only 48% from its current all-time high of $2.47 on May 17. While the value of other projects has gradually declined, Cardano has remained stable in the $1 to $1.20 range.

    Cardano, the third-largest cryptocurrency by market cap (excluding stablecoins), is frequently regarded by investors as a hedge to Ethereum. Since the beginning of the current bull market, there have been similarities in price action between Ethereum and Cardano. Both tokens experienced a price increase in mid-May before reverting to levels seen in February and March. The reasons for Cardano’s current strength, however, cannot be fully explained by its use as a hedge against Ethereum.

    Staking Made Easy

    Cardano’s staking model could be one reason why the demand for ADA has held up so well. Stakeholders receive rewards every five days at a rate of 4 to 6 percent APY. ADA is easier to understand and more accessible to the average investor than other Proof-of-Work coins. One-click staking is available on major exchanges such as Coinbase, Kraken, and Binance, making ADA an appealing investment for even inexperienced crypto investors.

    Cardano also has a lower entry barrier than its competitors for those looking to run their own validator in order to stake ADA. There are almost no hardware requirements, with only 4GB of RAM and 24GB of memory required. In comparison, running a validator on Solana necessitates a powerful CPU and at least 128GB of RAM.

    Because of its obvious support and ease of staking, ADA has become appealing as a lower-risk crypto investment. Even if investors do not expect any short-term upward momentum, they will likely find ADA’s current APY of 6% appealing if they are confident that firm support has been established. As investors buy-in for a stable return on investment, more demand for ADA is created, strengthening the support in a cyclical relationship.

    Investors appear to be sticking with Cardano in the long run, based on the amount of ADA staked across the network. Over the last six months, the number of wallets staking ADA has remained stable, never falling below pre-February levels.

    Investors who run their own staking pools are observing similar patterns. Popular quantitative analyst Benjamin Cowen has observed consistent levels of ADA delegation to the staking pools he manages for his community of followers, reasoning that people’s commitment to staking is aiding in the establishment of support.

    The community is the final aspect of Cardano’s strong support. Founder Charles Hoskinson interacts with the Cardano community on YouTube and Twitter on a regular basis, keeping investors up to date on the project’s latest developments. Cardano, like many other cryptocurrency projects, has been slow to deliver on promised features such as smart contracts, which have yet to go live. However, by establishing a strong and engaged community, the project has successfully maintained investor interest.

    It remains to be seen whether Cardano will be able to maintain its position in the future. According to technical analysis, while ADA has strong support, it is also having difficulty breaking out of its current range. Regardless of the short-term price action, it appears that Cardano’s supporters are unlikely to abandon the cryptocurrency anytime soon.

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