Over the past 30 trading days, Cardano (ADA) has seen a meteoric price increase totaling close to 110%, which brings the current trading price up to around $0.09 at the time of writing. The 18-month-old cryptocurrency project is now ranked in 9th position in market cap rankings, as it holds a $2.34 billion market cap value.
Cardano is a smart contract and dApp platform, similar to Ethereum, which allows developers to create dApps on top of its network. However, Cardano is said to be scalable, unlike Ethereum, and is built on the premise that all work is academically peer reviewed before being implemented.
The cryptocurrency was founded by Charles Hoskinson, who co-founded Ethereum alongside Vitalik Buterin. However, Hoskinson noticed some scalability flaws within Ethereum, which caused him to branch off to create a new project.
In this article, we will take a look at the potential for Cardano to reach the top 5 ranked cryptocurrencies by 2020.
The top 5 cryptocurrency rankings are presently held by Bitcoin, Ethereum, Ripple, Litecoin, and Bitcoin Cash. BCH currently holds a $5.13 billion market cap value, which is $2.79 billion ahead of Cardano at this present time. This means that Cardano has a long way to go before it reaches the top 5 ranked cryptocurrency projects. However, we all know that cryptocurrencies flip positions with one another quite regularly, and Cardano has many strong fundamentals that make it a top contender for breaking into the top 5 before the end of 2020.
Positive Drivers
Ledger Integration
In March 2019, Ledger announced that they have successfully integrated Cardano into their hardware wallet. This now allows ADA holders to securely store their funds offline with increased peace of mind that they are safe.
The Ledger integration had been highly anticipated by the Cardano community, as users had previously stored their crypto on hot devices, which greatly increases the risk of theft due to the low level of security. Now users can protect their private keys through the help of the Yoroi wallet, developed by Emurgo, the commercial arm of Cardano.
Real Trading Volume
According to research posted on Reddit, it has become apparent that over 90% of crypto trading on exchanges is grossly inaccurate. The majority of reported trading volume is said to be fake, with crypto being bought and sold back and forth to artificially boost trade volume. However, according to data from OpenMarketCap.com, Cardano is the only cryptocurrency within the top 10 that has over 50% real volume.
Over the long term, the fact that more than half of the trading volume on Cardano is real will greatly help Cardano supporters feel comfortable that the growth of their cryptocurrency is genuine, increasing their confidence to invest further within the project.
Mainnet 1.5 Release
In March 2019, the Cardano dev team had reached a major milestone with the release of their 1.5 mainnet. This marks the start of the transition from their Byron phase to Shelley, which will see the entire network becoming decentralized with staking and delegation integrated.
The upgrade brings some major performance upgrades to the Cardano wallet, Daedulus, along with laying the foundations for the Shelley phase transition.
Entering the Shelley Phase
Perhaps the most compelling reason for Cardano to reach the top 5 ranked cryptocurrencies within 2019 is the Shelley phase of development within the project. The Shelley phase will see the cryptocurrency consensus algorithm shift towards proof-of-stake (PoS) with the Ouroborus BFT consensus protocol implemented. The Ouroborus protocol is said to be the first PoS protocol that matches the security provided by proof-of-work (PoW) protocols.
The fact that the new protocol will provide security similar to Bitcoin’s PoW protocol will greatly benefit the Cardano network, as network security is one of the most crucial assets that a blockchain can attain.
Although the user experience will not change much for ADA holders, the Shelley phase will involve a complete migration from one codebase to another, and therefore it will not happen overnight.
The first hard fork will update the new rules for the Shelley phase in an “inactive state,” which will then be activated a few weeks later. For an overview of the stages of the Shelley phase, take a look at this article.
The Shelley phase will be one of the main drivers to push Cardano into the top 5 ranked cryptocurrencies, as we will witness the scalability and security of the Cardano blockchain increase in a big way.
ADA Long-Term Price Analysis
For Cardano to reach the top 5 at today’s market cap values, the cryptocurrency will need to increase past the $0.20 target. Let us take a quick look at the ADA/USD market and highlight some key potential resistance areas on the way up toward $0.20 for Cardano.
ADA/USD – LONG TERM – DAILY CHART
Analysing the daily chart above for ADA/USD, we can see that the market has been rising ever since hitting the 2019 low during February 2019. The cryptocurrency proceeded to break above the 100-day moving average during March 2019, which is an incredibly potent bullish signal, as Cardano has never surpassed the 100-day moving average in its short lifetime.
During April 2019, we can see that the market has surged further higher and has now met resistance at a bearish .382 FIbonacci Retracement level (drawn in green) priced at $0.09185. This bearish Fibonacci Retracement is measured from July 2018 high to the December 2018 low.
If the bullish pressure continues to cause ADA/USD to break above the current resistance, we can expect immediate higher resistance to be located at $0.10 and then the bearish .5 Fibonacci Retracement level at $0.1120.
Above $0.1120, the market will then meet resistance at the short-term 1.272 and 1.414 Fibonacci Extension levels (drawn in purple) priced at $0.1177 and $0.1268. This is closely followed with resistance at the bearish .618 FIbonacci Retracement level at $0.1321.
If the buyers can keep causing ADA/USD to rise above $0.15, they will then meet resistance at the bearish .786 and .886 Fibonacci Retracement levels (drawn in green) priced at $0.1608 and $0.1779.
Before being able to reach the $0.20 target, the market will have to break above $0.18 and $0.19. After Cardano reaches $0.20, its total market cap value will also reach $5.18 billion. Provided that the top 5 cryptocurrencies do not rise too much during this time, Cardano will be closing in on the 5th market cap ranking.
Conclusion
The whitepaper project Cardano will have to make exponential increases to be able to reach the top 5 ranked cryptocurrencies. However, with major upgrades on the horizon during the Shelley phase of development, the cryptocurrency will undoubtedly continue to make headlines as the blockchain enters a new era of development milestones.
If the project can start to reach its potential and become a major contender in the smart contract and dApp sector, with increased scalability and network security, we can assume that developers will start to transition over to using Cardano in the development of their dApps further expanding the use case for Cardano.
