Cardano forms a strong base at $0.13 but the transaction volume still remains a concern for the investors. ADA saw a notable decline yesterday that was correlated with Bitcoin’s plunge to $11,000 as we reported in the previous Cardano ADA news.
Cardano forms a strong base at $0.13 but the bulls defended the level on a few occasions over the past day. Despite not establishing a bearish technical formation, some investors are concerned about ADA’s blockchain because of the low transaction volume. One analyst noted that compared to other chains with similar volumes suggesting that the current market capitalization could be twice as big as it should be valued at. The recent Shelley mainnet upgrade could be a factor that solves this problem and will help increase the utility and utilization of the blockchain.
At the time of writing, Cardano’s price is trading under 7 percent at a current price of $0.135. This marks a notable decline from the daily highs of $0.148 that was set at the peak of the rally. ADA was closely tracking the price action which was set by Bitcoin and Ethereum over the past few days which is what made it susceptible to seeing a sharp decline overnight. BTC dropped from highs of $12,000 to $11,000 while ETH saw a drastic decline that sent it from $415 to $300.
Cardano was able to find support around $0.13 but it got some strong reactions to this price level over the pas day. While referencing one investor that commented about ADA seeing only one transaction every ten seconds, Kevin Koh, the ex-Partner at Goldman Sachs explains that he believes ADA is overvalued. He noted that its current $4 billion market cap will be cut in half while still being “generous” in spite of its lack of current use:
“Cardano’s valuation (liquid market cap) makes absolutely zero sense at $4.4 B. A $2 B market cap ballpark for ADA is being generous in the current market.”
Koh pointed out to valuations of its closest competitors as an anchor point for the fair valuation with a range between $1 billion and $2.9 billion. ADA has a stronger community and an investor base than other tokens which is why the value is higher. Investors could also be betting on the possibility that they will soon see a huge influx of utility following the release of the Shelley mainnet upgrade. Charles Hoskinson, the IOHK CEO explained:
“This time next year I predict there will be hundreds of assets running on Cardano, thousands of DApps, tons of interesting projects and lots of unique use and utility…”
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