The Cardano (ADA) price has underperformed other major coins during the past month. The high to low drawdown from November was around 40%. Even though we did see a pullback in the market in general, Cardano was the one that caught our eye. Over the past 24 hours, the price has bounced 6.5% to trade at $1.70. But even if this bounce continues, does the blockchain network have enough fundamental long-term value?
Positive technical picture
In the short-term, the technical picture points to a move higher in coming days. The long-term trend line acted as support in the $1.50-$1.54 region earlier this week. This rising support previously kicked in at $1.05 back in the summer, and at the start of the year back at levels around $0.35.
The downtrend over the past three months is still in play, but a bounce from current levels could continue until the $2.15 region where it would meet selling pressure. If this downward trend was broken cleanly above $2.15, then this would suggest a broader change of sentiment with the coin with a much more positive backdrop.
If this was seen, then September highs of $2.27 would be eyed up, and beyond that the physiological barrier at $2.50 would come into play.
Fundamental value unclear
Even though the move in coming weeks could offer a ~30% return from current levels, the longer term picture doesn’t look great from a fundamental point of view.
Cardano is a blockchain and smart contracts platform. It isn’t unique in this way, with Ethereum being the original and largest platform currently. In the crypto boom over the past couple of years, other similar developers have created rivals such as Solana and Polkadot. Not only does this take away potential volume from Cardano, but over time it’s logical to think that only the top few blockchain ecosystems will be used.
Will Cardano be one that survives? We don’t know. However, recent news shows that the development of the decentralized application (DApp) platform is slow in being rolled out. With the likes of Ethereum 2.0 just around the corner, it’s easy to see why investor excitement in this space isn’t focused around Cardano right now.
The performance of ADA over the past month likely reflects in part the lack of promise that investors have about the long-term viability of the ecosystem.
Jury is out with regards to Cardano
Overall, we do see value in holding Cardano as a trading asset within a portfolio, for potential short-term gains. However, we’re unsure as to whether the fundamental value of the blockchain offering makes it worth holding the coin for years to come. Some of our favourite alternative options for December are discussed here.
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