Like most alts in the market, Cardano too lost a significant percentage of its value when the crypto-market dipped in mid-May. While ADA had recovered some of its losses at the time of writing, the cryptocurrency was still well off its ATH of $2.45.
And yet, the degree of optimism associated with Cardano remains as high as ever. In some ways, this is an anomaly, not only because much of the crypto-market is still bruising from the aforementioned depreciation event, but also because the communities of other alts like Dogecoin have steadily seen a drop in positive sentiment.
Why is this the case? And, could ADA mimic its price action from the summer of 2020, a time during which the alt hiked by almost 550% in just 4 months?
In a market as volatile as the present one, this is a very tricky question to answer. However, there are signs worth looking forward to, signs which suggest bullish price action can be expected from Cardano in the near term. This was a sentiment recently shared by popular trader Lark Davis too, with the analyst asserting that soon, ‘Cardano Summer’ may be upon us.
And, there’s good reason for such optimism too. As revealed by IOHK’s Charles Hoskinson in a recent interview, the Alonzo hard fork, the planned upgrade that will finally allow developers to build smart contracts on Cardano, is more or less on schedule, with a late-July or early-August date expected to be penciled in. In fact, the first Alonzo testnet went live just yesterday.
While Hoskinson himself later tempered his remarks by suggesting that he’s trying to “manage expectations” and “Alonzo doesn’t need to be on the mainnet in 90 days,” the effect of his remarks was clear on the community, with ADA climbing by over 30% soon after.
Smart contracts, he went on to say, are the “capstone, the holy grail of utility.” Ergo, it is only understandable that ADA’s value will hike on the foundation of the expectations associated with it. Something similar was also alluded to by Davis in a recent video, with the analyst stating,
“Smart contracts are coming and they are coming very soon and you can see the price building that anticipation in.”
“Smart contracts are obviously going to kick off a revolution in terms of what’s possible on Cardano,” he added.
That’s not the only development, however. Cardano’s ERC-20 converter is nearing its testnet phase too, with the same likely to further fuel integrations with Cardano. Will it also precipitate a wider migration from the Ethereum network though? Unlikely, Davis noted.
Here, it’s worth underlining that this isn’t an impossibility either. In the past, projects such as SingularityNET have migrated from Ethereum to Cardano citing a ‘lack of clarity,’ and speed and cost issues.
Finally, the analyst also highlighted the fact that according to the findings of a recent CoinShares report, ADA recorded its highest weekly inflows from institutional managers. Simply put, what this implies is that institutions are now looking beyond the likes of just Bitcoin and Ethereum, stressing the resurgence of the wider crypto-market.
Ergo, it would be fair to argue that higher price targets might be incoming for Cardano in the future, with ADA likely to test its ATH again soon. A more confident assertion on the fact, however, would be based on how the rest of the market, most notably, Bitcoin and Ethereum do. The depreciation of these two cryptos pulled ADA down to $0.92 on the charts. If corrections hit again, a new ATH will have to wait.