Last week, the price of Cardano went up more than 100% and surpassed Bitcoin Cash to become the sixth largest crypt currency in the market.
The price of Cardano (ADA) increased by more than 100% last week and surpassed Bitcoin Cash (BCH) to become the sixth largest crypt currency in the world by market capitalization.
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There are 2 main factors behind the sharp increase in ADA over the past few weeks. First, most of the major cryptosystems experienced large rallies after BTC’s upward trend to USD 36,400 and Cardano has some major network upgrades scheduled for this 2021.
Daily chart of the ADA/USDT price (in Binance)
Excitement builds with the launch of Cardano’s smart contracts
Cardano launched its main Shelley network in 2020, initiating Cardano’s growth as a proof-of-stake blockchain protocol.
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Shelley’s launch was an important milestone for Cardano, leading to an improvement in the general sentiment around ADA throughout 2020.
However, the smart contract functions in the Cardano block chain are not yet enabled. When smart contracts are in place, large-scale decentralized finance protocols (DeFi) and other decentralized applications can be launched on top of Cardano.
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Binance Academy researchers said the launch of the smart contract features is part of the Goguen upgrade. Considering the importance of this network upgrade, the market sentiment around ADA seems to be improving. The report said:
„By December 2020, functional smart contracts cannot be launched on the blockchain platform. As part of the roadmap, they will be launched as part of the Goguen upgrade. After Goguen, the Basho era focuses on optimizing scalability and interoperability, and the Voltaire era introduces a treasury system to address governance“.
Smart contracts in Cardano differ from other block chains because they allow developers to code self-executing smart contracts based on pre-programmed conditions. This allows developers and decentralized applications (dApps) to be more flexible. Emurgo, a blockchain solutions company, wrote:
„These contracts, when written in the Cardano block chain, offer the value of giving full visibility to all contract participants, while being extremely secure and self-executing according to programmed conditions.
The current movement is largely technical
Although Cardano has a number of important updates scheduled for the near future, no major updates were announced during the rebound period.
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Technical analysts and traders predicted a large ADA rebound in late December 2020, as large-cap cryptoactives rose in tandem.
On December 30, Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, said he believes Cardano will do well in the first quarter of 2021. He wrote:
„One of the platforms that will do well in the next quarter, I think, will be #Cardano. The big ones probably run first and this is definitely a big one. As long as the USD 0.11 (or USD 0.15) is maintained, I think we will continue towards USD 0.27 and/or USD 0.40“.
A combination of technical factors and expectations for the launch of functional smart contracts in 2021 probably drove the ADA rally.
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In the short term, analysts say that as long as BTC consolidates above USD 34,000 and shows technical momentum, large-cap altcoins, such as Cardano, are expected to perform well.