Back to around $2 as of this writing, Cardano (CCC:ADA-USD) like other major cryptocurrencies, is in “recovery mode.” Starting late last month, investors have dived back into crypto in a big way. We’ve seen this play out with Bitcoin (CCC:BTC-USD), which has zoomed from just under $30,000, to back above $45,000.
We’ve seen it play out with Ethereum (CCC:ETH-USD) as well, with its move from around $1,750 back above $3,000. In the case of the ADA-USD rebound? It’s seen an even larger rebound, surging more than 90% since the crypto comeback kicked off around July 20.
Yet even with its hot run in recent weeks, I wouldn’t say the party’s over just yet. With its major upgrade less than a month away (more below), there may be room for this token to get back to its all-time high of $2.46. Over the longer-term, perhaps to even higher prices.
As it’s been the case in the past, this along with other cryptos remain very risky. A change in sentiment back to negative (caused by factors such as possible increased regulation) may be enough to send this altcoin lower once again. But if you’re looking for a crypto with strong fundamentals, and plenty of room to gain? This remains one of your best options.
The Alonzo Purple Upgrade Could Give Cardano Another Boost
After its impressive surge in recent weeks, it’s possible ADA-USD trades sideways for the rest of August. But on Sep 12, this altcoin’s price could be set to soar once again. Why? As our Brenden Rearick reported Aug 14, that’s the day the blockchain powered by this crypto goes live with its Alonzo Purple upgrade.
This upgrade paves the way for Cardano to finally have smart contract capabilities. As I’ve discussed before, improving its utility is key for this “Ethereum killer” to take on ETH, when it comes to its usage in DeFi, or decentralized finance. An increased usage of this coin in DeFi transactions could enable it to see further price appreciation.
To what extent? It may be years away from supplanting Ethereum, much less Bitcoin, in terms of market value. The coin’s market capitalization of $62.9 billion may factor in a lot of its potential post-Alonzo. Yet if the upgrade goes off without a hitch, and investor sentiment remains the same then as it is now?
A move back to its high of $2.46 looks attainable. Hitting long-term price targets, like $3, $5, or $10, could happen sooner than analysts previously anticipated. That being said, there’s a major factor to keep in mind before you run off and buy Cardano. Its forthcoming upgrades could be a game-changing catalyst. But this negative factor may be something that sinks it back, whether or not this altcoin experiences an Alonzo-related boost.
Increased Regulation Still Something That Could Sink ADA-USD
The buzz around upgrades may be helping the crypto market to recover from its May meltdown. But there’s another emerging factor that could send cryptocurrencies (Cardano included) lower from here. I’m talking about increased talk of a U.S. Government crackdown on cryptocurrencies.
These concerns kicked off with stringent crypto tax reporting requirements included in the latest infrastructure bill. Then, further talk from lawmakers in Washington on bringing regulations for this asset class in line with traditional asset classes like stocks and commodities.
Now, it’s inevitable that this asset class, which has only been around since 2009 (when Bitcoin launched), would be reined in by regulators. Some have even made the case that increased regulation is a good thing, not a bad thing, for it. In the long run, that may prove true. But in the short-term? Given you can argue that regulation defeats much of the purpose behind crypto. Many may question the rationale of buying something designed to disrupt fiat currencies, only to integrate itself into the traditional financial system.
Putting it simply, Regulation headwinds could outweigh upgrade tailwinds. In turn, helping to send BTC, ETH, ADA and the rest back in the wrong direction once again.
Still Risky, But Prospects Brightening Up for Cardano
The market’s recent positive reaction to in-progress upgrades may bode well for future ADA-USD appreciation. Once Alonzo Purple goes live on Sep 12, this altcoin may have a clear path back to its high-water mark. It could also get to the $3 price level (or higher) sooner than expected.
Increased talk of crypto regulation is definitely something to keep an eye on. Regulation could give this asset class a great degree of legitimacy. At the same time, it could lessen the appeal of this asset class, designed to be a fiat currency alternative.
Risk still runs high. But given its high utility, and its potential for big gains after its upgrade? Cardano remains one of the top cryptos to buy.
On the date of publication, Thomas Niel held long positions in Bitcoin and Ethereum. He did not have (either directly or indirectly) any positions in any other securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.