Cardano's Rise: Regulatory Relief and DApps Activity Fuel a 43% Weekly Surge
Summary:
Cardano (ADA) saw a significant 43% surge in the week leading up to December 14, reaching a market cap of $22.7 billion. While this rise matches the valuation of Denmark's largest bank, the valuation of decentralized protocols like ADA vary greatly from traditional financial assets. Despite no significant changes in the staking ratio or transaction fee structures over recent months, ADA experienced a surge mainly due to reduced regulatory risks and increased activity in its decentralized applications (DApps). Even though Cardano still has room for growth in terms of active addresses and volumes, its current success suggests promising prospects for the future.
In the week leading up to December 14, Cardano (ADA) chalked up an impressive growth of 43%, hitting its peak since May 2022 with a market cap of $22.7 billion. Its surge to $0.64 puts it on the same playing field as Denmark's largest bank, Danske Bank (DANSKE.CO), serving over five million retail customers. However, it should be noted that valuations for a decentralized protocol like ADA vastly differ from traditional financial assets which rely on revenues for overhead costs. Instead, Cardano's market cap is independent of earnings and sales. Nevertheless, identifying potential factors behind ADA's price surge and its scope for future growth is key.
The driving elements behind Cardano's recent momentum are both diverse and complex, including explicit factors behind its 70% increase in December. A social media post by @matiwinnetou sheds some light on Cardano's ongoing success, with strong emphasis on factors like liquid staking, lack of transaction failure fees, no slashing for users, no minimum staking amount, and others.
However, not all is rosy in the garden of Cardano. There haven't been major changes in the staking ratio and there is a paltry yield of 0.6%. There are no notable improvements in transaction fee structures or validator slashing over the last couple of months, and the argument on minimum staking amount seems flawed when set against other cryptos like Ethereum, yielding much higher returns.
Even though @matiwinnetou lauds Cardano for its on-chain native assets and a large treasury fund for ecosystem development, these points have remained relatively unchanged for the past few months, making the recent burst somewhat unjustified. Though the author should be commended for recognizing Cardano's possible downsides and acknowledging them.
Highlighting certain activities and events leading to Cardano's price surge, one can't ignore the marked decline in regulatory risk and a heavier tilt toward Cardano's decentralized application activity (DApps). With lawsuits filed against Binance and Coinbase faded in the backdrop, following harsh criticism by U.S. Senator Cynthia Lummis, Cardano rallied past harsh regulation decrees, which had earlier labeled it as a security instrument, causing suppressed prices.
Criticism concerning lower activity in Cardano's DApps space has been well-recognized, but current data shows a significant rise in the same with a 16% increase in user base and 83% surge in DApps volumes in just a month, outpacing a majority of other chains. Praise should be reserved for Cardano's decentralized exchange Minswap, boosting 26,400 active addresses and $178 million in monthly volumes. And while Cardano still has geographical growth to achieve in terms of active addresses and volumes, the recent price surge shows promise for the future. Indeed, ADA's bull run has been propelled by DApps activity and diminished regulatory concerns.
This news piece doesn't offer investment advice. All investment and trading moves are fraught with risk, readers must conduct their independent research before arriving at a decision.
Published At
12/15/2023 12:43:09 AM
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