ADA, the native cryptocurrency of the Cardano blockchain, has surged 13% in the past week, 269% in the last month, and 2,633% since last year. With all that upward momentum, it’s managed to become the third-largest cryptocurrency by market capitalization.
Today, it kept going up all the way to a price of $1.28 even as much of the rest of the market lingered in the red. Bitcoin this week fell 15% and Ethereum is down 22%.
Apart from Dogecoin, the price of which was helped upward by Elon Musk tweets, Cardano is the best-performing crypto asset in the top 20 this year, according to data from Nomics. Impressively (and like Dogecoin), it’s performed well despite not being listed on Coinbase, a major gateway for main street US investors.
So, why is the price going up?
There are two likely culprits. First, it’s hard forking at the beginning of March...and that’s a good thing. After the “Mary” hard fork, Cardano will become a “decentralized, multi-asset (MA) smart contract platform,” writes Tim Harrison of IOHK, the primary development team behind Cardano.
Translation: smart contracts, decentralized finance (DeFi), and non-fungible tokens (NFTs) are all coming to the network. That may not seem like a huge deal given that Ethereum, the blockchain Cardano is often compared to, has all those things. But have you seen how high the gas prices on Ethereum have gotten?
Yet blockchain projects get upgrades and integrations and new features all the time. There’s no solid evidence that individual investors are pricing that into their decision-making while ignoring developments on other networks—although Cardano is getting ready to introduce NFTs at a time when they’re getting mainstream media attention. It’s great timing.
A second factor that could be driving the price up is this week’s news that FD7, a Dubai investment firm, sold $750 million in Bitcoin so it could buy ADA and Polkadot.
Gerald Votta, communications director at investment research firm Quantum Economics, told Decrypt, “Since Cardano has been trading close to a dollar and the platform has a lot of well-thought-out development, this may be the smartest play [FD7] can make for bigger returns.”
But Polkadot, the other recipient of the FD7 investment is down 13% for the week, so it’s unlikely that the bullish ADA market is entirely attributable to that either.
Cardano founder Charles Hoskinson, who also co-founded Ethereum, doesn’t know what’s behind the market momentum.
“If I knew why the prices behave the way they do, then I'd be a trader, not a builder,” he told Decrypt. “I'm focused on the growth of the Cardano ecosystem and the realization of our industry's use and utility in the developing world.”
Even if he is just a builder, he’s helped build something that people are buying.
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