As the crypto sell-off continues, it’s starting to have an impact on Cardano (CCC:ADA-USD) prices. At first, the sell-off was largely a story of Bitcoin (CCC:BTC-USD) dropping, while other cryptos, like Ethereum (CCC:ETH-USD) and this one, continued to make new highs.
What was behind this? Instead of getting out of crypto entirely, many were instead pivoting to altcoins. But, now, the sell-off is intensifying, and it’s now affecting cryptos across-the-board. After soaring from $1.33 on May 1, to prices topping $2, ADA-USD is falling fast towards prior price levels.
At $1.66 as of midday May 19, we may see a move back to $1, or even lower, in the coming days. As crypto market sentiment shifts from enthusiasm to panic, it may be best to stay away for now. But, once the dust settles? Up there with Ether in terms of utility, and still in its early stages, Cardano still has a shot of appreciating at an above-average clip over the next few years.
Emphasis on “still has a shot.” It’s still too early yet to determine whether the current meltdown is just transitory, or the beginning of the end. But, if the crypto trend has staying power, and doesn’t go out of style, coins like this one look the most promising.
Cardano: Why It’s Too Early to ‘Buy the Dip’
As prices move in the wrong direction, those who have been sitting on the sidelines may be seeing this a ‘buy the dip’ opportunity. Yet, rushing in too soon may not be the best move. Cardano’s popularity may be rising. This helped it continue to gain, even as the benchmark crypto, Bitcoin, started heading south from its all-time high.
Now? At first just swapping BTC positions for positions in ADA-USD, ETH-USD, and even Dogecoin (CCC:DOGE-USD), crypto aficionados and newbies alike are retreating to cash, getting more of their portfolio out of this asset class. Still in its early stages, it’s hard to figure out where this correction will bottom out.
Specifically for Cardano, it’s hard to tell whether it can find its floor. It’s important to note this coin’s popularity only started to take off in February. As recently as January, it was trading for around 35 cents. Back in December? Around 15 cents. Putting it simply, there’s little indication whether it can find support at $1. With its rapid rise over the past six months, those who bought on momentum could end being fair-weather friends, heading for the exits at the first sign of trouble.
This may result in big losses, for those thinking they’re “buying the dip,” but instead wind up trying to catch a falling knife. But, if we do see a massive decline in the price of ADA-USD, it may result in a fantastic buying opportunity, once the dust settles.
A Screaming Buy if It Falls Back to $1
Perhaps the risk Cardano falls back to 35 cents (or lower) is overblown. Yes, it traded for far below this price level just six month ago. But, as more became aware of its potential, it’s debatable whether a major meltdown in crypto prices would send it completely back down to these levels.
But, a move back to prices last seen during April’s crypto flash crash may be possible. That is, prices just above $1. Those who bought in near its highs may feel the urge to accept their losses, and move on, if this happens. Yet, prices at or slightly above $1 may be a fantastic entry point for a long-term position.
Why? As I discussed earlier this month, the key with Cardano is to focus on the long-term. Instead of chasing it on short-term momentum, it may be better to buy it, let it sit in your portfolio, and wait for it to increase in value, as this coin becomes more widely used in the blockchain economy.
One caveat, though: long-term appreciation hinges on many things. For one, Decentralized Finance (DeFi) needs to permanently disrupt the world of finance. Second, it needs to convince more in the blockchain economy its currency is a solid alternative to Ethereum. Right now, the jury’s still out whether both will end up happening.
Cardano Bottom Line: Wait for the Dust to Settle
A few months back, crypto seemed indestructible. As more started to believe in it, it became easier to justify higher prices for Bitcoin, Ethereum and the rest. But, now, that’s not the case. If the loss in cryptocurrency confidence continues to accelerate, it may be a while before things fully bottom out.
Once the meltdown ends, though, Cardano may be a name to buy after the dust settles. Its many positives help to bolster its long-term potential. But, it’s unclear how far it could fall in the short-term.