Cardano is a highly controversial cryptocurrency that draws mixed opinions within the industry.
Most proponents believe that Cardano (ADA) is the future, citing its fast speeds, low transaction costs, decentralization, and the fact that it is the only peer-reviewed crypto project.
Critics, however, argue that Cardano is an overvalued ghost chain, boasting a market cap of over $20 billion with little actual network activity. So, is Cardano a good investment?
Cardano has underperformed top peers
Historically, Cardano has not delivered strong returns compared to other major cryptocurrencies. Its price has dropped from an all-time high of $3.15 in 2021 to $0.60 today, a decline that wiped out over $70 billion in market capitalization, from a peak above $90 billion.
As the chart below shows, Cardano price has jumped by 405% in the last five years, while Binance Coin (BNB) and Solana (SOL) have jumped by 2,930% and 4,636%, respectively.
This underperformance stems from a lack of developer and investor engagement. Cardano currently has just 49 DeFi developers and a total value locked of approximately $348 million.
In contrast, Solana has 232 dApps and a TVL of over $20 billion, while BSC has 904 applications and a TVL of $8.4 billion. A closer look at most Cardano applications reveals that many have little user activity.
For instance, decentralized exchange protocols on Cardano recorded just $98 million in volume over the past 30 days, far below BSC’s $178 billion and Solana’s $61 billion over the same period.
Cardano is actively working to grow its ecosystem. Its developers are building Midnight, a privacy-focused sidechain that leverages zero-knowledge proofs. Midnight will introduce two native tokens, NIGHT and DUST, with a Glacier airdrop expected soon. ADA holders will be eligible to receive NIGHT tokens.
In addition, Cardano is preparing to deploy the Leios upgrade, a major protocol enhancement designed to boost throughput through parallel processing. If successful, this upgrade could increase transaction speeds from around 40 TPS to 1,500 TPS.
Still, it remains too early to tell whether the Ouroboros Leios upgrade will drive meaningful adoption in verticals like gaming or decentralized finance.
Is Cardano a good investment today?
Technical analysis suggests that the Cardano price has formed an inverse cup-and-handle pattern, a popular bearish continuation sign. It is now in the formation of the handle section.
Cardano has formed a death cross pattern, a popular bearish continuation pattern. A death cross forms when the 50-day and 200-day moving averages cross each other.
Therefore, the coin is likely to experience a strong bearish breakdown in the coming weeks, with the next target at 0.321, representing a decline of over 47% from the current level. This means that Cardano is not a suitable investment at this time.
