If I were an investor looking Cardano (CRYPT: ADA)I would avoid purchasing until it proves something specific. If you can do that, you probably won’t have any problems reaching new heights.
This is what needs to happen before it is worth investing in.
As a blockchain, Cardano has spent years emphasizing a rigorous research process that leads to careful and collaborative engineering. This development methodology is theoretically a virtue, but it is not an economic moat that blocks competitors, nor does it imply an attractive investment thesis. A moat only appears when builders pick a chain because switching seems expensive, and for cryptocurrencies, such moats are almost always a competitive advantage.
Today, Cardano is tenuously present in areas that tend to attract capital, such as decentralized finance (DeFi) applications and stablecoins. That type of “ongoing, but only technically” profile can persist for years without generating profits for investors.
So the only thing to wait for before even considering buying Cardano is for it to prove that it has a niche in which it excels beyond the competition. If there is no segment of the crypto sector where the on-chain design produces significantly better results than its rivals, there is simply no incentive for capital to be allocated there. Hence the extremely poor performance of the coin relative to other major cryptocurrencies over the past three years.
Investors should look at two things to see if Cardano is improving in a way that could eventually justify a purchase.
First, your core DeFi metrics, such as total value locked (TVL), need to increase for several quarters in a row. Second, look for signs that the chain is attracting apps that people have been using for more than a few months. App revenue is one metric to watch, but the number of new apps launched per month is also a decent indicator, as is the number of monthly active wallet addresses on-chain.
Until Cardano starts meeting those criteria and dominating a niche, sitting idly or looking for other investments is the best strategy.
Before buying shares in Cardano, consider this:
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