- While Bitcoin is sailing on calm water, its rival Cardano has already increased by more than 36 percent in the third quarter.
- Traders looking to diversify from the top, yet flat, cryptocurrency could pump Cardano further into July.
- The upward trend is due to the upgrade of the altcoin to the proof-of-stake at the end of this month.
When Bitcoin traders get bored, they pump up altcoins.
This can be seen in last week's price action across the alternate cryptocurrency universe. As Bitcoin develops within a trading range of 0 to 1 percent, the main blockchain competitors such as Ethereum, XRP, Bitcoin Cash, Chainlink and others have risen.
Most notable in the top 10 crypto index, however, is Cardano. The market capitalization of the sixth largest blockchain project rose by more than 36 percent in the third quarter. Meanwhile, the native token ADA has also seen a similar parabolic upward trend.
Cardano's ADA in parabolic upside rally since its March 2020 low. Source: TradingView.com
The Get-Rich Cardano pump
One can assume that there is a lot of speculation on Cardano. The project did not go well enough after falling over 95 percent from its all-time high of January 25th. The first version of the Mainnet launch included token transfers in a federated blockchain – nothing new.
However, the story shifted from 2020. IOHK, the core development team that Cardano supports, provided the code for the second upgrade of the project called "Shelley. ”It will be activated at the end of July – and with it Cardano's long-awaited proof-of-stake (PoS) protocol will come with operational rewards.
Is that an entry? I do not think so. Is that a short entry? I don't think so either.
Upward trends -> buy the dip strategy. pic.twitter.com/20ec5u3sEj
– Crypto Michaël (@CryptoMichNL) July 8, 2020
Now everything that was said above is a promise. Cardano has neither confirmed a successful hard fork nor proven that it is a better PoS project than its top rivals Tezos and Chainlink. In addition, the conversion of the Ethereum from proof of employment to proof of employment will intensify competition next year.
But the announcement appears bullish to the crypto country. It is enough if traders leave their Bitcoin holdings aside for a while and hedge themselves in Cardano's ADA to "buy the hype". As a result, the ADA / BTC exchange rate has been 55 percent higher since the beginning of the month.
More room to grow
Wilson Withiom from Messari Data Aggregator Service explained the hype in a note released last week. The research analyst described the term “deployment bonuses” as the main catalyst for the ADA rally (both in the US dollar and Bitcoin markets). Excerpts:
“Potential stakers who buy ADA and those who speculate about the appeal of the bonuses have probably driven this upward trend. (…) The use is more lucrative at an early stage because the participants see a decreasing return when more stakers join the network. ”
Mr. Withiom meanwhile added that the Cardano token has "plenty of room for growth".
This puts ADA under the spell of magnetizing upward targets, starting with the closest at 1,613 sats, followed by 1,944 sats and beyond. Values were taken from a Fibonacci retracement chart created from the upper ADA value from April 3, 2019 to the lower end of January 14, 2020.
ADA upside targets plotted on a Fibonacci retracement graph. Source: TradingView.com
As long as Bitcoin remains unattractive, boring and stable, traders can continue to benefit from the hypes generated by neighboring tokens. In the meantime, a breakout in top cryptocurrency could cause altcoins, including ADA, to cut some of their recent gains.
The ADA / BTC has already reached its 15-month high.