Three reasons why Cardano still won’t jump above $1 — things could change with the release of the new protocol

The Cardano ecosystem (ADA) will have a new privacy protocol called Midnight. Project co-founder Charles Hoskinson told this in an interview. However, despite the scalability of the smart contract platform and other technical features and the seemingly enormous potential, the altcoin is barely growing in value. Let’s discuss why that is, below.

What is Midnight? 

The new protocol is expected to focus on privacy and appear in the smart contract platform ecosystem. It first became known a month ago. Then Hoskinson said that Cardano will launch a separate token (Dust) for Midnight, which will allow to develop of the project independently from the main network. If it works out, it will be a perfect version of previous projects, with a focus on privacy.

The main goal of Midnight is to protect the personal data of users, companies, and developers without affecting their freedom. To ensure this, the project uses technology with zero knowledge protection. 

Hoskinson said that the main issue is figuring out how to simultaneously protect users’ information and, conversely, expose it when and where it is needed. For example, on the one hand, regulated businesses often require the transfer of users’ personal data, and on the other hand, there is privacy law. 

According to blockchain rules, all private information becomes public, so the project team decided to create a network similar to what Ethereum did with Bitcoin, where there is a coin that is responsible for privacy, and there are smart contracts that are a private unit. 

Of course, one of the main competitors of the new blockchain from Cardano will be Monero, which is considered one of the safest cryptocurrencies, but because of its involvement in illegal transactions, so far has a dubious reputation. 

As for Cardano, the project has better credibility. The fact that ADA is one of the top 10 digital assets by market capitalization says it all. It would seem that to succeed Cardano only needs to implement similar or slightly better technology than Monero, but despite its popularity, blockchain has its problems. 

Why is Cardano priced so low? 

We reported about Cardano very often and there is a reason for that. The asset is considered one of the most prestigious, is in the top 10 in terms of capitalization, and is very promising. However, all is not good with the financial component. At the time of writing, the coin is trading at $0.3151 with a market capitalization of $10.85B. 

Over the past week, the token has fallen in value by 0.97%, and in the last 24 hours, it has risen by 1.76%. That’s not bad, and not a good performance, more like neutral, but given the current crisis, it’s better that way than falling.

The collapse of FTX affected ADA too, but it clearly suffered less than other cryptocurrencies. However, the opposite is also not observed, which is growth. There is an opinion that the token suffers from investor pressure because ADA has not traded above $1 since April 2022. The peak of $2.9593 on September 3, 2021, is not impressive either, so the question arises why the coin cannot reach new highs, though it has a powerful blockchain and has potential in the field of NFT and DeFi. 

Experts name three reasons: 

1. The crisis associated with the collapse of FTX and the bear market. The most obvious reason. All cryptocurrencies were affected by the market crash, and Cardano was no exception. Yes, it didn’t collapse completely like LUNA, but a 90% drop from the highs didn’t do ADA any good.
2. Maximum supply. Experts say that the maximum number of coins also has a negative impact on the coin’s value. For example, ADA has 45B and BTC has only 21M. Some cryptocurrencies like Ethereum and Solana, for example, don’t have an upper ceiling, but they already have fewer tokens in circulation than Cardano.
3. Expectation/Reality. Blockchain is growing rapidly, but often what the team releases and what users expect don’t match up. For example, as was the case with the Alonzo update (DeFi apps were supposed to show up, but didn’t) and the Vasil cryptocurrency hard fork (release delays). In both cases, investors did not get what they wanted and started abandoning ADA, so the price of the token collapsed.

How can I make money on this?

There is a possibility that if the project team gets rid of the above problems and the crisis ends, the cryptocurrency will rise in price, but so far nothing of this kind is expected. With the release of Midnight, the company may step into the same traps — promising one thing, but in fact, giving another, then, on the contrary, it will only further undermine its credibility. However, let’s not be pessimistic and hope that this time Cardano will do what it promised, and then maybe the price will finally fly up to $1.