Perhaps the biggest reason for Cardano’s growth this month is the upcoming launch of Djed, the network’s stablecoin. Djed is an overcollateralised, algorithmic stablecoin pegged to the US Dollar.
There’s no denying it, 2023 is off to a superb start. At the time of writing, almost all the cryptocurrencies in the top 100 list by market capitalisation were in the green YTD. A majority of the coins have even registered double- and triple-digit gains since the start of the year.
Cardano is one of the coins that has posted substantial growth over the last month. The eighth-largest cryptocurrency by market cap is up nearly 50 percent year-to-date (YTD) and some experts predict further growth in the coming weeks. But what’s behind Cardano’s sudden rise and can it sustain its momentum going forward? Tag along to find out.
Cardano’s Djed stablecoin
Perhaps the biggest reason for Cardano’s growth this month is the upcoming launch of Djed, the network’s stablecoin. Djed is an overcollateralised, algorithmic stablecoin pegged to the US Dollar. It is also one of the first stablecoins in the market to employ a formal verification process. This means that it is mathematically verifiable and does not require a bank to audit its collateral reserves.
On January 24, Cardano’s Twitter handle announced that Djed was scheduled to launch somewhere in the coming week. When it is introduced to the market, interested parties will have to exchange ADA to receive Djed. Moreover, developers behind the project revealed that investors and traders would receive extra rewards when they stake ADA to receive Djed. This could be pushing the demand for ADA, resulting in gains over the last few weeks.
Other updates and developments
The upcoming launch of Djed isn’t the only factor behind ADA’s recent growth spurt. There are a couple of other network updates that are creating momentum for the coin. For instance, Cardano recently announced a planned update called CIP-30. If implemented, this improvement proposal will allow Cardano-based hot wallets to interact with web2 platforms like Amazon. This could boost the utility and demand of ADA in the future.
Further, on January 20, Cardano revealed its first automotive project, eTukTuk. Announced at the recently concluded World Economic Forum in Davos, the project is looking to create a charging network for electric vehicles in Sri Lanka. It will also introduce a safe, more reliable, and highly sustainable electronic autorickshaw (aka eTukTuk EV). The project is hosted on the Cardano network and users will need to hold ADA to start using the services. This will again push the demand for ADA, resulting in price gains over the last few days.
Developer activity booms
Another factor behind Cardano’s recent gains could be the network’s expanding developer activity. As per Santiment data, Cardano currently ranks third amongst all blockchain networks in terms of developer activity. This is after the network Saw an 80 percent increase in the developer activity metric over the last month. GitHub published a similar study which stated that Cardano was the second most active network in terms of development activity.
Where is ADA headed next?
Cardano’s technical indicators, including its relative strength index (RSI), moving averages, and moving average crossovers, all point to bullish sentiments for Cardano. The network is also heading toward further updates in Feb, which could provide a boost for ADA. The total value locked on Cardano has also spiked 50 percent since the start of the month, jumping from $48.95 million on January 1 to $75.35 million at the time of writing. These are all good signs for ADA’s future price action.
Conclusion
Like the broader crypto market, ADA has been flashing green since the start of 2023. The coin jumped from $0.248 on January 1 to $0.372 at the time of writing, that’s a 50 percent rally in less than a month. ADA’s momentum has also helped it ride out a network outage on January 24 and continue on its upward trend after a short dip.
Moreover, if technical indicators are to be believed and the network’s future updates pan out without hiccups, ADA could be in for further gains. However, cryptocurrencies are highly volatile and prices can fluctuate wildly in a matter of hours or even minutes. Therefore, it is important to do your research and invest only as much as you can afford to lose completely.
