bitcoin (btc 1.00%) was the first cryptocurrency and is still the biggest name in the business more than a decade later. cardano (ada 0.45%) is a blockchain platform for smart contracts with an ambitious long-term roadmap.
These two digital currencies soared in 2021 and crashed in the first half of 2022. Could their prices stabilize and restart their stalled growth trajectories this year? let’s take a closer look at bitcoin and cardano to find out.
Reading: Cardano vs bitcoin
the case of bitcoin
Since June 15, the bitcoin price has plunged 69% below November’s all-time highs, reaching approximately $21,000 per coin. the largest cryptocurrency hasn’t seen prices this low since December 2020. bitcoin has generated market-beating returns over the past two years, despite negative vibes in recent months:
bitcoin price data by ycharts
Broadly speaking, the recent drop in bitcoin’s price has been linked to the same investor fears that weighed on wall street growth stocks. Inflation is skyrocketing in America and around the world. The government is raising interest rates to fight inflation, which is bad news for growth stocks and cryptocurrencies. People are looking to limit their exposure to financial risk these days, and that strategy includes staying away from volatile investments.
On top of that market-wide trend, crypto investors have been spooked by the collapse of the stablecoin platform now known as terra classic, halted withdrawals from the crypto-based savings service celsius network cryptocurrencies and other concerns unique to the cryptocurrency market. Each of these concerns tends to drag bitcoin down again, even if the news has no direct link to this specific digital currency. the captain is supposed to go down with the ship, you know.
There are brighter days ahead, maybe not right away, but in the long run.
This bear market will end, as it does with all economic crises. Meanwhile, regulators at home and abroad are crafting legal frameworks and tax systems for these novel digital assets, and even an overly draconian set of regulations will be better than the unclear guidance that currently exists. the battered cryptocurrency sector will be back.
Bitcoin’s role as a simple payment system and an ultra-secure system for storing economic value is crucial to the future of decentralized finance, web3, and the metaverse. There are other cryptocurrencies that serve a similar function, often started as direct clones of bitcoin’s program code, but none can match bitcoin’s huge market footprint.
Any system or service that needs to manage financial transactions will almost inevitably support bitcoin, usually by default first. and each new bitcoin-powered product adds to the market power of the digital currency. this is a situation where having first mover advantage gives bitcoin a powerful long-term advantage.
bitcoin’s rebound may not begin until washington (and beijing, tokyo, berlin and…) put the final signature on their detailed cryptocurrency regulations. but when they do, you don’t want to be left out.
the cardano case
The future of the smart contract platform may be even more exciting than that of bitcoin.
cardano is compatible with smart contracts developed for the market leading ethereum platform, although this system was not built to comply with the erc20 token standard from the start. the functionality was added in a later code update, managed by a companion blockchain called milkomedia which also adds similar cross-chain functions to the polkadot ecosystem.
The powerful addition of milkomedia highlights Cardano’s flexible blockchain network. Over time, I expect this development platform to continue to get new features while staying at the forefront of blockchain innovation. cardano already supports decentralized lending and lending features, yield farming protocols, non-fungible tokens (nfts) and much more.
If bitcoin provides the capital of the future, cardano is poised to offer much of the functionality of decentralized banking and transactional services. this coin is not trying to kill or replace ethereum, which will likely remain the overall smart contract market leader. instead, cardano gives application developers access to unique elements and features along with high-speed smart contract and transaction processing.
and don’t forget that the total market value of ethereum is $130 billion today vs. cardano’s $16 billion. cardano can double ethereum’s long-term returns, even if it gets only 20% of the largest cryptocurrency’s market share.
who’s the big winner?
There are no losers in this race. cardano appeals to a different type of investor than bitcoin, offering higher potential returns in a more competitive subsector. If I have to pick just one winner, it all boils down to this fact: Bitcoin is the closest thing to a guaranteed winner in this exploding market. Long-term investors should build the crypto-focused corner of their portfolios around bitcoin, leaving a smaller space for the more exciting but less predictable cardano coin.