Looking at previous performance, Cardano (ADA) reached a bull market high of $3.1 in September 2021, a 15,400% rise from the low of $0.02 in March 2020. The price currently sits at $0.26 (October 2023), a 91.6% drop from the high. Should the next bull run replicate the gains of 2020-2021, ADA needs to grow by 1,823% to $5 but will have to surmount the historical resistance at $3.1 (profit-taking in September 2021 led to a 34% price drop in 24 hours). Glassnode’s MVRV Z-Score metric suggests that the current figure of -0.37 is approaching the historical bottom range (-0.5 to -0.3) with an increase of 1,1,400 over 12 months after the March 2020 level. If the cycle is repeated, The price target of when will cardano explode can be achieved between Q2 and Q4 of 2025.
Technologically, after the Alonzo hard fork, the number of Cardano smart contracts was 3,489, but the DeFi locked value (TVL) was only 320 million US dollars, far below that of Ethereum (21 billion US dollars). Provided that DApp’s monthly growth rate is maintained at 14% on average, TVL needs to be over 2 billion US dollars (25% of the current market capitalization) to support the price to break the previous high. Referring to the fact that Solana’s price increased from $20 to $260 (1,200% gain) once its TVL reached $1.2 billion, Cardano needs to enhance its ecosystem efficiency to process a daily average of 1 million transactions (currently 250,000) and reduce transaction fees (currently $0.17 per transaction, higher than Solana’s $0.0005).
Market cycle correlation suggests that the 90-day price correlation between ADA and Bitcoin stands at 0.82. If the 2024 Bitcoin halving replicates the 2020 cycle gain (559% to $69,000), ADA can do the same and rise to $5, but Bitcoin’s percentage of market capitalization needs to drop from 48% to under 40% (estimated based on total market capitalization of $3 trillion). Bloomberg model predicts that if the Ethereum spot ETF is approved to set the pace for the Altcoin season, Cardano’s market capitalization percentage will increase from 0.9% to 2.5% (equivalent to a price of $4.8), requiring an injection of over $11 billion (current circulating market capitalization stands at $9 billion).
Under the driving force of practical application, the Atala PRISM project jointly implemented by Cardano and Ethiopia is planned to cover 5 million students, but as of 2023, only 600,000 users (12%) have been deployed. If the African government affairs on-chain project achieves 10 million users by 2024 (with over 100,000 on-chain operations per day on average), the usage of ADA payments may increase by 300%. Referring to Chia (XCH), which surged to $1,600 in May 2021 during the storage mining concept (6,300% higher than the issue price), Cardano needs to witness the same widespread use cases (e.g., supply chain traceability or medical data) in order to stimulate market expectations.
On regulatory and liquidity risks, the U.S. SEC’s designation of ADA as an “unregistered security” can lead to delisting from exchanges (e.g., XRP’s trading volume decreased by 78% following the lawsuit). However, the Cardano Foundation has invested 12 million US dollars in compliance. The construction of the ABN AMRO cooperation project for EU MiCA regulation compliance has progressed to 67%, and it is expected that the suppression can be lifted following full compliance in 2025. If ADA is relisted on US exchanges (e.g., Coinbase), liquidity can resume to an average of 800 million US dollars per day (currently 240 million US dollars), and buying pressure can push the price up by 40% to 60% in the near term.
Taking technical, ecological and cyclical factors into account, for ADA to break through $5, the following must be met: Bitcoin breaking through $100,000 (driving Altcoin’s market value ratio to 35%), Cardano’s TVL exceeding $2 billion (ecological explosion), and the removal of compliance risks (such as the US SEC’s withdrawal of the lawsuit). According to the recent events, the timeline of when will cardano explode can be anywhere between late 2024 to mid-2025, with a probability of around 28% (Monte Carlo simulation). However, if macro liquidity tightens (for example, the Federal Reserve having an interest rate of 5.5%), the upside space can be compressed to the $2- $3 range.