Cardano (ADA-USD) is down 60% in six months, which makes it a great time to start a position. The size should be only but a part of an accumulation process. It’s the same approach you might take with gold. Crypto is shaping the way the world will do financial transactions in the future, which means it should be a part of your portfolio.
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Current events are highlighting the need for alternative finance systems free from central government. To keep the peace, the West is threatening to cut Russia out the SWIFT network. This should remind us of the importance of having redundancies in life.
I am not taking sides on this particular issue, and I hope all parties resolve the conflict quickly. But the scenario of losing a critical financial freeway should worry everyone.
In times like this, it’s good to have alternate ways to move assets around. Cardano is a leading crypto network trying to make that happen.
With the help of its coin, ADA, Cardano is carving itself a piece of the crypto business. The network helps process transactions, so it belongs on crypto investor lists. Bitcoin (BTC-USD) remains the chief coin in charge, so I use it to guide all my crypto decisions. As BTC goes, so do the rest of them. Recently they’ve taken a bit of a dive, but it is normal price action.
The fundamentals of crypto are beyond reproach. If the “proof is in the pudding,” then crypto is as legit as they come. The value appreciation there has eclipsed all other asset classes by far. Meanwhile, they remain predominantly a laughing matter on main street. I know this first hand from my discussions with friends and family. While I try to educate them, I barely get through to 10% of my audience. Over time this sea of skeptics will be a source of potential new investors.
Since ADA-USD is already in demand, these incremental buyers would eventually catapult the bullish thesis forward.
Meanwhile, there will be large fluctuations in value, so you will need conviction. ADA just broke into new lows under last year’s levels. So, it’s up to the bulls to recover $1.2; otherwise, the bears retain control. Like all crypto it trades in wide ranges and in stride with Bitcoin. I am currently tracking the correction in BTC-USD to add to my crypto investments. I am deploying risk to build core positions into coins for the next few years.
Starter Positions in Cardano Make Sense
Source: Charts by TradingView
Since the $3 peak last summer, ADA lost as much as 75% of its value. It is also significant that it lost the $1 mark. Luckily, the crypto correction was obvious for those who know charts. The idea is to incrementally add into a core position. Even though I prefer Solana (SOL-USD), Cardano is a viable option for others.
Short-term traders can do so against the support at 75 cents. Longer-term investors can buy their first batch of many. The bulls now have the arduous task of recovering and exceeding resistances. Meanwhile, I continue to assume that the bears are in charge until the charts say they are not. The descending channel is proof and guide to this.
This doesn’t mean I’m bearish the coin, because I’m following a plan. I have already deployed cash into SOL-USD. I have also added some Ethereum (ETH-USD), because I will need it for a few transactions. SOL and ADA share similar thesis; however, they both support legitimate competing networks to Ethereum. Regardless of which crypto you chose, do not take all-in positions at once, because these assets move fast. The straightforward strategy is to accumulate coins over time.
Meanwhile, they are tradable and I’ve already cashed out 40% wins several times. But I also want to build longer-term core positions and start staking them right away. These core Cardano positions should deliver substantial capital appreciation in the long run. Currently, Ethereum is the king of crypto transaction system. ADA coin carries a rank of 7 with $30 billion in market cap. My take is that there’s enough business for all networks to prosper.
Potential Inflation Hedge Argument
Thanks to crypto I sleep better knowing I have ways of transferring assets to my family overseas. This came in handy during the pandemic, so I have first-hand experience with it. Just like I own physical gold, I see the need to hedge against cash. The 2020 lock downs reminded us how delicate infrastructures can be. Thinking outside the box when things are perfect is how we get ready for the next crisis.
Moreover, the process of staking coins is helping me fight inflation. Cash in U.S. banks collecting 0.4% is dying against inflation. The process of staking crypto coins can pay 10% on deposits. It is of course without the FDIC guarantee, but you can use a stable coin. So consider staking them a trade with a 10% return unless the company folds. Currently, Crypto.com shows it would pay 2% for staking ADA coins. I am doing that with my other core coins since I don’t intend to trade them now.
There are many skeptics. I love that. The longer they hang on to there ignorance, the bigger the advantage investors have over them. Ethereum is dominant, expensive and relatively slow. This is a screaming reason to invest in its competition. It is not a long leap of faith to start owning some of its competitors now.
In the last two months, there have been rumblings of government regulation over crypto. If and when the headline breaks out, all crypto coins will crash. It is part of my plan and I would be ready to pounce. My thesis even includes the low odds of Bitcoin retesting its 2021 breakout near $19,000.
On the date of publication, Nicolas Chahine had positions in SOL, ETH and USDC. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
