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Cardano Requires Patience, As Its Utility Increases So Should the Price

It may not have joined its larger peers, like Bitcoin (CCC:BTC-USD) and Ethereum (CCC:ETH-USD), in rallying last month. Yet that hasn’t stopped Cardano…

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It may not have joined its larger peers, like Bitcoin (CCC:BTC-USD) and Ethereum (CCC:ETH-USD), in rallying last month. Yet that hasn’t stopped Cardano (CCC:ADA-USD) from pulling back, following the recent crypto run-up. Right now, it’s trading for around $1.77 per token. That is about 20% below what it traded for last week. Worse yet, its a substantial decline from the $3 per token it traded for following the Alonzo Hard Fork upgrades in September.

Source: Shutterstock

It makes sense why Cardano’s selling off now. But why didn’t it rally in October and early November?

Chalk a lot of it up to rising competition from the other top “Ethereum killer,” candidate, Solana (CCC:SOL-USD). As I recently wrote, SOL-USD is starting to look more like the crypto that will give ETH a run for its money.

So, between its underwhelming performance, and with Solana now the new altcoin rising star, should you stay away? Not so fast.

Yes, for now, it may not be much of a great trading opportunity. It could stay stuck at current prices, or drift even lower, in the short-term.

However, when it comes to its long-term potential. Cardano still remains a viable play. In time, as more DeFi (decentralized finance) and dApp (decentralized app) developers flock to it, it will become more widely used. In turn, this will enable it to see a further, albeit gradual, rise in price. This doesn’t have to be the only crypto in your portfolio. Just don’t consider it one that you should pass up on.

The Near-Term May Stay Underwhelming for Cardano

ADA-USD’s long-term prospects remain bright.

Unfortunately, its middling performance recently could continue for some time. Even the post-Alonzo profit taking, which played a major role in its drop in early September, has likely wrapped up.

Why?

Mostly, because it’s going to take a while before Cardano has another bout of “game changing” news. Granted, there have been some developments of note over the past month. For example, as InvestorPlace’s Brenden Rearick reported Oct. 28, news of this token’s developer forming a partnership with the Government of Burundi. Cardano’s founder, Charles Hoskinson, has been traveling across Africa, looking to promote usage of it across the continent.

However, it’s going to take something more major, like the Hydra upgrades, to compel traders to dive back into ADA-USD. Once implemented, Hydra could help this crypto’s blockchain catch up to Solana in terms of scalability and speed capabilities.

Nevertheless, while the crowd stays on the fence, this may be your opportunity to enter or add to a position in this token. As the “pupcoin bubble” deflates, flash-in-the-pan plays like Shiba Inu (CCC:SHIB-USD) have started to collapse. However, in the case of this high-utility crypto, competition from Solana, not to mention the current “DeFi king” Ethereum, may run high. Even so, just remaining one of the most widely-used cryptos could enable it to see further price gains.

ADA-USD Still Stands to Rise in Price Over Time

The situation with Cardano hasn’t changed much in recent weeks. But neither has the long-term bull case. Just like I mentioned above, and in prior coverage of it, the long-term bull case is as follows.

Thanks to the Alonzo upgrades, this crypto has made a big leap toward bridging the utility gap between it and Ethereum. All that’s left now is for it to bridge the valuation gap between it and the more widely used crypto.

As this occurs, and more developers move their dApp/DeFi applications to the Cardano blockchain, its share of the blockchain finance market will climb. In turn, as it becomes as widely used, it should see its market capitalization (which stands at around $59 billion today) get closer to that of ETH-USD, which today has a market capitalization of $498.7 billion.

The best part?

As the gap between the two high-utility cryptos is so wide, even a partial catching up on Cardano’s part would result in a tremendous jump in price compared to where it stands today. I wouldn’t count on it happening as quickly as Cardano’s last triple-digit percentage move. But don’t think that, after its more than 10x increase in price so far in 2021, it has topped out quite yet.

The Bottom Line on Cardano

If you’re looking for a short-term crypto trade, for now you may want to stick to the names making headlines right now. As of this writing, Decentraland (CCC:MANA-USD) and “metaverse” themed cryptos are replacing “pupcoins” like Shiba in terms of what’s hot. But if you’re looking for a crypto you can approach as a long-term investment then ADA-USD remains such an opportunity.

Buying Cardano now, after it’s fallen back below $2 per token, could be a winning move in hindsight. In the coming years, as its usage increases, it stands to see a gradual, yet substantial, increase in price.

On the date of publication, Thomas Niel held long positions in Bitcoin and Ethereum. He did not have (either directly or indirectly) any positions in any other securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.

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The post Cardano Requires Patience, As Its Utility Increases So Should the Price appeared first on InvestorPlace.

Author: Thomas Niel

Economics

“Team Transitory” Is Dead After Powell Says “Time To Retire Word Transitory Regarding Inflation”

"Team Transitory" Is Dead After Powell Says "Time To Retire Word Transitory Regarding Inflation"

Remember when clueless macrotourists  and…

“Team Transitory” Is Dead After Powell Says “Time To Retire Word Transitory Regarding Inflation”

Remember when clueless macrotourists  and worthless econo-hacks who have zero understanding of actual economic dynamics spent miles of digital ink convincing their tiny echochambers that they were right and that inflation was transitory (or rather, desperately scrambled to mask their utter lack of grasp of even the simplest concepts):

Well, one month ago we made it quite clear where in the financial pecking order these so-called ‘experts’ fall…

… and then moments ago none other than Jerome Powell put to rest any further debate on the topic of transitory vs permanent inflation:

  • *POWELL: TIME TO RETIRE THE WORD TRANSITORY REGARDING INFLATION
  • *POWELL: THREAT OF PERSISTENTLY HIGHER INFLATION HAS GROWN

Powell’s cremation of “team transitory” took place after the Fed chair was asked how long inflation has to run above-target before he decides it’s not so transitory, with Senator Pat Toomey mocking the term “transitory”, saying: “Everything is transitory. Life is transitory” to which he could have also added that “on a long enough timeline the survival rate for everything drops to zero.

In response, Powell said it’s probably a good time to “retire that word”, a clean and clear admission from Powell that inflation is no longer transitory.

And while it is certainly good news that we can finally stop polluting the airwaves with idiotic discussions whether inflation is transitory or not, it hardly helps Americans because as the latest BofA transitory vs permanent inflation reading shows, both are at all time highs.

The market was not happy either because just moments later, Powell also said the one thing that traders dread, namely that the taper could wrap up a few months earlier:

  • *POWELL: CAN CONSIDER WRAPPING UP TAPER A FEW MONTHS SOONER

Tyler Durden
Tue, 11/30/2021 – 11:12

Author: Tyler Durden

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Economics

Stocks, Bonds, & Cryptos Crushed As Powell Threatens Accelerated Taper

Stocks, Bonds, & Cryptos Crushed As Powell Threatens Accelerated Taper

Fed Chair Powell has been more hawkish than many expected during…

Stocks, Bonds, & Cryptos Crushed As Powell Threatens Accelerated Taper

Fed Chair Powell has been more hawkish than many expected during this morning’s hearings, specifically noting the non-transitory nature of inflation and the need to use his tools to address it.

“At this point the economy is very strong and inflationary pressures are high and it is therefore appropriate in my view to consider wrapping up the taper of our asset purchases, which we actually announced at the November meeting, perhaps a few months sooner. I expect we will discuss that at our upcoming meeting.”

This is a significant change from earlier this month, when the FOMC was pointing to wrapping up the taper in June 2022, and was not what the market wanted to hear…

Stocks immediately reversed their post-open ramp…

That leaves Small Caps down 6% since the onset of Omicron anxiety…

Yields jumped across the curve with the short-end spiking most (30Y has almost erased the initial spike)…

Rate-hike odds spiked dramatically…

And the yield curve puked as ‘policy error’ fears soar…

Cryptos also plunged…

And the Dollar spiked…

The Powell-Put just went kaput…

Tyler Durden
Tue, 11/30/2021 – 10:59




Author: Tyler Durden

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Economics

Rabobank: Brushing Up Our Greek Alphabets

Rabobank: Brushing Up Our Greek Alphabets

By Michael Every of Rabobank

Brushing up our Greek alphabets

After a ‘sell first, ask questions…

Rabobank: Brushing Up Our Greek Alphabets

By Michael Every of Rabobank

Brushing up our Greek alphabets

After a ‘sell first, ask questions later’ Friday, markets regained some confidence on Monday. News that Omicron may lead to relatively mild symptoms may have helped the mood, though much about the new strain still remains unclear, including how infectious it is compared to other variants and whether it requires updated vaccines. The health ministers of the G7 issued a joint statement that contained little new information on the strain, but did warn that it “requires urgent action”. European equities also defied news that Germany is now the next country to consider stricter measures to curb the rise in cases.

The risk-on tone weighed on fixed income, with 10y Bund yields rising 2bp on the day, though that reverses only part of Friday’s decline. And the German inflation numbers didn’t provide much support for Bunds either. High inflation was already expected, with a 5.5% consensus forecast. Nevertheless, the German HICP managed to surpass that, as prices rose 6.0% y/y in November. With similar inflation rates already observed in other European countries, including Spain (5.6%) and Belgium (5.6%), a high Eurozone-aggregate HICP today shouldn’t come as a surprise.

In addition to German inflation being higher than expected, it was also a bit more broad-based: certainly, energy was an important contributor, but clothing, furnishing and household equipment, and particularly recreation and culture -though notably a volatile component- also drove prices higher. Despite the wider base of inflationary pressures, that doesn’t take away from the fact that most of these effects are probably still temporary factors that result from the reopening of the economy, supply chain disruptions, and the changes to German VAT at the start of the year. Indeed, the Bundesbank had already warned for a near-6% inflation rate this month, and the ECB’s Isabel Schnabel stated in a TV interview that “November will prove to be the peak.”

Nikkei reported some reassuring news to that extent, noting that the supply chain disruptions in the auto sector are starting to ease. According to the newspaper, the global supply of chips used in the auto industry may finally be improving: “after months of shortages, inventories have risen for the first time in nine months.” While it may still take some time before shortages across the entire supply chain are resolved, this does suggest that some bottlenecks are indeed gradually easing, boding well for both price pressures and for the output of one of Germany’s key industries. That said, bear in mind that the chip shortages were at the forefront of the global disruptions; since then shortages in many other materials and sectors have followed.

The rebound in China’s manufacturing PMI may also offer some reassurance about the recovery of the global value chain. The headline recovered to an expansionary reading of 50.1, but this may understate the improvements in actual output, seeing that one of the main drags on this headline relates to a sharp decline in energy prices faced by manufacturers. This likely reflects the government’s interventions in the coal sector, boosting production. Bloomberg reports that the National Development and Reform Commission met with coal producers last week and that prices would have to be guided towards to a “reasonable range”.

That is, of course, assuming that omicron does not throw a spanner in the works here. It certainly does make central bankers’ jobs that bit harder again. Fed Chair Powell said yesterday that the new strain, as well as the general rise in Covid-19 cases, poses downside risks to the full employment mandate and adds uncertainty to the inflation outlook. While he didn’t specifically mention any implications for the Fed’s current policy trajectory, it adds to the markets’ doubts whether the FOMC will still decide to accelerate the pace of tapering in its December meeting, and whether the market wasn’t too aggressive in its pricing of rate hikes next year. EUR/USD continues to find some support in this revaluation of potential for US policy moves.

Certainly, uncertainty also clouds the ECB’s decisive December meeting. However, with a more dovish starting point, that is less of a marked change. If anything, the European Central Bank may want to commit less in December, leaving more options open for earlier in the year when the Governing Council has more clarity on the outlook and omicron’s impact. A key case in point are Vice President De Guindos’ remarks on the TLTRO-IIIs this morning: he is clear that “the TLTROs are not finished yet”, confirming that -in his view- this year’s long-term liquidity providing operations certainly weren’t the last. However, he added that “it’s not going to be a decision we discuss in December”. Assuming that the future of (or rather after) PEPP will still be decided in December, that does put much more weight on the few other tools the ECB could use to mitigate the expected end of pandemic purchases. This could set markets up for an initial disappointment.

Tyler Durden
Tue, 11/30/2021 – 10:45






Author: Tyler Durden

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