Can Cardano Break Through the $1 Level in 2023?

In mid-April, it looked like Cardano (CRYPTO: ADA) may be headed for a breakout. At the time it was trading around $0.45 and was up more than 80% for the year. Over the past 30 days, however, the blockchain platform has dropped nearly 20%, and much of the spring optimism appears to be waning.

So what will it take for Cardano to break through the $1 mark in 2023? Below are two factors that can affect the valuation.

The growth of the Cardano ecosystem

It may sound obvious, but the primary factor to watch is overall growth in the Cardano ecosystem. This is important because investors have continuously complained that nothing happens on the blockchain. In the minds of many investors, it is a “ghost chain”. So Cardano absolutely needs to show very specific numbers about its growth to convince these skeptics.

The good news is that Cardano publishes a weekly development report, so it is possible to see what is actually happening on the blockchain. In the last week, for example, 126 new projects have been launched on it. There are now more than 1,240 projects on Cardano, and some of them seem to be gaining ground with users and developers.

Image source: Getty Images.

For example, there has been growth in non-fungible token (NFT) marketplaces that specialize in Cardano NFT. Loyal users obviously want to stay within the ecosystem when buying and selling NFTs. It’s a positive sign that Cardano can gain market share (and mindshare) from Ethereum (CRYPTO: ETH), which has historically dominated the NFT market.

If the growth of new projects accelerates on a weekly basis, it could be evidence that Cardano potentially deserves a higher valuation. Also, keep an eye on other metrics, such as the number of active developers, which may signal that it’s gaining ground. At the end of 2022, for example, it surprised everyone by being ranked the No. 2 blockchain in terms of active developers, behind only Ethereum.

Growth in DeFi

While overall growth is good, of course, the one area I’m zeroing in on is decentralized finance (DeFi). At the start of the year, Cardano prioritized DeFi. This is an area where it has always lagged behind market leaders like Ethereum, so it is important that it finally shows growth here. In the minds of many investors, DeFi is the key to valuing blockchain projects.

That is why I am particularly impressed by some of the new projects within the Cardano DeFi ecosystem in 2023. An algorithmic stablecoin was launched at the end of January that makes it much easier for traditional financial players to move in and out of the DeFi ecosystem. .

There are new decentralized exchanges that offer the same kind of functionality and liquidity as the best decentralized exchanges on Ethereum. And there are new product launches on the way, including a token that will enable spending Bitcoin (CRYPTO: BTC) on the Cardano blockchain.

The best single value to track Cardano’s growth in DeFi is total value locked (TVL). This metric tracks how much Cardano is “locked” into various DeFi protocols, such as those used for crypto-stakes.

As a general rule of thumb, the higher the number, the better. And Cardano’s TVL has moved up from the charts. Although it still only ranks #18 on the blockchain in terms of TVL, this metric recently hit a 10-month high. If Cardano is able to move up the TVL chart, that would be a very bullish signal.

How high can Cardano soar?

For Cardano, the $1 price level remains an aggressive target, because it would require it to nearly triple in value from its current price. And getting to even higher levels is almost unthinkable for now. Some crypto influencers, caught up in the meme coin hype, are now suggesting that it may soon break through the $15 barrier. Others claim to use ChatGPT to make $20 price predictions.

From my perspective, these ultra-Cardano bulls rely too much on hope, and not enough on the underlying metrics. The all-time high for Cardano is just $3.10. That said, I certainly think a $1 price target is within reach, as long as it continues to deliver growth to investors.