There's no denying that Cardano(CRYPTO: ADA) has been a crypto market laggard through the first half of 2024. Of all the cryptocurrencies ranked in the top 10 by market cap, Cardano is the only one that is currently in the red. Year to date, Cardano is now down 34%.
But there are three reasons to think that Cardano might actually turn things around in the second half of the year. Let's take a closer look.
Regulatory clarity
First and most importantly, Cardano seems to be off the hook with the Securities and Exchange Commission (SEC). Ever since the SEC brought lawsuits against Coinbase Global(NASDAQ: COIN) and Binance(CRYPTO: BNB) in June 2023, there has been much speculation that the SEC was aiming to classify Cardano as a security.
But at the end of July, the SEC finally announced that it was revising its lawsuits, and not planning to take any action against Cardano. This newfound regulatory clarity should help Cardano attract new investors.
For example, as soon as the SEC hinted that it might go after Cardano in 2023, Robinhood Markets(NASDAQ: HOOD) immediately pulled Cardano from its list of possible trading cryptos. If Robinhood decides to reinstate Cardano later this year, it could help to regain the trust of retail investors.
Major blockchain upgrade incoming
You could argue that blockchain upgrades are a dime a dozen within the crypto industry. Fair enough. There's always talk of upcoming major upgrades, and nothing ever seems to move the needle. Even The Merge from Ethereum(CRYPTO: ETH) -- arguably the single biggest blockchain upgrade ever -- had relatively little impact on price. But Cardano says it has a new upgrade (known as the Chang hard fork) that promises to change everything.
Image source: Getty Images.
According to Cardano co-founder Charles Hoskinson, the blockchain upgrade will be "the most significant milestone in the history of Cardano and for the industry as a whole." That remains to be seen, of course, and the crypto industry appears to be mixed on its assessment of the Cardano upgrade.
Some think the blockchain upgrade is nothing more than a lot of smoke and mirrors to cover up Cardano's dismal recent performance. Others, though, see the blockchain upgrade heroically moving Cardano into its next major stage of development, leading to greater efficiency and better governance.
Possible spot Cardano ETFs
Finally, there's the matter of a potential spot exchange-traded fund (ETF) for Cardano. Ever since Wall Street launched the new spot Bitcoin ETFs in January, the buzz has been over which cryptocurrencies might follow in the path of Bitcoin. Now that Ethereum has spot ETFs, the next major cryptocurrency in line for an ETF could be Cardano.
The only problem here is that there may not be enough institutional support for Cardano to get those ETFs off the ground. According to some estimates, as much as 90% of all money invested in Cardano is coming from retail investors. For now, the financial giants of Wall Street have preferred to focus on Bitcoin and Ethereum, the two largest cryptocurrencies in the world. Cardano, with a market cap of $14 billion, is tiny in comparison to Bitcoin, which has a whopping $1.4 trillion market cap.
Just how likely is a Cardano turnaround?
Certainly, there are a handful of catalysts that could propel Cardano higher over the next few months. But it is a source of much anxiety that Cardano has turned in such a dreadful first half of the year. Hopefully, the arrival of regularity clarity should remove some of the clouds hanging over Cardano.
But for now, don't hold your breath waiting for Cardano to skyrocket in value. The all-time high for Cardano is just $3.10. Even at today's price of $0.40, that represents less than a 10x return on your investment in a best-case scenario. Crypto investors -- who are used to oohing and aahing over $1 million price targets for Bitcoin -- are most likely going to want to see a much higher number than $3 to convince them to back Cardano.
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Dominic Basulto has positions in Bitcoin, Cardano, and Ethereum. The Motley Fool has positions in and recommends Bitcoin, Cardano, Coinbase Global, and Ethereum. The Motley Fool has a disclosure policy.
