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Why Altcoins Like Cardano Were Recovering on Saturday


What happened

Is the Great Cryptocurrency Winter about to end? That was a big question on the minds of many crypto investors Saturday afternoon and early evening, as many altcoins began paring their losses in what seemed to be — perish the thought — the opening stages of recovery after a terrible week.

One prominent example of this was Cardano (CRYPTO:ADA), which was down by only 3% in late trading. Cardano was down as much as 16% over the past 24 hours earlier in the day. Two peers, Fantom (CRYPTO:FTM) and Binance Coin (CRYPTO:BNB) followed a similar pattern, with the percentage declines being a respective 12% and nearly 22% for Fantom, and 6% and almost 13% for Binance Coin.

Image source: Getty Images.

So what

Zooming out on the wider Cryptoverse, it seems that the tokens with more utility and/or greater potential in their blockchains are posting the narrowest losses and the speedier recoveries.

Cardano, Fantom, and Binance Coin all sit on some of the most promising (and high-profile) blockchain projects in the sector. In the case of both Cardano and Fantom, they’re seen by many to be front-runners to knock Ethereum off its perch as the leader in smart contract functionality.

Binance Coin, meanwhile, is the native token of Binance, which happens to be the largest crypto exchange on the planet. Originally used primarily as a trading platform, Binance Chain’s ecosystem has expanded to include other basic forms of commerce and investments that can be purchased directly with Binance Coin.

Now what

Of course, this apparent recovery might be the product of opportunistic buying from investors convinced that the wider crypto market has either hit, or is near, the bottom.

We should exercise caution here, then. After all, to my mind, the big factor that helped trigger this recent rout is still in force — the planned inflation-fighting measures by monetary authorities that include interest rate hikes that are likely to be of significant size. Depending on how steep and immediate these are, they could still drain plenty of investor capital out of more speculative instruments like cryptocurrencies.

 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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