Altcoins almost always see huge boosts following Bitcoin price jumps. When Bitcoin plummeted in mid-May so did many altcoins. Bitcoin has seen an increase of over 67% since its low in late July, helping to pump altcoin prices as well.
Bitcoin has generally been seen as the baseline indicator of health in the market. As the original cryptocurrency, many investors see Bitcoin’s success or failure as a representation of the crypto industry in general. When Bitcoin increases people begin speculating on other altcoins. When it drops people seem to lose faith in not only Bitcoin but the other altcoins as well.
The lower trading volumes of some of the altcoins, including Cardano, can sometimes mean that their reactions to Bitcoin’s moves are more volatile and intense. The chart above shows how Cardano made steep increases as Bitcoin steadily climbed from its low in July.
Another reason that is probably the biggest driver of Cardano’s increasing price is its imminent release of smart contracts.
The release of smart contracts will allow people to build decentralized applications like ones found on Ethereum. Many people on social media are skeptical about Cardano as it has reached a $94 billion market capitalization and become the third-largest cryptocurrency in the world without live smart contracts.
During a live youtube video late on August 22nd, the founder of Input-Output Global, Charles Hoskinson, said that smart contracts on Cardano are on schedule and ready to go live on September 12th even though many are doubting that they will ever launch.
“There is a lot of irrational exuberance and irrational hate that is flowing through. There is a state of disbelief in certain circles in the cryptocurrency space, first whether we are even going to launch smart contracts at all, they are on schedule, September 12th. Good luck everybody, it’s a done deal.”
Many believe that Cardano will increase in price as more people begin to use the decentralized applications on the platform.
Another factor that may be helping smart contract altcoins other than Ethereum is the fact that transactions fees on Ethereum are so high. A perfect example of this is the rise of the Ethereum competitors like Binance Smart Chain, Solana and more.
Like Ethereum, these platforms offer decentralized financial applications with significantly lower transaction fees. This allows a broader range of users instead of just wealthier Ethereum holders.
Average fees on Uniswap are currently above $50, according to Etherscan, a website that tracks fees on Ethereum. This makes it impossible to trade or move anything on the platform that isn’t well above that value.
With Cardano’s launch of smart contracts due within the next few weeks, it would not be surprising if some investors were accumulating Cardano to be ready to make use of some of the decentralized finance applications that are already in development.