With the amazing rise of Cardano, almost doubling its price in the last few weeks, a lot of people have been asking about when to buy Cardano. Is now the time to ride the momentum? Or is it too late? Read on to find out.
First off, let’s get one thing straight. No one can know for sure where the market will head to in the future. Do not believe anyone who speaks in absolute certainty because if it was that easy, then they should already be billionaires. We can look at current and expected trends but there will always be unexpected events that may swing the market in the opposite direction. Wars, natural disasters, epidemics, regulations, hacking and scams can happen with little to no warning. Therefore, no one can really predict price with absolute certainty. Take note that these unexpected events affect all kinds of investments and not just crypto investments.
With that out of the way, it is still possible to make educated guesses based on the data that you have. Currently there are two schools of thought on how to make this educated guess— Fundamentals and Technical Analysis. I’ll explain each further below:
Also called Fundamental Analysis, this is the study of the business’s financial statements, health, competitors and markets. This can include looking at the company leadership, it’s growth plans and execution schedule. This is the technique used by Warren Buffet when valuing investments.
2. Technical Analysis
This is the study of past market data including price and volume in order to forecast the direction of future price. At its strictest form, proponents may refuse to look at news reports and will just stick to price charts to make investment decisions. This is because proponents believe that fundamental factors (e.g. the launch of a secret product or the financial results for the quarter) will already be factored in to the price charts long before any news report comes out.
Another way of looking at the market is in terms of your investment horizon. This is a measure of how long you plan to hold your investment before selling it. This will have an effect on how you should best analyse your investment. For example:
1. Short Horizon
If you plan to buy and sell within days or even weeks, then it is better for you to look at price charts and use technical analysis instead of relying on fundamentals. This is because technical analysis give you more up to date information when making decisions.
2. Long Horizon
If you plan to hold your investment for a longer period and sell it years later, then Fundamental analysis is more suited for you. This is because the deeper insight of fundamentals lends itself to better long term decision making.
There are still a lot more about investments but I will stop here for now and save that for another day.
In summary, some people are more comfortable with one type of analysis over the other and swear by it. Personally, I see the benefit of combining both fundamental and technical analysis. From a long term perspective, I feel more comfortable to look at fundamentals. Is the company managed by competent individuals, are their projects realistic, what are their past track record, etc. If all look good, I will be comfortable in strategically investing my money in the business long term.
However, when making tactical buy and sell decisions or if I am looking at short term investments, I prefer to look at the price charts using technical analysis. I look at trends from various time intervals from the daily charts all the way to annual and 10 year charts to understand past trends. I then include known events like the schedule of future project go-lives in my analysis before finally making a buy/sell decision.
Going back to Cardano in particular, always remember that no one can predict the future with absolute certainty. What we can do however, is to make educated guesses based on the data that we have at the moment. From a Fundamental standpoint, despite the current price already being high at 2.20USD as of this writing, it is highly likely that the price will further go up when smart contracts goes live by mid- September. Only the occurrence of multiple unexpected negative events can stop this from happening (e.g. sudden regulatory tightening in multiple countries or similar negative news). You can get your money ready and watch the charts for a pull back to get in— taking in mind that price may further go up while you are waiting, or you can just buy outright.
Just remember that crypto is highly volatile and you should only invest money you are prepared to lose. This is because your investment can get tied up for long periods of time if the crypto market reaches a bear period. Okay, that’s all I have for now.
Good luck with your investments. Stay safe and have fun!
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