Cardano price rose modestly this week after Grayscale applied for a spot ADA ETF. The popular layer-1 coin jumped to a high of $0.788 on Thursday morning, up by over 53% from its lowest level last week. It has jumped by over 150% from its lowest level in 2024.
Cardano ETF hopes
The main catalyst for the ADA price was Grayscale’s decision to file for a spot ADA ETF, a move that may spark more applications in the coming days. More firms like Rex Osprey, Bitwise, and Franklin Templeton are the most likely filers.
An ADA ETF filing makes sense because it is one of the biggest cryptocurrencies with a market cap of over $25 billion.
Cardano is also a highly popular coin, with over one million holders who see it as a viable rival to Ethereum.
An ADA ETF would lead to more institutional demand in Wall Street and hype, which would, in turn, lead to higher prices in the coming months.
However, there are a few risks to remember. First, recent data shows that Wall Street is mostly interested in spot Bitcoin ETFsand many institutions have largely avoided Ethereum funds. Spot BTC ETFs have attracted over $40 billion in inflows, while Ether funds have received about $3 billion.
One reason for this is that Ethereum ETFs don’t generate a staking yield, which currently stands at about 3% annually. As such, investors prefer to allocate money to Ether directly and taking the 3% return. A 3.5% return is almost in par with the Schwab US Dividend Equity ETF (SCHD), one of the most popular funds.
The same argument may be made of a spot ADA ETF since Cardano generates a yield of about 2%. Still, there are chances that the SEC will allow ETF of these proof-of-stake networks to generate staking rewards. In a note, an analyst from CoreFin told Invezz:
“A spot Cardano ETF will generate hype and possibly push its price higher. But, as we have seen with Ethereum, inflows to the fund may be limited unless Cardano becomes a more useful network like Solana. As it exists today, Cardano is a ghost chain with no major developments going on.”
Read more: Is a Cardano ETF next after Ethereum ETF’s strong start?
Charles Hoskinson VIP meeting
The ADA price has also rebounded as investors anticipate an upcoming VIP meeting that Charles Hoskinson has pledged. This meeting will happen on March 1, and speculation is that it may be with Elon Musk or David Sacks, the crypto and AI czar.
The risk, however, is that Hoskinson does not always fulfill his promises. For example, Cardano reached a deal to move Ethiopia’s education system to the blockchain. Four years later, nothing has materialized.
Most recently, Hoskinson said he would meet with Chainlink, the biggest oracle in the industry. That meeting has likely not brought any major change.
A meeting with Elon Musk would fuel the theory that he would select Cardano to offer blockchain solutions for the US government. Musk has said that he hopes that the blockchain technology may help to cut government spending.
The other top concern is that Cardano is largely a ghost chain, with no major applications in its ecosystem. It is a much smaller chain than other smaller networks like Aptos, Mantle, and Cronos.
Cardano price forecast
ADA price chart by TradingView
The weekly chart shows that the ADA price has stabilized in the past few days. It has moved to a high of $0.788, a few points above the 50-week moving average and the key resistance point at $0.80, the highest swing in March last year.
Cardano has moved into the second phase of the Elliot Wave section, which is usually a corrective one. It will then enter into the bullish third phase, often the longest one.
If this happens, the price of ADA will likely have a bullish breakout and get to $1.679, the 50% retracement level that is about 112% above the current level. A drop below last week’s low of $0.52 will invalidate the bullish view.
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