A portfolio strategist working at Morningstar and focusing on cryptocurrencies, Amy Arnott, said that Cardano could end up becoming a mainstream cryptocurrency, just like Bitcoin and Ether and this would result in the creation of ‘big three’ of mainstream cryptocurrencies. Last week, in an interview with Insider, she shared her views regarding Cardano, ether, and crypto regulation. She noted that there are not many cryptocurrencies that can generate cash, which means that it determines a suitable price for them is very difficult. However, she went on to say that since ether is used for supporting non-fungible tokens (NFTs) and powering decentralized finance (defi) transactions, it boasts an in-built price to some extent.
The strategist said that the simple fact ether serves as a utility can be helpful in providing some kind of price floor, but it is not clear what it should be. Many people talk about a network effect where these cryptocurrencies will become more valuable because they are used more frequently and there are more connections and interdependencies. Arnott also stated that another promising cryptocurrency is Cardano (ADA) and it could end up joining ether and Bitcoin, which would form a ‘big three’ of mainstream crypto.
While elaborating she said that Ethereum and Cardano are very similar because the latter is also a protocol and that it also boasts a lot of technical applications. She said that people are very enthusiastic about Cardano and a number of other stablecoins. The Morningstar strategist continued to shed some light on the institutional adoption of cryptocurrencies that has intensified this year, primarily because of the global COVID-19 pandemic. She said that it was interesting to note that institutional investors have been more than willing to adopt cryptocurrencies in the past year and are ready to consider them an investment asset.
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She opined that if this trend continues at the same pace, then there was a strong possibility that other cryptocurrencies would also end up becoming more mainstream. The crypto strategist also added that she wanted to see a diversified crypto index fund and this can be seen through an exchange-traded fund (ETF). However, a crypto ETF has still not been approved by the US Securities and Exchange Commission (SEC) and this has made it incredibly difficult for mainstream investors to get the exposure they want to cryptocurrencies. Arnott said that regulatory risk is not something to be taken lightly.
In fact, it has proven to be the driving factor behind most of the volatility seen in the last few months. If governments all over the world decide to clamp down against cryptocurrencies in general, specifically ether and Bitcoin, then this would be a big negative. It is a fact that governments all around the world have begun to take action against cryptocurrencies and their volatile nature. Regulations are being introduced and they are certainly having an impact on the cryptocurrency market, as is obvious in the volatility the market has experienced.