Cryptocurrency Investors: Should You Buy Cardano in September?

Cardano is a utility-based blockchain network that is well poised to surge higher and create massive wealth for long-term investors.

| More on:
think thought consider

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The cryptocurrency market has lost significant momentum in the first eight months of 2022. Several digital assets have lost close to 60% in market value year to date. But there can be more pain ahead for investors considering September has historically been the worst month for cryptocurrencies.

Between 2013 and 2021, Bitcoin ended lower six times in the month of September, with an average decline of around 7% in this period. But the “September Effect” is just an anomaly, and this trend should not concern long-term investors.

Given digital assets are trading at a steep discount compared to last November, I’ll try to analyze if Cardano (CRYPTO:ADA) is a buy right now.

What is Cardano, and how does it work?

Valued at a market cap of US$15.5 billion, Cardano is the eighth-largest cryptocurrency in the world. The blockchain network was created in 2017 and named after Gerolamo Cardano, a 16th-century polymath from Italy. It is a proof-of-stake blockchain platform, and the open-source project aims to redistribute power from unaccountable structures to individuals.

While the price of the ADA token is down 85% from all-time highs, it has still returned over 2,000% to investors in the last five years. So, if you are bullish on the cryptocurrency space, it makes sense to take a closer look at Cardano, which is making all the right noises.

Similar to Ethereum and unlike Bitcoin, Cardano is a programmable blockchain. So, you can create self-executing programs on its network called dApps (decentralized applications) that offer services such as lending and borrowing.

The Cardano ecosystem is expanding rapidly, and in 2021, the network was selected by the Ethiopian government to create a blockchain-based national ID system.

Another project part of the Cardano ecosystem is Blueshift, a decentralized exchange (DEX) and a crypto asset management protocol. The protocol is based on an AMM (automated maker algorithm), which calculates exchange prices while controlling liquidity flows on the platform.

It uses portfolios to manage liquidity so liquidity providers can invest in tokens and acquire shares of the token portfolio.

Right now, there are 1,000 decentralized applications running on Cardano’s blockchain network, showcasing the utility it offers to developers. It has massive potential, as the network can host enterprise-level solutions for companies across sectors such as finance, healthcare, real estate, and retail.

The Foolish takeaway

Investing in cryptocurrencies carries significant risks. While there are close to 21,000 cryptocurrencies in circulation, just a handful of them are going to survive over the long term. It’s advisable to place your bets on blockchain networks that are poised to gain traction once the asset class gains widespread adoption.

It’s difficult to value cryptocurrencies, but you can consider looking at the utility a blockchain network offers and the size of the developer community. Additionally, you need to invest as much as you can afford to lose in these digital assets.

As a rule of thumb, financial experts have maintained cryptos should not account for more than 5% of your overall portfolio. So, if you invest $1,000 every month, contributions towards cryptocurrencies should be limited to $50.

Should you invest $1,000 in Cardano Aud right now?

Before you buy stock in Cardano Aud, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Cardano Aud wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $18,750.10!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 35 percentage points since 2013*.

See the Top Stocks * Returns as of 1/22/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. 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, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Aditya Raghunath has positions in Bitcoin and Ethereum. The Motley Fool recommends Bitcoin and Ethereum.

If You Thought Apple and Microsoft Were Big, You Need to Read This.

The steel industry produced the world's first $1 billion company in 1901, and it wasn't until 117 years later that technology giant Apple became the first-ever company to reach a $1 trillion valuation.

But what if I told you artificial intelligence (AI) is about to accelerate the pace of value creation? AI has the potential to produce several trillion-dollar companies in the future, and The Motley Fool is watching one very closely right now.

Don't fumble this potential wealth-building opportunity by navigating it alone. The Motley Fool has a proven track record of picking revolutionary growth stocks early, from Netflix to Amazon, so become a premium member today.

See the 'AI Supercycle' Stock

More on Investing

calculate and analyze stock
Dividend Stocks

The Best Canadian Stocks to Buy Right Now With $3,000

Just because you don't have tens of thousands in the bank doesn't mean your investments can't get there.

Read more »

Investing

1 Canadian REIT Offering an Outstanding Yield

Canadian Apartment Properties REIT (TSX:CAR.UN) has a nice mix of appreciation and distributions.

Read more »

Income and growth financial chart
Tech Stocks

This TSX Stock Has Already Soared 151%: Can it Double in 2025?

Whether MDA stock doubles again in 2025 will depend on consistent execution and broader market conditions, but it certainly seems…

Read more »

e-commerce shopping getting a package
Tech Stocks

Opinion: This Is the Only TSX Growth Stock to Own for the Next 5 Years

Here's why Shopify (TSX:SHOP) looks like a top growth stock worth owning over the next five years on a relative…

Read more »

top TSX stocks to buy
Stock Market

2 Canadian Stocks That Showed Remarkable Growth in 2024 

Stocks making multi-year losses suddenly delivered remarkable growth in 2024. What should you do with such stocks?

Read more »

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Dividend Stocks

2 Ultra-High-Yield Dividend Stocks You Can Buy and Hold for A Decade

These dividend stocks have resilient payouts and offer ultra-high yields, making them top investments to generate solid passive income.

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

1 “Growthy” Dividend ETF to Buy to Generate Passive Income

This Canadian dividend ETF offers a decent monthly yield in addition to good share price appreciation potential.

Read more »

calculate and analyze stock
Bank Stocks

Bank of Nova Scotia: Buy, Sell, or Hold in 2025?

Bank of Nova Scotia recently gave back some gains. Is BNS stock now oversold?

Read more »