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Why do analysts expect Cardano to outperform BTC and what does this have to do with the Ethereum merger?

 


A popular cryptocurrency analyst has suggested that Cardano (ADA) could soon begin to outperform the leading cryptocurrency Bitcoin (BTC) as traders will start using the cryptocurrency to hedge against the dangers of Ethereum moving from a Proof of Work (PoW) consensus algorithm to a Proof of Stake consensus algorithm ( PoS).


According to the Coin Bureau channel host, who shared a video informing 2.1 million YouTube subscribers of the cryptocurrency market, non-Ethereum smart contract platforms such as Cardano, Solana, and BNB Chain can be viewed as a hedge against the potential risks of an Ethereum consolidation upgrade.

The consolidation is described as the integration of Ethereum's existing mainnet into the network that has been integrated with the Beacon Chain Proof of Stake platform, paving the way for future expansion upgrades, including retail technology. This move is expected to reduce Ethereum's energy consumption by 99.95%.


It is believed that moving away from the PoW consensus mechanism will make the network cheaper, faster and more environmentally friendly, but it will also mark the end of a revenue stream for Ethereum miners who are rewarded for securing the network.


For the Coin Bureau host, it hedges against the risk of an Ethereum merger by adding rival smart contract networks to its portfolio including ADA, where the crypto-token acts as a hedging tool while in turn awaiting its own promotion in the near future, Hard Fork Vasil.


Vasil's hard fork is a major upgrade that will include four proposals to improve Cardano. The hard fork was expected to take place in late June but was delayed due to the breakdown of Terra, as the team behind it wanted to exercise caution before issuing the upgrade.


Charles Hoskison, the founder of Cardano, said the hard fork would provide a "tremendous performance improvement". For the Coin Bureau host, it would be a “recognized strategic move if Cardano improves scalability as Ethereum transitions to a proof-of-stake mechanism” because it “puts Cardano in an ideal position to gain users and investors if the merger fails or simply fails to meet Outlook for ETH holders".


The host added, as noted by the Daily Hodl blog, that Cardano looks set to take on major cryptocurrencies, including BTC.

“ADA appears to be up against BTC on the weekly chart. This is because ADA historically fell against ETH for about eight weeks before seeing a rally for several more weeks. As you can see, ADA has been dropping against ETH for about eight weeks and is now showing signs of a reversal.”

 The analyst added that Cardano's rally against BTC does not necessarily mean that it will rise in terms of the coin and the dollar, although he also expects it will do so by at least 50% in the coming weeks.


He stressed that these gains are ultimately related to the cryptocurrency market which will see a recovery in the near future. According to the analyst, the Cardano hard fork will also expose the project to “the same kinds of issues and risks that Ethereum might encounter during an upgrade.”


According to him, it appears that other smart contract networks including Solana are “on the verge of breaking through major resistance against both ETH and the US dollar” before the merger as well.

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