- Amy Arnott of MorningStar believes that Cardano could win over mainstream investors to join Bitcoin and Ethereum.
- She also disclosed her dream of seeing a diversified crypto index fund.
Cardano (ADA) has over the past few years improved on its technological innovations, making it a strong competitor of Ethereum. According to a portfolio strategist at U.S financial service firm MorningStar, Amy Arnott, Cardano (ADA) could join Bitcoin and Ethereum to form the “big three” mainstream assets. During an interview, she stated that it is extremely difficult to determine a suitable price for many cryptos since they are not cash-generating. However, assets like Ethereum have an in-built price to some extent. She explained that the Ethereum platform has several use-cases including the facilitation of Decentralized finance (DeFi) transactions and the support for Non-Fungible tokens (NFTs).
The fact that ether is used as a utility should provide some sort of price floor, but I’m not sure what that should be. A lot of people talk about a network effect where these currencies become more valuable as they are used more and there are more interdependencies and connections.
Institutional investors back Cardano
According to Arnott, Cardano has a lot in common with Ethereum. She mentioned that the Cardano protocol boasts of promising technical applications that could lead its penetration into the mainstream.
There is a lot of enthusiasm about Cardano, and also various stablecoin.
In June, Digital Asset Manager CoinShares disclosed that institutional investors are buying more Proof-of-Stake (PoS) assets like Cardano and Polkadot compared to the Proof-of-Work (PoW) assets. It was reported that Cardano attracted an inflow of $5.2 million with Polkadot attracting $3.8 million in just a week.
Governments’ crackdown on cryptos could pose a greater risk
Speaking on the institutional interest in crypto, Arnott admitted that in the past year this has grown exponentially. Institutional investors who are willing to invest in the leading digital assets. She believes that the growing crypto exposure among institutions could see other assets go mainstream.
Regardless of the current trend of growing mainstream investors, she stated that the strong stance of the US Securities and Exchange Commission (SEC) regarding Bitcoin Exchange-Traded Funds could pose a big challenge for other institutions to get exposure. This was after she explained that it will be great news to have a diversified crypto index fund in the industry.
Regulatory risk is a big issue – that’s been the driving factor behind a lot of the volatility over the past few months. If governments around the world clamp down on crypto in general, or bitcoin and ether specifically, that would be a large negative.
Over the last few months, the crypto market has struggled to regain even half of its all-time high market value after China staged a crackdown on Bitcoin miners, and the likes of the UK, Japan, Singapore, the US, etc imposed tougher crypto laws to control their operation.