Why Cardano Is Up 15% Today

Excitement is growing around the Vasil hard fork.

Cardano (ADA) is one of the biggest top crypto gainers today, with an increase of 15% in 24 hours, according to CoinMarketCap data. Not only have many popular cryptos seen price increases, but Cardano's upcoming upgrade means there's also increased investor interest in the project

What's behind Cardano's 15% gain?

At times, Cardano's slow-and-steady approach has proven controversial in a crypto community that's used to speedy upgrades and lightning-fast progress. The team behind the programmable cryptocurrency peer-reviews each stage of development, and as a result it's been slower to introduce new features. For example, it only introduced smart contracts last September. In the meantime, newer projects, such as Solana (SOL), have taken a larger market share and have more projects running on their ecosystems.

On the other hand, at the end of last year, Cardano passed the 20 million transaction mark without a single outage. That stands in stark contrast to Solana which has struggled with several outages already this year. In these uncertain times, some investors may feel Cardano is a safer bet. Let's unpack the two biggest drivers behind Cardano's price jump today.

1. Crypto prices are up across the board

Crypto prices were a sea of green this morning, with both Bitcoin (BTC) and Ethereum (ETH) gaining more than 5% and a number of other popular cryptos following suit. Positive U.S. jobs news along with hope over an easing of COVID rules in China pushed the stock market up. As is often the case at the moment, crypto followed equities and increased confidence pushed prices upward.

2. Anticipation over the upcoming Vasil hard fork

Cardano's got a big upgrade in the pipeline. The Vasil hard fork is due to take place toward the end of June. It aims to improve the network's performance and make it easier for developers to use the Cardano blockchain to create applications. This is important as the competition for Ethereum alternatives continues to grow.

Cardano is a top 10 crypto in terms of its market cap, but it only ranks No. 29 in terms of its total value locked (TVL), according to DeFi Llama. TVL is the amount of money locked in applications on each network, and is a good indicator of activity on a particular blockchain. It shows that Cardano doesn't yet have as many apps, particularly decentralized finance apps, as similar-sized ecosystems. If the Vasil hard fork will help developers to build more projects on Cardano, it will be a significant step for the project's evolution.

What it means for investors

After months of sluggish price action, it's easy to get excited about double digit daily gains. But the crypto industry is not out of the woods yet. The Crypto Fear and Greed Index still registers "Extreme Fear" and Cardano may not be able to sustain today's increase. The excitement about the upcoming fork may be outweighed by wider economic factors. For example, the next set of inflation figures will have a huge impact on all crypto prices in the near term.

If you're buying Cardano to take advantage of a potential short-term price rally, bear in mind that this type of trading can be extremely risky. The upgrade may not happen as planned. Plus, speculation over Cardano's smart contract launch last year pushed its price to unsustainable levels. The price rose to an all-time high of almost $3, before falling to around $2 in the following month. It is now trading at around $0.60. While it's unlikely to rebound to $3 anytime soon, we may see another speculation-fueled price rally in the run up to the next hard fork.

Don't buy ADA because it's up 15% today and you're scared of missing out on future gains. Instead, look at how you think Cardano might perform long term and decide if you want to buy and hold it for a decent amount of time. Keeping a long-term perspective makes it easier to handle even dramatic price volatility, particularly if you've only invested money you can afford to lose. A successful upgrade will be good for the network's long-term development. But that doesn't mean you have to rush into buying Cardano -- take your time, do your research, and make sure you're on top of your other financial goals first.