Why Did Cardano Slide 7.2% Today?
Key Points
Japan's central bank may opt to raise rates.
This could lead to a major unwinding of leveraged positions across the market.
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Cardano (CRYPTO: ADA) is down 7.2% in the last 24 hours as of 7:43 p.m. ET on Monday. The drop comes as the S&P 500 fell 0.6% and the Nasdaq Composite slid 0.4%.
Cardano is following Bitcoin and the rest of the crypto market as sentiment hovers around all-time lows. Comments made today by Bank of Japan (BOJ) Governor Kazuo Ueda did little to calm nervous investors.
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Japanese rates may rise
The Federal Reserve may soon choose to cut U.S. interest rates once more, but Japan's central bank looks like it may make the opposite choice. Ueda said that the BOJ is looking at the possibility of a rate hike, stating that the bank is evaluating the "pros and cons" of such a move.
If Japanese rates do rise, investors who borrowed cheap yen to buy crypto assets could be forced to unload their positions to cover those loans -- the same dynamic that led to a major market dip in August of 2024.
Image source: Getty Images.
Ethereum is a better bet
While Cardano's technology is interesting, any advantages it has over Ethereum are outweighed by the latter's greater adoption and network effects. Ethereum powers the vast majority of DeFi apps and fintech integrations. I would avoid Cardano.
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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.
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