Why Cardano, XRP, and Chainlink Tokens Are All Plunging Today

What happened

Cardano (CRYPTO:ADA), XRP (CRYPTO:XRP), and Chainlink (CRYPTO:LINK) are reversing their moon missions today and instead are falling all the way down to earth. As of 1:18 p.m. EDT, they were down 12.81%, 17.68%, and 18.39%, respectively, in the previous 24 hours. That left Cardano at $2.48 per token, XRP at $1.14, and Chainlink at $29.05.

At this point, seasoned cryptocurrency investors have seen just about everything, but they were not expecting Kim Kardashian to be blamed for inducing FUD (or fear, uncertainty, and doubt) surrounding the sector. On Sept. 6, the chairman of the U.K.’s Financial Conduct Authority, Charles Randell, claimed celebrities like Kardashian put retail investors at risk by luring them toward altcoins that could be scams. Earlier this year, Kardashian promoted a little-known “penny stock” cryptocurrency called Ethereum Max to more than 200 million followers on Instagram. As a result, the token has lost more than 90% of its value since its May highs. 

Image source: Getty Images.

So what

The move has led investors to reexamine the fundamental value behind their altcoins, and unfortunately for most, the cryptos have not caught up to their market cap. Take the case of Cardano’s ADA, a virtual nonentity last year that has grown to become the third largest token in the world. Last month, Mike Novogratz, the CEO of leading cryptocurrency asset management firm Galaxy Digital, said in a tweet that none of the experts he consulted saw Cardano gaining any traction with developers. Even though Cardano still lacks smart-contract functionality and, as a consequence, cannot build decentralized applications (dapps), its market cap has ballooned to over $80 billion. What’s more, there are concerns that the Alonzo upgrade, which will enable smart contracts and is scheduled for Sept. 12, is not quite ready due to issues like lack of concurrent processing slowing down the network. 

Next, XRP is the most vulnerable of the three to any regulatory scrutiny as its developer, Ripple Labs, is locked in a lawsuit with the Securities and Exchange Commission. The litigation itself concerns whether or not the sale of XRP to raise funding constitutes the illegal sale of unregistered securities, but that’s not the main concern with XRP. The token has risen to a market cap of $53 billion even though its utility is detached from RippleNet, the liquidity solution for financial institutions to conduct cross-border transactions. So whether or not banks can successfully use XRP and not just Ripple Labs’ enterprise software solutions remains to be seen.

Lastly, Chainlink is at the forefront of integrating blockchain smart contracts with real-world data feeds like asset price changes and retail payments. But skeptics wonder if services like providing decentralized exchanges with data on cryptocurrencies should really have a valuation of $13 billion.

Now what 

Every year or two, there is a new round of FUD in the crypto space that shakes off those who are in it to make a quick buck. In times like this, it’s important to realize the long-term value of cryptocurrencies continues to grow. For example, back in 2018, Ethereum (CRYPTO:ETH) had a huge market cap but minimal utility for its smart contracts. Now, the Ether token plays a fundamental role in creating decentralized applications, DEX, decentralized finance solutions, and more, with a total addressable market of hundreds of billions of dollars. So unless one needs the cash now, don’t panic sell.