In recent days, cryptocurrencies are bouncing back, following their brief decline on June 22. One crypto that has undergone an outsized rebound is Ankr (CCC:ANKR-USD). After dipping below 5 cents, the token has made its way back to 8 cents.
Is this the start of a full rebound back to its past highs of over 20 cents per token, set in the weeks before May’s cryptocurrency meltdown?
I wouldn’t go that far. The across-the-board price declines seen over the past month may soon end. But it may take time before cryptos reenter a bull market.
So does that make Ankr a name to avoid for now? Not exactly. As a high-risk, up-and-coming token, it’s likely going to remain volatile. And it’s definitely not a good name to make a core holding in a cryptocurrency portfolio.
If you’re building a basket made up of other long-shot plays like EOS (CCC:EOS-USD) and Holo (CCC:HOT1-USD), , however, Ankr may be worth including as well. The chances of it becoming more widely used, and in turn rising in value, may be slim. But, given the impossibility of figuring out which early-stage coins/tokens are going to take off and which ones are going to fizzle out, the best move for investors may be to spread their bets widely.
Ankr and the Potential of its Unique Platform
When I last wrote about Ankr in late May, I detailed the story behind this under-the-radar token. In a nutshell, it’s the native token of the Ankr distributing computing platform. The platform, which operates within the Ethereum (CCC:ETH-USD) ecosystem, serves as a middle man of sorts for computing capacity.
Those with excess capacity can “lend” it through the platform, receiving ANKR-USD tokens as compensation. The borrowers are those who need the capacity for DeFi (decentralized finance) activities, such as staking and node deployment.
Since Ankr can benefit from DeFi gaining critical mass, the currency has attracted increased attention so far this year as the DeFi concept has become more widely discussed.
At the same time, it makes sense why Ankr remains a relatively small crypto asset, currently ranking 104th by valuation on CoinMarketCap. It may have a great deal of potential utility. But it lacks some of the other advantages that the other long-shot altcoins have.
It doesn’t have billionaire whales behind it. Nor is it an outside-the-box concept like Holo, whose platform operates differently than a typical blockchain. Yet, while Ankr is even further behind the rest of the pack, that doesn’t mean that it has dramatically lower odds of succeeding tremendously.
Spreading Bets Widely Across the Crypto Long-Shots
Outside of the established coins, like Bitcoin (CCC:BTC-USD) and Ether, and the top “Ethereum killers,” like Cardano (CCC:ADA-USD) and Polygon (CCC:MATIC-USD), cryptocurrencies are very wide open. There are thousands of names trying to become prominent during this digital gold rush.
Some may want to stick to the top two cryptocurrencies…Bitcoin and Ether. Their potential gains could be more limited than the two largest names, and their volatility may still be high.
But, for those looking for limited crypto exposure, that may be a solid strategy. Others may want to take slightly riskier positions, by going long one or more of the potential “Ethereum killers.” By making those bets, they would be wagering that the continued growth of DeFi will raise the prices of those cryptocurrencies many times.
For those with an even greater risk appetite, taking positions in several of the “long shots” could end up being profitable as well. However, the keyword is “several.”
That’s because, even after filtering out the names that lack utility, it’s still hard to handicap which of them are going to surpass average expectations and which names are going to disappear.
Instead of deciding that EOS, Holo, or other long-shots are better buys than Ankr (or the other way around), investors may be better off building a basket made up of many names with some potential and utility.
The Bottom Line on Ankr
Admittedly, the approach I’m recommending is not a slam dunk. In other words, it will not definitely be profitable.
Even those who invest in many cryptocurrencies could still lose money, either from DeFi failing to catch on or from crypto turning out to just be a passing fad. And if DeFi does catch on, but only Ethereum and its competitors soar, my approach could also result in losses.
But the gains from a long-shot cryptocurrency reaching the “big time” would likely cover the losses of the ones that fizzle out. As a result, a diversification strategy may be the best approach for those pursuing long-shot digital asset opportunities.
If you decide to employ this “basket” route, don’t forget to consider Ankr. The name is a long-shot.. But, given the potential of its platform, its rankings can climb.
On the date of publication, Thomas Niel held long positions in Bitcoin and Ethereum. He did not have (either directly or indirectly) any positions in any other securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Thomas Niel, a contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.