We are firmly in crypto-mania despite a sharp pullback. The kind of growth we are seeing is unprecedented and has outmatched the early enthusiasm for cryptocurrency. Naturally, this has led to massive growth among altcoins, and BitTorrent (CCC:BTT-USD) is no exception.
Between February and April of this year, the price of BitTorrent suddenly launched 10x, going from a tenth of a cent to a full cent ($0.01) in the space of six weeks.
Admittedly, those gains have evaporated, and the altcoin is now trading for around $0.0036. Still, that is good enough for a valuation of nearly $2.52 billion.
But before you go ahead and place your bets on this one, you have to ask one question: Is there any financial issue this altcoin solves?
In my eyes, the answer is no. That does not mean you will not see gains along with the rest of the crypto world. It is just that the growth itself is not based on institutional investment or inherent potential. That makes it closer to Dogecoin (CCC:DOGE-USD) than to Bitcoin (CCC:BTC-USD) in many respects.
It is tough to advocate for this altcoin based on where it stands at the moment.
BitTorrent Lacks Utility
Surging in tandem with other “altcoins,” BitTorrent jumped around forty-fold between January and April. However, if you purchased this asset right before the market crash, you are probably miserable right now.
Since crashing back to earth, investors are now mulling whether it is worth parking your capital into this one again. I am here to tell you that would be a mistake. It just comes down to one word: utility.
Sure, established names like Bitcoin and Ethereum (CCC:ETH-USD) are speculative investments. However, they also have high utility and widespread use in blockchain or decentralized finance (Defi) transactions.
That is the primary reason for their bull run.
You may think I am overly optimistic, but the sentiment makes sense. Of course, there have been significant upheavals along the way, but the overall trajectory for BTC is onward and upward, and it makes sense.
Bitcoin has inherent utility. It gives users a sense of autonomy. You do not have to deal with an intermediary authority like a bank or government and can make discreet purchases through a purely peer-to-peer system.
In addition, standard wire transfers and foreign purchases usually involve sizable fees and exchange costs. However, you do not have to worry about these costs when dealing in BTC.
On the other hand, Ethereum co-founder Vitalik Buterin learned from the mistakes and shortcomings of Bitcoin and tried to iron them out in his own platform. For example, an Ether transaction is generally confirmed in seconds compared to hours for Bitcoin.
Again, it all comes down to utility, which these two coins have in spades.
Chances of a BTT Comeback Are Slim
We are operating in a space that is highly news-sensitive. One tweet from Mark Cuban or Elon Musk and BTT will skyrocket. But you have to ask yourself, what value does this coin bring to the table? What problem does it solve?
Around the early 2000s, BitTorrent became the file-sharing protocol to share content all over the world. Unfortunately, that opened the floodgates for piracy leading to a legitimate operating company becoming synonymous with opaque business practices.
That is why capital under the control of institutional investors, central banks, hedge funds and other financial individuals and entities, will stay away from this one. This is the Achilles heel for BTT and why it will not do well in the long run.
While it was astounding seeing the Bank of New York MellonCorp (NYSE:BK), the nation’s oldest bank, making the foray into crypto, many could see it coming due to the volumes and uptake of BTC. However, I cannot foresee that happening for BTT anytime soon.
Now comes the main question, how should I play BitTorrent if I invested in this digital coin during the highs. First, if you have not sold it, hold onto it now since it can rise alongside other altcoins. Once that happens, try and sell whatever portion you have and then invest in more stable coins like bitcoin and ether.
They are not immune to shocks. But compared to DOGE and BitTorrent, they have greater utility and institutional interest. So stick to them if you want to play in this space.
On the date of publication, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.