Algorand (CCC:ALGO-USD) is up big since the kickoff of the crypto recovery back in mid-July. Then, it was trading for around 70 cents. Now, even after the cryptocurrency market’s most recent pullback? It’s up more than 155%, at around $1.70 this morning.
Factors outside its control will determine where it’s headed in the near term. Concerns about a stock market correction still loom.
With cryptos becoming more correlated with stocks, crypto may see another round of across-the-board declines. Does that mean you should head for the hills, and avoid this space? Not so fast.
Instead, another crypto sell-off may give you the opportunity to pick up some possible long-term winners at more favorable prices. Firmly in that category is ALGO because of its growing institutional backing and usage.
If this carries on in the years ahead this altcoin could move its way up the list of the most valuable cryptos by market capitalization.
It may never make its way up to a valuation on par with Ethereum (CCC:ETH-USD).
Yet if it can move up to the level of Cardano (CCC:ADA-USD), and become one of the top “Ethereum killers,” investors considering it a buy today, or on any potential near-term weakness, could see fantastic returns.
Algorand: Institutional Backing and Usage
As I’ve written before, this altcoin’s blockchain has managed to accomplish quite a bit in the two years since its launch. Many third parties now use its platform, and recent developments show it’s continuing to score major deals.
For instance, in its recent deal with Koibanx, the fintech developer will use the Algorand platform to develop El Salvador’s blockchain infrastructure. In addition, it continues to lock down big-ticket partnerships with third parties, such as its recent $100 million partnership with the Drone Racing League.
Not only that, institutional backing for ALGO is picking up in a big way. As my InvestorPlace colleague Mark Hake discussed recently, Anthony Scaramucci’s Skybridge Capital is investing heavily in this altcoin.
Already holding $700 million worth of tokens, the hedge fund plans to buy more after it raises $100 million for an Algorand-specific exchange-traded fund (ETF).
To top it all off, heavy investment in its development is carrying on as well. This blockchain’s developer (The Algorand Foundation) is investing nearly $300 million into DeFi (decentralized finance) projects using its platform.
The key takeaway from news of more partners, more backers and more projects is that there’s a clear path for this altcoin rising star to continue climbing.
Volatility May Be Your Friend
It has much in its corner, but that doesn’t mean that you need to pile into ALGO all at once. You may still want to take your time when it comes to locking down a position fter its triple-digit percentage rally. This is especially true as clouds of uncertainty hang over financial markets.
When it comes to buying Algorand, possible near-term volatility could be your friend. That is, crypto markets could be set to take another dive.
With more eyes on it, we may not see another move to below 70 cents for ALGO, but since it is still far less liquid than Bitcoin (CCC:BTC) and Ethereum, a continued downturn would likely result in it seeing an outsized drop in price.
A move back to $1 to $1.25 per token is not out of the question.
Near-term traders have seen big gains riding this up-and-coming token during the recent crypto comeback. The coming months, or perhaps the next year, may be rockier. Yet for investors approaching this as a long-term play volatility could give you the ability to make it a major position, at prices far lower than where it changes hands today.
Consider ALGO a Top Altcoin to Buy
As you can tell, I am bullish on this crypto. Still, I’ll admit that it’s not guaranteed to rise to the level of “Ethereum killer” front runners like Cardano.
Competition runs high when it comes to blockchains looking to become widely used in DeFi. This may limit its ultimate level of usage, and in turn, the eventual price of its token. However, it still is a contender, and one that’s only now starting to take off. ALGO remains an altcoin worth buying.
Don’t “bet the ranch” on it right now, as the opportunity to get in at lower prices may be around the corner. But if you’re bullish on crypto’s long-term prospects, be sure to include Algorand in your portfolio.
InvestorPlace does not regularly publish commentary about cryptocurrencies that have a market capitalization less than $100 million or trade with volume less than $100,000 each day. That’s because these “penny cryptos” are frequently the playground for scam artists and market manipulators. When we do publish commentary on a low-volume crypto that may be affected by our commentary, we ask that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
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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, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.