Algorand (CCC:ALGO-USD) is a $9.5 billion market cap cryptocurrency looking to knock Ethereum (CCC:ETH-USD) off of its pedestal. The crypto has more than doubled in the last month and a half from 81.41 cents as of July 31 to $1.66 as of Sept. 20. However, from its peak on Sept. 12, ALGO crypto has dropped by 31.9% from $2.4369 to yesterday’s price.
Algorand is a proof-of-stake (POS) blockchain (doesn’t use mining) that wants to compete with Ethereum on a broad scale. The blockchain software is developed by The Algorand Foundation. The Foundation intends to make it a “fast, scalable system for decentralized applications and DeFi protocols,” according to Decrypt online magazine. (Defi stands for decentralized finance).
What’s New With Algorand
One of the recent causes for the dramatic rise in ALGO crypto was the news on Sept. 16 that a hedge fund run by Anthony Scaramucci, Skybridge Capital, was investing in it. His fund presently has $700 million of AlGO crypto tokens. In addition, the fund is raising $100 million for an exchange-traded fund (ETF) related to Algorand.
Part of the effect of this announcement relates to Scaramucci himself. He is a colorful character, always seeming to be skimming on the latest trends in investing. In fact, at one point, in 2017, he was fired as the Trump Administration’s Communications Director, after just 10 days.
Scaramucci told CNBC after making this announcement that “crypto is here to stay.” He indicated that he thought the government would need to act quickly to “stem the snowballing adoption of the technology.”
But his focus on Algorand was very specific. Here is what he told CNBC: “Algorand is going to be the winner in building the backbone for what institutions need and financial services companies need.”
That shows why Scaramucci made such a large investment in Algorand crypto.
Where This Leaves ALGO Crypto
Another reason is that in the past month is the government of El Salvador signed an agreement with a financial services firm concerning Algorand. The firm, Koibanx, is a leading Latin American asset tokenization and blockchain financial infrastructure company.
The firm will help El Salvador build out its blockchain infrastructure using Algorand. El Salvador had already adopted Bitcoin as legal tender. For example, Algorand will be the infrastructure for a tracking system for Covid-19 cases. It will also develop a point-of-sale credit issuance system and various smart contract financing platforms.
This is the first time a major cryptocurrency blockchain software platform has been adopted by a national government anywhere in the world.
What To Do With ALGO Crypto
Other funds have been putting money toward the development of Algorand. For example, the Algorand Foundation recently announced that it will put 150 million Algorand in a fund toward developing the Defi ecosystem for the blockchain. At yesterday’s price of $2.4369 per ALGO token, the dollar value of the fund for this development will be over $365 million.
This is an impressive amount that will help the crypto become embedded in the nation’s financial infrastructure. It augurs well for the ALGO crypto price in the long run.
Investors may want to begin taking a toehold stake in the crypto at this point. This is despite the fact that the ALGO crypto is not at a trough in its price cycle. In effect, following the path of these trailblazing funds could end up making the enterprising investor in ALGO crypto some money. Just keep in mind that Algorand crypto is likely to be quite volatile.
On the date of publication, Mark R. Hake held a long position in Bitcoin and Ethereum but not in any other security (directly or indirectly) mentioned in the article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.