Crypto coins are not evil, nor are they a cure for poverty. It’s just a bunch of assets that fluctuate in value – and pretty quickly. They are not currencies, nor do they need to be. Gold ceased being a currency eons ago, yet people accept it as an investment. The bottom line is that their leader Bitcoin (CCC:BTC-USD) is the best performing widely asset in a decade by far.
My hope is that you get a constructive take-away from today’s note. Usually I compare crypto to gold in terms of why it holds value. They are both valuable only because people say so. Although it is still much smaller, BTC is catching up to gold’s market cap. Crypto simply needs time to gain in popularity to the yellow metal. Until then it will continue to have its skeptics and extreme fans and haters.
Crypto coins are a new concept, so the biggest hurdle to overcome is that they are fake. Even brilliant financial minds called it so. Today I will use a tangible approach to help people get over that “fake” hump.
Consider the example the famous art piece the Mona Lisa. Its beauty is a matter of taste and all subjective. Yet, you don’t need to be a fan of art to understand why it is valuable. I don’t personally like it, but I do know it is an investable asset.
But Nic, the Mona Lisa is an original and it is worth over $500 million. It’s not fake like bitcoin. Well, they also make replicas of it and all other famous paintings, and those sell for millions. They are, in fact, fakes yet valuable.
Where and how things come to exist is not my concern. I know is that there is a huge demand for crypto, and that I can make money trading it.
The concept of crypto worth right now is good old supply and demand. You don’t have to either believe in it – or like it – to appreciate it. The truth is that crypto coins exist and that millions want them. They are here to stay for a long while. Therefore, investors who choose to ignore them are actively avoiding the most lucrative modern asset class. BTC market cap is their leader, and Ethereum (CCC:ETH-USD) is chasing it next. Today we have three other coins of interest:
Crypto Coins to Buy: Ethereum (ADA-USD)
Let’s for a minute not pretend that we are experts of the inner-workings of crypto coins. Instead, we should concentrate on leadership. The BTC early expert opinion concentrated around its market-cap opportunity. The argument was that it is hunting that of gold, thereby creating the opportunity. I would argue that it worked so far, so let’s roll with it.
Popularity also matters and clearly behind bitcoin, ETH is second best and half way to it. ADA Cardano is closely behind second place. The price action in it is somewhat reliable, without obvious intrinsic issues. It rises and falls with the crypto coins collective.
Recently, buying it under $2 delivered easy wins for traders. That is also a pivotal level that investors should track. The $1.9 line has been pivotal from day 1, so I expect it to matter for a while. Anywhere near it would make for an good entry for a fast trade with proper stops. This crypto coin is a good blend of trade versus investment vehicle. Therefore, it would be smart to trade some now, and hold some long term.
Most of the comments I shared about ADA apply here. SOL market cap is about 30% lagging ADA, but it will get there. It is popular and riding the coat-tails of Ethereum. Experts in the field suggest that Solana offers potentially a better alternative for ETH use-case.
Perception is a strong price driver, so SOL out did its rival (ETH) last month. Over the last three month, SOL is up more than 8 times more than Ether. Clearly, it’s a shinier star for now, with a reason to own it long term.
Base case is important but in the short term, popularity matters more. Most of the investors are not experts, so sentiment matters more than it should. Nevertheless, knowing that allows us to use it to our advantage.
SOL offers a strong fundamental reason to own long term. Short term, it has the advantage of public opinion. It deserves to be atop of the crypto coins list today.
Crypto Coins to Buy: Dogecoin (DOGE-USD)
At the risk of insulting the super DOGE fans, it’s the only one that I would not accumulate. My impression, not fact, is that it doesn’t present as good a useful argument as the other two. Nevertheless, I am definitely a big fan of it, so I trade it with a smile on my face.
I’ve never felt uneasiness about it because it moves fast enough that I eventually get to my profit goals. Even my 19-year-old son got in on the action without my help. At one point, we both bought DOGE at almost exactly the same time without choreographing it.
The way I trade it is very straight forward. When crypto coins come under fire, I start looking for an entry. My goal is mostly short term with DOGE, so I set my alerts and wait. I buy it when it hits my entry points and then I diligently exit when it hits my upside profit goals. I do not try to catch the absolute tops or bottoms. Below 20 cents gets puts my buy bots on alert. I do not intend to hold it for a long-term investment thesis.
On the date of publication, Nicolas Chahine 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.
Nicolas Chahine is the managing director of SellSpreads.com.