For those less-versed in cryptocurrency trading, shedding 10% in value over a week, as Bitcoin (CCC:BTC-USD) had at time of writing, is an uncomfortable experience. With Chinese government authorities labeling cryptos and their mining process as “extremely harmful,” the virtual currency sector has decided to take a breather. That won’t stop proponents from clambering onboard.
Indeed, one of the trending terms on various social media platforms is “buy the dip,” a rallying cry for both cryptos and meme stocks. Despite the existence of other powerful fundamental headwinds, particularly the strong dollar weighing down cryptos per the Wall Street Journal, advocates of blockchain-derived coins and tokens remain undeterred. Honestly, with Bitcoin consistently defying gravity, it’s hard not to feel bullish about the red ink.
But is this really a “buy the dip” opportunity? While cryptos represent one of the biggest talking points this year, it’s important to avoid magical thinking with this sector. Anything and everything is liable for a correction. Regarding Bitcoin specifically, my research suggests that the original virtual currency is printing an asymptotic exponential curve; that is, as BTC rises, traders have an exponentially more difficult time generating big percentage swings.
But let’s toss out the jargon and get down to the numbers. Between 2010 through 2015, Bitcoin generated 1,700X returns when comparing annual average prices. From 2015 through mid-November of this year, BTC generated 172X returns. While that’s still a gargantuan profit, BTC is taking longer to generate lower returns than in previous paradigms. Thus, we have a higher-risk, lower-potential-reward environment, which if translated into mathematical principles is the hallmark of an asymptotic exponential equation.
As well, the variance between each year’s highest and lowest price point has become much more narrower in recent years. On the surface, this implies that volatility is dying down. At the same time, it also means that upward mobility is pressured. Again, Bitcoin is trending inside a higher-risk, lower-reward ecosystem, which could incentivize these alternative cryptos.
Here are 7 cryptos to consider in light of the Bitcoin beatdown:
- Litecoin (CCC:LTC-USD)
- Bitcoin Cash (CCC:BCH-USD)
- Crypto.com Coin (CCC:CRO-USD)
- Ethereum Classic (CCC:ETC-USD)
- Theta (CCC:THETA-USD)
- Dash (CCC:DASH-USD)
- Dogecoin (CCC:DOGE-USD)
While no one knows what will happen in the future, it’s important to keep in mind the scarcity principle. In short, there are only so many resources to go around, meaning that it may be more advantageous to consider cryptos that haven’t received an enormous influx of investor capital.
Just a week ago, Litecoin appeared to be challenging the $300 level. Unfortunately, the wave of negative headlines pressured Bitcoin, which in turn took LTC-USD down several notches. Presently, the original altcoin is trading hands just below $225.
Part of the reason why Litecoin might be a better choice for speculation — and that’s what all cryptos are, pure speculation — is that LTC-USD is flying under the radar. Not too much, where it’s at danger of crashing into the ocean, but just enough to keep traders interested without drawing intense interest, which in turn leads to devastating crashes.
And more companies are accepting cryptos as payment. Of course, with more than 213 million companies operating worldwide, the ratio of virtual currency acceptance is ridiculously low. Nevertheless, if such integration continues on an upward trajectory, Litecoin will make for a better payment system.
Simply, it’s much faster than the rather anachronistic Bitcoin, which has become a store of value. Plus, with a three-digit price tag, it’s easier to conceptualize.
Bitcoin Cash (BCH-USD)
Back in its day, Bitcoin Cash was a hotbed of controversy. Prior to the hard fork that gave life to BCH-USD, Bitcoin users and developers agreed that its underlying blockchain architecture was aging relative to the influx of demand it had been enjoying. But conflict stemmed from how to resolve the nagging issue.
To make a long story short, those who wanted a faster and less-expensive mechanism for transacting digital assets — the original goal of Bitcoin — decided that the only solution possible was a separate, “enhanced” blockchain network. So BCH-USD forked from the original blockchain, resulting in mixed feelings from the crypto community.
Today, the controversy isn’t as intense as it once was. And to be sure, the original Bitcoin has been the standout winner in the debate. While Bitcoin has gone on to post record high after record high, Bitcoin Cash can’t even approach its December 2017 peak.
Still, there’s a chance that BCH-USD could be a slow burn. Even with recent volatility, the crypto coin has been printing a series of higher lows since July 2021. It’s one to watch if you have a contrarian take on cryptos.
Crypto.com Coin (CRO-USD)
One of the riskiest cryptos out there in my opinion, Crypto.com Coin is the exact opposite of an under-the-radar play. Since launching in late 2018, CRO has made quite an impression on the virtual currency community, which is tied to the namesake blockchain network. In turn, the “CRO blockchain serves primarily as a vehicle that powers the Crypto.com Pay mobile payments app,” per Coinmarketcap.
As if the token needed any more attention, Crypto.com Coin is one of the relatively few digital assets that have printed double-digit gains over a 24-hour period while Bitcoin flounders just below $60,000. Generally speaking, cryptos have a tendency of playing follow the leader with BTC-USD, so I wouldn’t bet the farm at CRO’s current price point.
Still, if the token manages to drop lower, this would be a discount I wouldn’t mind buying the dips on. And no, I’m not just saying that. Part of my confidence stems in the fact that Crypto.com now commands a substantial global footprint. For instance, its partnership with Formula 1 — an auto racing series that travels across the globe — represents a huge lift for CRO and cryptos as a whole.
Ethereum Classic (ETC-USD)
If you’re new to cryptos, you might think that there’s only one Ethereum (CCC:ETH-USD) in the virtual currency realm. However, Ethereum Classic is the legacy chain of Ethereum. That means the developers of ETC-USD are actually Vitalik Buterin and Gavin Wood, two names that are synonymous with Ethereum and its missing to integrate smart contract applications to decentralized protocols.
As with Bitcoin Cash, the hard fork that sparked a split between ETC-USD and ETH-USD was extremely contentious. Following a major hack, Ethereum participants disagreed on how to resolve the issue, with many wanting to revert the underlying blockchain to cancel out the hack’s impact while others felt that such a revision would spiritually contradict the purpose of decentralization.
Obviously, the two sides couldn’t come to a consensus and Ethereum Classic decided to stay true. To be clear, this has resulted in 51% attacks, which allow hackers to control the target blockchain, including initiating actions like double-spending coins.
On the plus side, ETC-USD’s supply is fixed, which basically means that it’s a deflationary investment. While ETC-USD features several risks you shouldn’t ignore, it might not be a bad place for wagers with dumb money.
Among the more intriguing cryptos on a fundamental basis, Theta is essentially a decentralized version of the content delivery network (CDN). Originally conceptualized to reduce bottlenecks in the internet, CDNs distribute data sources spatially to end users, thus improving availability and performance. Naturally, CDNs were vital during the pandemic-fueled lockdowns as people hopped online to fulfill both professional and personal needs.
Theta applies the same concept but promotes distribution of rewards. Under a traditional CDN, only the provider accrues financial benefit. With Theta, users can contribute unused bandwidth to the network, thus helping the network operate while receiving crypto rewards — the underlying THETA-USD coin — for their troubles.
It’s a novel solution, one that promotes inclusivity to power modern digital innovations. To be fair, though, the risk factor involves market volatility. If Theta crumbles in price, it’s hard to imagine that network users will continue offering their valuable bandwidth in exchange for virtual currencies of questionable viability.
But I’d be remiss in not pointing out that THETA-USD has been charting a series of higher lows since July of this year. Like the other cryptos, it’s one to consider with speculation funds.
One of the more popular alternative cryptos a few years ago, Dash has really fallen off the radar. Ranked at number 72 in terms of market capitalization, other digital assets have crowded into the space, pushing out some of the old timers, so to speak.
Still, it’s an intriguing concept. From Coinmarketcap’s description, “Dash is an open-source blockchain and cryptocurrency focused on offering a fast, cheap global payments network that is decentralized in nature. According to the project’s white paper, Dash seeks to improve upon Bitcoin by providing stronger privacy and faster transactions.”
For those who are curious, the name Dash comes from the phrase “digital cash.” Launched in 2014 as a fork of Litecoin, the DASH protocol is user friendly and scalable. It falls under the group of cryptos that are tied to practical payment applications.
Granted, the rise of meme coins has helped push Dash into the background but that might work to its advantage. Currently, it’s one of the digital assets that has been printing a series of lower highs since July of this year, suggesting it could break out higher.
As I’ve mentioned in recent InvestorPlace articles, I’ve had a change of heart regarding Dogecoin and risky cryptos of its ilk. No, I don’t think they’re suddenly wonderful investments. Indeed, you are taking a major gamble if you put serious money into DOGE-USD. But the thing is, cryptos like Bitcoin require a massive amount of money to gain a comparatively small reward.
I don’t know about you but I’d rather do the opposite: bet small, win big.
True, based on historical data, Bitcoin has a greater probability of rising higher than Dogecoin, which could potentially crumble under the weight of its hubris. But the latest volatility in BTC was a warning shot. If you had bought one BTC-USD near $70,000, you’d be staring at a $10,000 loss today.
Most regular folks can’t absorb that kind of devastation so they’ll stay put. But what if BTC-USD drops to $50,000? That’s another $10,000 loss. Yet the same people will hold because losing $20,000 is truly unbearable. And so the spiral continues.
With Dogecoin, you can enjoy BTC-USD’s reward potential but with a fraction of the risk. As I said, that seems a more favorable proposition.
On the date of publication, Josh Enomoto held a LONG position in BTC-USD, LTC-USD, BCH-USD, ETC-USD, ETH-USD and DOGE-USD. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.