Amp (CCC:AMP-USD) is beginning to gain credence as a collateral play for blockchain transactions. AMP is the base crypto of the Amp blockchain, a collateralized token whose focus is to speed up transactions. As a result, the crypto is starting to make a comeback to its prior peak reached earlier in the year.
On June 16, it hit a peak of 10.9 cents per token and by Dec. 4 it had drifted down to 5.34 cents. That represents a drop of 51% in the last six months or so.
However, it bottomed out around 4.1 cents on July 19 and again on Oct. 27. So, in the past month and a half, AMP has now risen over 30%. As a result, many investors in the last month or so have been able to make a profit.
Stand Out Features of Amp
AMP is able to offer its blockchain as a mechanism to help make transactions go faster. This especially applies to Ethereum (CCC:ETH-USD), which is well-known as a slower cryptocurrency.
As Coindesk explains, Amp allows users to provide its tokens as collateral for transactions on other crypto networks, like Bitcoin (CCC:BTC-USD) and Ethereum. AMP crypto can then be liquidated as collateral if transactions take too long or are unsuccessful. That way the receiving party still gets paid using it as the collateral for the transaction.
AMP can collateralize any account, application or transaction and “carry” balances directly verifiable on Ethereum. It can also act as a smart contract collateral manager. It can lock, release and redirect collateral in partitions in order to support value transfer activities, according to CoinMarketCap.
As it stands now, AMP had a market value of $2.25 billion as of Dec. 4 and is ranked as the 63rd largest cryptocurrency. So it is not an insubstantial blockchain by any means. As it gains credence as a collateral mechanism making transactions operate safely, its value will continue to rise.
However, one of the problems I see with Amp is that it has not moved into newer areas that investors are interested in these days. For example, I don’t see any movement by Flexa, the company behind Amp, to move into smart contracts, decentralized finance (DeFi) or decentralized apps (dApps).
More specifically, I believe it will need to cut out some sort of non-fungible token (NFT) niche. This is what helps push a cryptocurrency higher these days. Maybe Flexa can come up with some solution that Amp can provide for owners of NFTs other than just acting as collateral in transactions.
Where This Leaves AMP Going Forward
So far this year, AMP has been on a terrific run. It ended last year at 0.66 cents per token. So at its Dec. 4 price of 5.34 cents, it is 8 times the price where it started at the end of the year. That is a fantastic return for most investors.
But will it repeat this performance going forward? Not likely. That would imply it would move to a market capitalization of more than $18 billion. Although theoretically possible, it seems highly unlikely.
For one, there is very little visible marketing spending and very little news about new collaborations or partnerships with Amp. I would expect to see a lot of that sort of thing if the crypto had a chance of rising another 8 times.
However, assuming that Amp continues to gain credence as a way to speed up transactions and make them safer, expect to see it rise consistently higher. I would not be surprised to see AMP 20% to 50% higher over the next year as a result.
On the date of publication, Mark R. Hake did not hold any position (either directly or indirectly) 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.