With crypto prices trending down today, there’s a healthy bit of fear in the hearts of investors. Gone are the days of 2021, where nearly any coin was capable of turning a profit. Investors now must be very careful as the market shows off more volatility. So what are the altcoins to buy that one can actually be confident in?
There’s a handful of reasons to be down on crypto in 2022. We’re looking at one of the biggest turning points for digital assets. Legislation is taking shape across the globe, and eyes are falling on the U.S. as it prepares its policy. The classification, taxation and regulation of the space in the U.S. will ripple across every other nation. Moreover, Bitcoin (BTC-USD) is continuing to falter ever since its plummet from its all-time high in November. Thanks to its own sphere of influence over the market, the king of crypto is able to send the entire market tumbling alongside it.
Even with all of this in mind, though, one must not misinterpret crypto as a dying industry. In fact, it’s only just getting started.
The total number of cryptocurrency holders more than doubled in just the first half of 2021. Countries are accepting Bitcoin as legal tender, the total crypto market capitalization totals trillions of dollars and non-fungible tokens sell for tens of millions.
To shake off the damage of a crash in 2022, one must invest in fundamentally solid coins and tokens. Consider these altcoins to buy for protection right now:
Altcoins to Buy in 2022: Terra (LUNA-USD)
Terra is one of the best altcoins to buy in 2022 thanks not only to its own savvy use case in keeping TerraUSD (UST-USD) pegged at $1, but also the Terra network’s DeFi capabilities. The network is one of only a few which have mitigated market-wide corrections; LUNA’s losses of just 7% in the last week far beat similarly sized cryptos’ losses 15%-20%.
The LUNA coin underlies the Terra blockchain network, and it’s one of the largest in the world. Its market cap of nearly $21 billion makes it the ninth-largest crypto on the global market. It also boasts $16 billion in total value locked (TVL) across its many applications. The largest of these apps, which in itself holds $9 billion in TVL, is Anchor Protocol. The DeFi protocol allows users to stake crypto for an impressive annual percentage yield (APY) of about 20%. It’s this APY which makes Anchor one of the best ways to earn passive income not only in crypto, but across the entire investing landscape.
Moreover, LUNA is an apt investment because of its close relationship with the UST stablecoin. UST is the native, dollar-pegged stablecoin for Terra and all of its applications. Unlike other stablecoins, LUNA isn’t backed by a reserve of USD. Rather, LUNA is what keeps the coin on its peg.
The total supplies of both LUNA and UST are fluid, and users can convert their holdings back and forth between the two to help maintain UST’s $1 value. If the price of UST exceeds $1, investors can burn their LUNA. The protocol, in response to LUNA burning, mints UST. As a result, the increase in UST supply drops the price back to $1, and the value of LUNA rises from supply and demand. When UST drops below $1, users can burn UST to mint additional LUNA. This increases one’s LUNA holdings whilst boosting UST’s value.
When it comes to altcoins, you won’t find anything larger than Ethereum. In fact, ETH is the only cryptocurrency even remotely close to Bitcoin, with $311 billion to its name. Thus, it’s fundamentally the strongest altcoin one can invest in — think of it as the Apple (NASDAQ:AAPL) of crypto.
And Ethereum isn’t just like Apple due to its huge value, it’s also like the California tech company because Ethereum is a highly influential project in the blockchain space. The network continues to rapidly grow, launching thousands of apps on its platform and vastly growing its user base in the last year.
What makes ETH such a savvy buy for 2022 isn’t just the network’s growth and high market cap, though. There’s one huge, glaring catalyst which investors have been waiting on for months, and it’s coming at the midway point of the year. The Ethereum Merge promises to be by far the largest upgrade the network has seen since its launch in 2015.
The Merge, promised by the end of Q2, marks the network’s change from proof-of-work to proof-of-stake consensus. The switch will not only drastically reduce energy consumption, it will also completely rid the need for ETH mining. And while the new consensus will make the network’s scalability rise, the upgrade will also begin the process of upping transaction speed using sharding. Sharding, which will break chunks of data into more manageable pieces for nodes, will reportedly up Ethereum’s transactions per second (TPS) from just 15 to 100,000.
With developers setting up for the Merge throughout 2021, the full rollout of the revamped Ethereum will surely breed massive gains.
Altcoins to Buy in 2022: Dai (DAI-USD)
Dai is one of the best altcoins to buy for 2022 because it is stable and it has widespread applications for wealth building.
Like UST, DAI is a stablecoin with a $1 USD peg. Also like UST, the coin has its own unique way of maintaining that peg. Rather than a supply of USD reserves backing each DAI coin, the project holds a reserve of other cryptocurrencies to keep it at $1.
Dai is the product of the MakerDAO ecosystem. As such, there is no centralized entity which makes decisions regarding the coin. Rather, the holders of DAI themselves get to choose or approve changes to it. As a fully decentralized currency, the coin promises one of the best options for full financial independence; it is stable against market volatility as a stablecoin and it allows for cheap international transfer of funds.
Most appealing about Dai is that in addition to the financial freedoms it permits, one can generate their own DAI by locking one of several collateral cryptos into a smart contract. This allows one to own DAI without having to pay for it. From there, one can lock their DAI into another smart contract to earn the Dai Savings Rate (DSR). This DSR allows one to earn without any fees, minimum deposit or restraint based on location. If the DSR rate isn’t appealing enough, there are still plenty of other non-native staking options for one to utilize, like Compound (COMP-USD).
On the date of publication, Brenden Rearick 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.