The crypto sector continues consolidating … clues about its future by watching the pros … a tiny crypto that could be tomorrow’s 10X winner
2022 has seen a handful of assets suffer heavy losses.
Tech stocks have been put through the wringer. Last week, the Nasdaq even briefly fell into a bear market (down 20% from recent highs).
Then there’s stodgy ‘ole bonds. The yield on 10-year Treasury has jumped 29% so far this year (climbing yields reflect falling prices, so this move represents pain for a bondholder).
But perhaps no asset class has had it worse than cryptocurrencies.
Though Bitcoin is down only 12% in 2022, many smaller altcoins are suffering through far more painful drops. For example, Reddit-favorite, Dogecoin, is down 26%. Cardano is down 33%. And Solana is down 47%.
Keep in mind, these losses are just in 2022. The total peak-to-trough losses, beginning last fall, are even more brutal.
But in the face of such declines, crypto investors need to remember a critical truth of investing…
Prices don’t always reflect intrinsic value.
So, as long as you believe in the future potential of whatever asset you’re analyzing, heavy losses should be welcomed as discounted prices.
Warren Buffett stressed this point in one of his letters to shareholders, writing:
Smile when you read a headline that says “Investors lose as markets fall.” Edit it in your mind to “Disinvestors lose as market falls – but investors gain.”
But let’s circle back to the tricky part of all this…
“As long as you believe in the future potential of whatever asset you’re analyzing.”
This is what trips up so many investors – how do you really know?
Well, you don’t. There’s never a guarantee in investing. That said, when in doubt, do two things:
One, watch the big-money investors to see how they’re voting with their dollars.
Two, follow the analysts who research the most and have a track record to prove they know what they’re talking about.
Today, we’ll do both. So, let’s take a break from all things “Russia,” and instead, put a tiny crypto on your radar that could be a 1,000%+ winner in the years ahead.
Let’s jump in.
***Crypto is down so much some people are asking, “was it a fad, or is there a future?”
To help answer that, let’s turn to our venture capital expert, Cody Shirk.
For newer Digest readers, Cody is a veteran venture capital investor who’s done deals all over the world, resulting in a growing list of 1,000%+ venture capital winners under his belt.
In his free newsletter, Venture Capital Digest, he shares tips and tricks to private investing… trends he’s tracking… even deals that catch his eye. Cody’s Digest is a fantastic way to keep a finger on the pulse of the venture capital world.
And in last week’s issue, he helped check the box on the first thing investors should do if they’re in doubt about an investment – track the big dollars.
Yes, crypto prices are down, but if you think they’re not the future, you’re betting against the smartest people in Silicon Valley.
From Cody:
As far as the broader crypto conversation goes, every private investor I know agrees that blockchain technology eventually will completely replace all legacy financial infrastructure.
This process, of course, will take time. And it will certainly involve some bumps along the way…
That said, with the amount of funding that is being plowed into crypto startups right now, we may see our financial system shift towards blockchain technology faster than we expect.
In digging into the details, Cody points toward venture capital giant Andreessen Horowitz (a16z), which raised a whopping $2.2 billion in 2021 for its much-anticipated Crypto Fund III.
Then there was Paradigm, founded by Coinbase co-founder Fred Ehrsam and former Sequoia partner Matt Huang. It raised $2.5 billion last year.
And if you’re saying “well, these were both last year,” I’ll note that momentum is continuing here in 2022. Cody highlights VC giant Sequoia Capital, just announcing a new crypto-exclusive $600 million fund. Then there’s venture capital firm Woodstock, raising $100 million from U.S. investors.
Even meme stock giant GameStop just announced that it will be launching projects in crypto and venture capital.
Back to Cody:
Although I have recently spoken about how it’s likely we are in a blockchain bubble, that doesn’t mean that crypto and blockchain startups won’t see success…
The long-term picture is clear — this technology is here to stay.
We’ll be searching for those winners in the coming months.
We’ll check back with Cody for his picks as he releases them (and if you want to follow along for free, click here. But today, let’s jump straight to a crypto highlighted last week by Luke Lango.
***Follow the person who’s putting in the most research and has the track record to prove it
Regular Digest readers recognize Luke as one of our crypto experts.
He’s also a bit of a prodigy. From a perfect score on his SATs, to an illustrious academic career at CalTech, to being the #1-ranked analyst (out of more than 15,000 investment experts) on TipRanks, Luke has accomplished quite a bit at a young age.
But much of Luke’s success comes from simply putting in the work. He and his research team at Ultimate Crypto spend countless hours analyzing the broad crypto market, on-chain market data, and the specific value proposition of various cryptocurrencies.
Last week showed how all this pay off…
The altcoin, API3, which Luke recommended to Ultimate Crypto subscribers just last October, basically doubled in price over the same period in which Bitcoin investors lost 10%.
On the news, Luke recommended subscribers sell a one-third portion, locking in an official 73% return on that portion of the trade. And again, this happened over a time-frame in which most altcoins suffered steep losses.
Luke just highlighted another crypto he’s bullish on – this time in his newsletter, Daily 10X Stock Report.
The Daily 10X, as we call it, is like nothing else we offer. Luke doesn’t keep a portfolio or provide sell advice. But every day the market is open, he highlights a small cap stock or crypto with the potential to grow 1,000%.
So, let’s pull back a moment…
We have a sector that’s attracting huge capital inflows from the brain-trusts in Silicon Valley. And we have a specific crypto that’s being highlighted by a team of analysts with a track record of winners that live and breathe this stuff.
So, what’s the crypto?
***An Ethereum-killer with a bargain price
Let’s jump straight to Luke:
This crypto is an Ethereum (ETH-USD) alternative with lower fees and higher speeds. Most attractively, it has a much smaller valuation. That’s why we believe this crypto is not just due for a big near-term rebound — but a huge long-term breakout, too.
The crypto we’re talking about is Algorand (ALGO-USD).
Algorand is a Layer-1 blockchain designed from the ground up to solve many of the pain points of legacy ecosystems.
Specifically, many Layer-1 blockchains suffer from really high transaction fees, really low verification speeds, or both. But Algorand — designed by MIT Professor Silvio Micali, who is a past winner of the Turing Award — endures neither.
Based on a permissionless, pure proof-of-stake blockchain protocol, Algorand does not involve any mining and, therefore, has much lower transaction fees and faster verification speeds than other mining-based protocols.
To prevent this Digest from running too long, let’s briefly hit the opportunities and challenges as Luke sees them.
In Algorand’s favor:
- Far lower gas fees than Ethereum
- A reputable and widely-respected developer team
- A new trustless bridge to Ethereum that could lead to a new wave of liquidity
- An attractive valuation of just $5 billion
Headwinds for Algorand:
- The platform hasn’t attracted major liquidity to its platform so far
- A competitive Layer-1 landscape
- Long-term price action is unfavorable, as every rally has seen sizeable selling pressure
In terms of 10Xing your investment, Luke points out that if Algorand can climb to just 20% of Ethereum’s market cap, that would mean a $60 billion valuation…and a 1,000% return.
Let’s keep an eye on whether the new trustless bridge from Ethereum increases liquidity. That would be a significant tailwind toward a 10X return.
I’ll give Luke the final word:
The best strategy with cryptos these days is to selectively buy washouts, accumulate a low cost-basis in multiple high-quality cryptos, and hold those cryptos for multi-hundred-percent gains over the next few years.
Amid the current market rout, Algorand is a crypto worth applying that strategy to. Long-term, this could be a big winner.
Have a good evening,
Jeff Remsburg
