Loopring (LRC-USD) is a zero-knowledge rollup (ZK-rollup), which is a Layer 2 scalability solution for the Ethereum (ETH-USD) network. It was one of the most discussed cryptocurrencies in late 2021. However, it has since steadily declined in both value and popularity.
Having said that, LRC can still be very profitable in the long term due to the scalability it adds to the Ethereum network. As more people use Ethereum, the fees will also become more expensive. Thus, Layer 2 solutions such as Loopring are likely going to see widespread usage due to their smaller fees.
In addition, Loopring’s market capitalization is relatively small compared to its popularity and future prospects. LRC has a market cap of $1.2 billion, down from a market cap of almost $4.5 billion a few months earlier. Thus, it certainly has more room to grow in the future. The decline of Loopring has also slowed down, and its price has been hovering around the $1 range since the start of the year.
It is essential to note Loopring is unlikely to see any significant bullish price action in the short term. The market is still volatile, and Ethereum fees have been lower as the crypto market cools.
However, investors should not lose hope for LRC in the long term due to its connection to Ethereum. ETH is already the most useful cryptocurrency, as most Web 3.0 technologies are being developed on its blockchain. Furthermore, Ethereum will likely be the largest cryptocurrency in a few years if it continues to innovate and outperform Bitcoin (BTC-USD).
In the long-term, Loopring can benefit from its smaller fees. As for the short-term, it is crucial to see whether or not LRC can hold its previous support. Its most recent significant support level is around 70 cents. If it falls below that, the asset is likely to decline further unless influenced by the broader market.
For the reasons I’ve mentioned earlier, I believe Loopring is a buy for the long term. It is very likely to become worthwhile, as it will fulfill the shortcomings of Ethereum. Moreover, Loopring has been around for almost five years, and it has been relatively consistent with the market. Thus, I believe LRC to be a safe long-term investment.
On the date of publication, Omor Ibne Ehsan 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.