Since July, cryptocurrency market net capital outflows sent its market cap from about $1.25 trillion to just over $1 trillion. However, that same outflow has created several oversold crypto opportunities. In fact, cryptocurrency investors now have a chance to bolster their portfolios on the cheap. Here are seven of those opportunities you may want to consider.
Oversold Crypto Opportunities: XRP (XRP-USD)
XRP (XRP-USD) is one such cryptocurrency to consider specifically because of its utility. It has established itself as a well-known crypto in cross-border settlement transactions. Users needing to send money abroad can do so using XRP. Transaction fees are nearly non-existent at $0.0002 — and fast as settlements take about three to five seconds.
However, many investors are frustrated with XRP at the moment. The company’s court win against the US SEC in mid-July was more of a blip than a true catalyst for the crypto. If you look at its chart, prices are back to where they were before the judgment was handed down. Sure, traders made a lot of money following the judgment, but many had hoped the rally would be sustainable.
I think that the wheels are in motion for that to occur. For one, its US SEC problems are a thing of the past. And two, XRP may soon be listed on Robinhood (NASDAQ:HOOD). That should result in greater liquidity and interest in general due to increased accessibility.
One of the biggest reasons Cardano (ADA-USD) has such acclaim is its developmental approach. Everyone who knows anything about Cardano is aware that it takes a slow, methodical approach that relies on evidence-based decisions to guide its growth. That means relying on things such as the latest computer science research to answer bigger questions. It is the antithesis of the ‘go fast and break things’ thinking that pervades cryptocurrency.
That approach seems to be reaching a critical mass. Cardano is the leader in GitHub activity in 2023 in terms of developer engagement and project advancement. That should tell investors a lot. Developers are the architects of the Internet and Web3. If they engage with Cardano more than any other crypto that is about as clear a signal as there can be that Cardano is on a path to growth.
It makes a lot of sense when you think about it. Developers are more likely to engage with Cardano and advance the project because it implements scientifically validated updates. Developers will avoid projects that are thrown together without thought because they are not only bound to break but simply difficult to develop.
Oversold Crypto Opportunities: Polkadot (DOT-USD)
Polkadot (DOT-USD) is another utility-first blockchain project. It facilitates the transfer of any type of data between blockchains. The Internet was revolutionary because it connects disparate sources and types of data. Polkadot is one of the primary projects attempting to bring internet-style connectivity to the world of blockchain. It’s the next step beyond the transfer of different coins from blockchain to blockchain.
It’s particularly important because the blockchain and cryptocurrency are viewed as the next iteration of finance. Bridges to and from traditional financial systems need to be built to facilitate the flow of information. Polkadot is the potential link.
Investors have to keep that thinking in mind and consider Polkadot for the long term. It has fallen by 40% over the last year. Other protocols attempting to solve the same problem also exist. Polkadot may end up dominating the space or it might not. However, if it succeeds the rewards will be substantial.
Bitcoin (BTC-USD) is the bellwether for the crypto market. Through fits and spurts, it has gone from a worthless asset to one worth multiple tens of thousands of dollars. Yet, it remains in the early stages of adoption. Mindset is critical here. In the grander scheme of things, the infrastructure of cryptocurrency remains immature. Bitcoin as ‘gold’ thus remains very immature in its value.
I like to think of Bitcoin and crypto and ask myself what it would be like to describe our current banking system to someone who lived hundreds of years ago. Most would have thought it impossible and probably crazy. Yet here we are again.
Oversold Crypto Opportunities: Stellar (XLM-USD)
Stellar (XLM-USD) is a cross-border payments platform that does a lot of what XRP does. It’s inexpensive and efficient and has established a deep network of partners in the finance space linking it to the established financial system while existing firmly within the crypto space.
XLM is also relatively cheap, trading for 12 cents making it an inexpensive token overall but one with proven utility. Before XRP was vindicated in its court case with the US SEC it made sense to compare XLM in that light. XLM was considered to have an advantage in that it wasn’t facing regulatory scrutiny. Now it simply has an advantage price-wise.
Both options make sense given the idea that each can continue to grow in parallel. Cross-border remittances aren’t exciting but that means less competition. XLM simply has to continue to build its network and identify growth opportunities that could expedite it. A few hundred dollars directed toward XLM could yield large returns with a horizon of several years.
Ethereum (ETH-USD) is the dominant crypto for paying transaction fees and has been likened to digital oil. It’s the lifeblood of the digital economy and that’s a reasonable argument in favor of adding it to your portfolio at most any time.
Ethereum pioneered the smart contract platform that allows actions to be executed and value to flow between parties. Along with Bitcoin, Ethereum forms the backbone of the cryptocurrency landscape as we know it today.
ERC-20 compatibility allows other cryptocurrencies to operate within Ethereum’s blockchain. The fact that more than 280,000 ERC-20-compliant tokens have been launched overall speaks volumes to Ethereum’s position. Competitors realize that Ethereum has cultivated a moat that makes compliance a much smarter route than competition. That’s a major factor favoring Ethereum moving forward. Unseating Ethereum seems less and less likely and, despite its problems, there seems to be no viable alternative. Thus, Ethereum is more likely to be patched into a stronger network over time than it is to be overtaken.
Avalanche (AVAX-USD) is one of few cryptos that does have a legitimate shot at unseating Ethereum. Its claim to fame is that it is faster at 6,500 transactions per second while being more scalable.
I’m torn when it comes to Ethereum alternatives like Avalanche and Solana (SOL-USD). There are legitimate transaction speed, fee, and scalability issues on which they compare favorably. That said, I just mentioned that there seem to be no viable alternatives to Ethereum a few sentences above.
Let me elucidate my thinking in terms of investing. It makes sense to set aside a small amount of money for AVAX or SOL and buy them. What I mean is an amount of money that wouldn’t hurt if it goes to zero. Let’s say, $1,000. That would buy 100 AVAX. Imagine if some flip occurs and Avalanche by some miracle replaces Ethereum. Its value might then grow about 150x because it would have usurped Ethereum’s place and thus value. Unlikely, absolutely but also possible.
On the date of publication, Alex Sirois 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.