- The crypto market has seen huge losses, but that’s an opportunity to buy into it at a cheap price.
- Cardano (ADA-USD): Investors want a solid roadmap, and Cardano has that.
- Ethereum (ETH-USD): Capital should follow established assets in this newest evolution of crypto.
- Bitcoin (BTC-USD): Consider Bitcoin as safety is found in the market barometer.
- Solana (SOL-USD): Solana remains among the strongest upstarts in the space.
- Polkadot (DOT-USD): Polkadot could soon emerge as the hub of Web3.
- Polygon (MATIC-USD): Polygon helps smooth any bumps in ETH development.
- Dogecoin (DOGE-USD): Stupid money still has sway, keeping Dogecoin interesting.
Cryptocurrencies have taken a broad, massive beating of late. On the one hand, bearish investors see this as the beginning of the end of the crypto boom. Interest rates are set to continue to rise. Quantitative tightening is ratcheting up. So, the thinking goes that soft money assets including cryptocurrency are headed into a long bearish cycle.
On the other hand, nothing is set in stone. Sure, Bitcoin, the industry barometer has gotten hammered. But as I write this it is approaching the $21,000 price level. That points to the notion that it has passed an inflection point and will continue to move upward. As it goes, so too does the rest of the crypto sector.
Long story short, a bullish position now could mean massive upside moving forward. Is it a gamble? Sure. That said, these cryptos are strong choices at present.
Cardano (ADA-USD) provides simplicity insofar as that’s possible in the often cryptic, deeply technical cryptocurrency landscape. That’s attractive, because it’s fair to say investors are increasingly scared of jargon-rich, difficult-to-understand cryptos in the wake of Terra Classic’s (LUNC-USD) meltdown.
I’d assert that more than ever, investors want crypto projects explained in plain English. The more technical and difficult to decipher the language describing a project, the worse. The more a project’s website smacks of a computer science review, the more likely it gets labeled a Ponzi scheme and a scam.
Thus, Cardano, with its clear explanations and relatively easy-to-understand roadmap, is a breath of fresh air. That roadmap serves as a kind of 10,000-foot view, which I contend is completely necessary. Moving forward, investors are going to increasingly call out overly technical jargon for what it often is: obfuscation intended to trick investors into putting capital into something they can’t understand.
So, while you may not understand Cardano’s finer points, you can appreciate its broader trajectory as it implements smart contract technology and moves toward the fourth of its five phases.
If utility is king (and it should be), then Ethereum (ETH-USD) is a definite buy. Ethereum establishes the peer-to-peer network for smart contracts that underpin the decentralized functionality of cryptocurrency. It also verifies and executes the code that supports those transactions via smart contracts.
Add to that, Ethereum’s position as the second most valuable crypto by market capitalization, and its importance becomes better defined. Investors seek safety in troubled times. That’s as true of the stock market as it is of the crypto market. And safety is found in numbers, so Ethereum, with its No. 2 market cap of around $146 billion, remains very attractive.
Ethereum is currently transitioning away from a proof-of-work model and into a proof-of-stake model. Once that is completed, transaction speeds will rise, fees will decrease and Ethereum prices will jump. ETH is back above $1,000, but still much cheaper than it has been for some time.
It was only last week when Bitcoin (BTC-USD) fell below the $20,000 threshold. It even briefly dipped below $19,000 per coin. As I write this, it is hovering around $21,000. That’s a strong sign because bearish macroeconomic signals haven’t abated. There’s nothing suggesting that we’re moving toward a lower inflation environment. Likewise, there’s nothing that indicates the chances of a recession are dwindling.
So, the fact that Bitcoin is leading a momentary rebound is plainly positive.
It also seems to suggest that the most bearish expectations, like that of Guggenheim Chief Investment Officer Scott Minerd, are overexaggerated. When Bitcoin dropped below $30,000, he said the chances of it dropping to $8,000 were high.
From a technical perspective, which is all we have with crypto, Bitcoin’s rebound suggests that $8,000 is highly unlikely.
Investors who knock Ethereum for its lack of speed will be inherently attracted to Solana (SOL-USD). It boasts a theoretical peak capacity of 65,000 transactions per second. That has garnered it a spot among potential usurpers to Ethereum’s throne. Solana’s current, real-world TPS figures are steady around 2,000. But that significantly outpaces Ethereum, which tends to hover around 12 transactions per second.
I mentioned that Ethereum is switching to a proof-of-stake mechanism, but Solana is already there. The reason to consider Solana is that it could gain an early advantage that Ethereum may never be able to make up.
Solana is already moving into fintech applications based on its native token while Ethereum is forced to play catch up. But while the argument has been made that Solana may make more sense than Ethereum, I’d suggest that both are strong considerations unless Ethereum proves that it is incapable of increasing speeds in the future.
Polkadot (DOT-USD) is building a platform to serve as the base for the interoperability of Web 3.0. Lots of projects are being built on blockchain technology presently. But that means that they also exist in their own little vacuums, so to speak. Without the ability to communicate with each other, disparate blockchains remain separate. If they remain separate, Web 3.0 can’t be fully realized.
Polkadot is helping to solve this problem using parachains, specialized blockchains that build interoperability between disparate blockchains.
The point here is that Polkadot allows what it calls arbitrary data to flow freely across blockchains. But that arbitrary data is subject to human ingenuity, and humans can and do build things. So, that which was thought to be arbitrary can become the basis of revolutionary new technology.
I like to think of Polygon (MATIC-USD) as a fallback plan should Ethereum fail to fully transition into a proof-of-stake network. Right now, Polygon has utility in bringing Ethereum’s network effects to users with significantly reduced fees. It allows dApps to be built much more cheaply via Ethereum than would otherwise be possible.
Ethereum knows this. But Ethereum can’t simply snap its fingers and switch its proof model. It will take time, and there’s no guarantee that Ethereum will be successful. Right now it looks like that transition could happen in late 2022.
But if there are any further delays, Polygon instantly becomes more valuable. There are all kinds of possibilities for collaboration and as long as Polygon makes Ethereum network use cheaper it remains very valuable. That will ensure that its price continues to rise over time.
I’ve never really been a fan of Dogecoin (DOGE-USD). It’s hard to get behind something that was created as a joke. But despite my misgivings about the project or its strongest backers, I have to admit it doesn’t matter.
It has a massive backing and if meme coins and crypto have taught us anything over the past few years it’s that power rests with the people.
Popular sentiment in the Dogecoin community amounts to characterizing criticism as outright lies or smear campaigns. That should be the case with the latest allegations that Dogecoin is increasingly being used in illicit activities. Dogecoin has become a vehicle for popular sentiment in crypto so, despite its lack of much else, it continues to have a persuasive fandom. That continues to matter.
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.