By now, you’ve heard of the primary reasons to invest in cryptocurrencies (or crypto in sector vernacular). Tied to the distributed public ledger known as the blockchain, virtual currencies foster true decentralization: their value is based on market dynamics and don’t have influence from centralized authorities like the Federal Reserve. Additionally, they’re trading 24/7/365 and are open to virtually anyone with internet access.
However, the main bullish case for the crypto market this time around may not have anything to do with the sector itself. Rather, virtual currencies can potentially skyrocket because they’re not stocks. Don’t think that investors can jump a market through “negative” thinking? Well, consider the recent presidential election. Did people vote for Joe Biden or did they vote against President Donald Trump?
My bet is on the latter. And for our Newsmax-watching readers, please note that I just referred to Biden as just Biden. Technically, he is not anything until the Electoral College says so. I have only one ask: let’s just remember this protocol for 2024 for consistency sake.
Source: Chart by Josh Enomoto
But there’s also an investment-related reason for people to eschew equities for cryptos. And that is the bearish broadening wedge formation that is developing in the S&P 500. Yes, I’m talking about technical analysis and yes, I understand that many folks believe this methodology is as good as horse manure.
However, consider that CNBC showcased Sven Henrich, founder and lead market strategist at NorthmanTrader, who warned that because of the broadening wedge, the S&P 500 could suffer a major drop … back in September 2019! I mean, how right was he? Even more alarming, we’re not done with the wedge’s implications, which bolsters the case for these crypto wagers to consider.
You might be thinking that precious metals would represent a better safe haven than crypto assets. Though this is valid reasoning, you must appreciate the emerging generation’s ethos. They’re all about lightning-quick conveniences and the world (literally) at their fingertips. Stocks just aren’t going to cut it which is why I’m bullish long term on virtual currencies.
Bitcoin (BTC)
In early November, I stated that bitcoin was looking at another run at $20,000 and probably soon. So far, my forecast has been right on the money, with BTC on the cusp of breaking through the $20,000 level. But what was the basis for my call? That bitcoin was the benchmark for the crypto market?
Of course, that’s always going to be a factor. However, because the crypto market “lacks” fundamentals in the sense that most of these assets are virtual currencies, not corporate securities, most investors have to rely on technical analysis. And in bitcoin’s case, it had charted a bullish pennant formation, defined loosely as a convergence of narrowing bullish and bearish price action that ultimately resolves itself to the upside.
Again, so far, so good. However, I believe we’re just getting started with bitcoin. Notice that right now, the idea of bitcoin at $20,000 is rather blasé. Previously, market analysts viewed the event as the second coming. With stability at these lofty prices established, BTC may go onto make surprisingly robust gains.
Do I hear $50,000, anyone?
Ethereum (ETH)
Presently the number two to bitcoin, ethereum represents the top echelon of alternative crypto assets, or altcoins for short. Fundamentally, bitcoin and the blockchain innovation that it brought to the mainstream was a proof of concept. For the first time, a decentralized market of tradable assets became a reality. However, bitcoin had a number of opportunities for improvement.
One area where the original blockchain fell short was its focus; bitcoin is narrowly defined as a peer-to-peer payment application. However, the developers behind ethereum introduced the concept of smart contracts, or contracts that can be completed without the need for a human (and therefore fallible) intermediary. Beyond the introduction of bitcoin, ethereum arguably represents the most groundbreaking development in the crypto market.
Better yet, the upside potential for ETH is significant. Between August 2015 through September 2018, ethereum prices rose via a step-up pattern. Later, it entered a long consolidation phase as bulls and bears fought for control. If recent price action is anything to go by, the optimists are going to win this battle.
Ripple (XRP)
Hang around various crypto communities and it won’t be long until you come across a recurring theme: hardcore proponents love talking about decentralization. After all, this concept is what allows virtual currencies to break free from the hegemony of the global banking system. And don’t treat this last statement as a conspiracy theory. It’s not called “fiat” currencies for nothing.
Logically, you can expect some controversy over ripple. Because XRP is tied to a centralized institution, these altcoins are not minable; instead, their supply is managed by human operators. Right there, this takes away from the street cred associated with crypto assets. At the same time, ripple offers a viable channel to replace cumbersome, inconvenient and expensive wire transfers.
That’s especially the case for micro-transfers, where the denomination of transferred currency is so small that it’s not worth considering for traditional exchanges. So, hate on XRP all you want – at least there’s some fundamental value here.
Further, ripple looks like it’s performing a bullish pennant formation, similar to that of bitcoin’s chart. If so, don’t be surprised if XRP takes off.
Litecoin (LTC)
Formerly the number two for bitcoin, litecoin still has the distinction of being the first altcoin (or at least the first that I know of – it’s possible that someone could have created their own crypto asset). With litecoin, the emphasis was on transactions of smaller and more practical denominations. This concept increased in demand as bitcoin started moving dramatically higher.
Further, because bitcoin was more proof of concept than anything, even the transactions within the underlying blockchain became time-consuming. Litecoin was lightning quick in comparison, drawing proponents because of its everyday conveniences. Plus, each unit of LTC was much cheaper. Psychologically, this offered an advantage to bitcoin’s increasingly ridiculous price tag.
As you know, once the crypto market became fleshed out, LTC shed some of its dominant presence. Nevertheless, this doesn’t mean you should ignore the altcoin. Rather, it appears that litecoin is in the middle of forging a bullish pennant pattern. That would make LTC an ideal play for those who are new to virtual currencies.
Bitcoin Cash (BCH)
Although the introduction of bitcoin forever changed the course of finance and investing, the inconveniences of BTC began piling up as the market scaled up. Crypto miners, investors and other sector advocates couldn’t achieve consensus on how to best resolve the issues. Most conspicuously, the lack of consensus between the debating parties resulted in a new cryptocurrency, bitcoin cash, via a process called a hard fork.
If you’re interested in the topic, there are many detailed articles that describe the process. But for our purposes, bitcoin cash is essentially an offshoot of the original bitcoin blockchain. Further, BCH isn’t the only red-haired stepchild of hard forks. However, it’s arguably the most popular and widely discussed within crypto circles.
Like ripple, you’re going to find some controversial takes on bitcoin cash, namely that it’s an illegitimate altcoin. Further, a risk exists that most proponents could adopt this view, turning BCH into a zombie crypto. But in my opinion, bitcoin cash can hitch a ride with the other virtual currencies bolstered by name recognition.
Chainlink (LINK)
I’m going to be blunt with you. Most likely, the newcomers to the crypto space don’t give a rat’s behind about the fundamentals of the blockchain tokens they acquire. Instead, they only care about making a quick buck. However, Chainlink is an interesting case because it solves an infrastructural challenge with mainstream blockchain adoption.
According to Chainlink’s website, the distributed public ledger has an “oracle” problem. Basically, “blockchains cannot pull in data from or push data out to any external system as a built-in functionality. As such, blockchains are isolated networks very akin to a computer with no Internet connection.” Long story short, Chainlink aims to serve as a connectivity platform, exponentially improving the usability of blockchain applications.
Will the endeavor be successful? I’m not entirely sure. Certainly, a failure to deliver could substantially impact LINK. However, I really like the bullish pennant formation that is presently being printed on the charts. As a speculative crypto wager, you may want to take a second look at LINK.
Dash (DASH)
Out of the various altcoins available, DASH may be one of the most psychologically significant. As everyone knows, getting a single unit of bitcoin is now limited to only powerbrokers. Even ethereum is getting pricey at close to $600 a pop. However, the altcoin sector is also littered with what I would term “ship coins” – as in, watch your portfolio get shipped to purgatory.
Okay, so maybe that’s not what I really mean. Instead, ship coins sounds like a phrase I can’t utter in polite company. The point is, DASH offers a viable middle ground. At its time of writing price of under $110, it’s not obscenely in the stratosphere. But it’s also not priced at a level that would draw derision.
Best of all, there could be a real opportunity to make money here. Potentially, DASH is in the middle of forming a bullish pennant pattern. If so, that gives speculators some time to build a position before the pennant’s implied breakout move.
Monero (XMR)
As you might imagine, crypto assets are called such because of their cryptic nature. We’ve all heard stories about elicit transactions occurring via the medium of virtual currencies. However, because most reward tokens are associated with public ledgers, they’re not completely anonymous. For true dark web stuff, you need something like Monero.
According to a September 2020 article by Forbes, the IRS will pay up to $625,000 to anyone who can “crack” open and expose the anonymous transactions underlining Monero’s blockchain. Call me conspiratorial, but you can see where the U.S. government’s heart is – it doesn’t care about crypto transactions, only that Uncle Sam gets its cut.
Cynically, this also plays into the bullish narrative for XMR. Look, I don’t know what kind of people use Monero’s blockchain nor do I want to know. But the reality is that we’re in desperate times and desperate people do stupid things. That could see XMR move substantially higher.
Plus, XMR has been steadily moving higher via a step-up pattern like ethereum. Given the renewed optimism in the crypto space, this is worth consideration if you don’t mind the bad boy image.
Cosmos (ATOM)
With the explosion of blockchain’s popularity along with its myriad potential applications, new crypto projects are forming all the time. Cosmos is one such example. However, unlike the avalanche of altcoins out there, Cosmos’ reward token ATOM has garnered tremendous support. At time of writing, ATOM is ranked among the top 30 virtual currencies by market capitalization.
What makes Cosmos appealing is its purpose. According to Coindesk.com, the project seeks “to create an ‘internet of blockchains’ that resolves both scalability and interoperability issues in blockchains.” Put another way, ATOM is linked to a connectivity approach that truly bring blockchain applications to the next level.
As with other crypto projects, not following through on the stated mission could have a detrimental impact on the target reward token. Still, if you’re new to the virtual currency game and don’t want to spend a fortune on just one token unit, you could consider ATOM’s more psychologically appealing entry point.
In addition, ATOM may be forming a bullish pennant formation, similar to chart patterns from the other cryptocurrencies on this list.
On the date of publication, Josh Enomoto held a long position in BTC, ETH, XRP, LTC, BCH, and LINK.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.