Cryptos have been plunging over the past month and it has shaken the belief that many have in the digital cryptocurrency market. To put it bluntly, cryptos have been in a bubble that has just popped.
That is what Vitalik Buterin, the founder of Ethereum (CCC:ETH-USD) told CNN last week. Many cryptos had skyrocketed many multiples of their prices just five months ago. That was unsustainable and this crash was inevitable.
But this is healthy and a normal part of a market cycle. It happened once before in 2017 when many cryptos peaked and later recovered over the next several years.
That is why I wanted to highlight seven cryptos that could profit an investor by buying into them at their lows now. These altcoins are cheap and have a good chance of making superior returns for the long-term investor.
But just keep in mind at all times that these are speculative investments. They should probably be in just a small portion of your total investment portfolio.
The list of altcoins that investors should buy now to profit when they recover are:
- Polkadot (CCC:DOT-USD)
- Crypto.com (CCC:CRO-USD)
- Cardano (CCC:ADA-USD)
- Chainlink (CCC:LINK-USD)
- Polygon (CCC:MATIC-USD)
- EOS (CCC:EOS-USD)
- Ethereum Classic (CCC:ETC-USD)
Let’s dive in and look at these cryptos.
Cryptos: Polkadot (DOT)
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Market Cap: $21.6 Billion
Polkadot started the year at $8.307 and as of May 24, it is at $23.06, or up 177% year-to-date (YTD). This is even after the altcoin has dipped from its peak of $47.946 as of May 13. That means that the altcoin is down just over 50% from its peak. This implies that once the altcoin recovers, it could have a quite significant performance.
Polkadot’s blockchain platform allows messages and monetary values to be transferred peer-to-peer. It is a multi-chain technology built on trust among its users.
Polkadot is a layer zero blockchain that connects different layer 1 blockchains together. These layer 1 blockchains are called parachains. Polkadot provides shared security, cross-chain communication to these parachains.
Polkadot holds auctions for a limited number of slots it can give out to a limited number of auction bidders. They effectively lease out a slot for 2 years and earn fees.
Polkadot’s popularity lies in its ability to accept all different kinds of independent chains — pooled security and trust-free interchain transactions.
Expect to see Polkadot’s growing usage translate eventually not higher prices for the DOT altcoin.
Cryptos: Cardano (ADA-USD)
Source: Shutterstock
Market Cap: $50.6 Billion
Cardano is a crypto that does not use mining and a proof-of-work reward to validate blockchain transactions. Cardano’s system, called Ouroboros, is a proof-of-stake validation system.
All Cardano owners can stake their ADA coins. This acts to validate a blockchain set and provide rewards. Staking is the future of cryptos since it doesn’t use electricity like crypto mining. Ethereum is transitioning to proof-of-stake later this year or early next year. Cardano is already doing this. As the largest proof-of-stake validation blockchain it gives Cardano a unique crypto angle.
Another use is its peer-to-peer settlement in payment transactions. The Cardano platform facilitates smart contracts and other apps. Nevertheless, Cardano is still looking to book large companies that use its platform.
Cardano is a third-generation crypto (behind Bitcoin and Ethereum) designed to get around their problems. Bitcoin (CCC:BTC-USD) is too rigid only applicable for payments and Ethereum, although less rigid and more useful, has high fees and has had congestion. Cardano gets around this by having a two-layer computational structure in order to avoid congestion and keep fees low. One computational level is for transaction settlements and the other is for computations.
In short, Cardano is seen as an “Ethereum killer.” Whether that will really happen is an open question, but ADA has been moving higher on the possibility. Look for Cardano to continue to do well as it gains acceptance as a third-generation crypto.
Crypto.com (CRO-USD)
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Market Capitalization: $3.1 billion
Crypto.com is an altcoin for the crypto.com blockchain platform. It has three areas of focus — trading, payment, and financial services.
Since the end of March, when the CRO token was at 22.13 cents per CRO token it has fallen 46% to 11.19 cents as of May 21. This implies that once the token revives it could move significantly higher.
According to CoinGecko.com, CRO coin holders can enjoy certain benefits. These include discounted fees, higher earnings for lending, and priority services. The platform’s mission is to accelerate the world’s transition to cryptocurrency.
According to Altcoin Buzz, crypto.com users have certain reward benefits. For example, they can choose from five tiers of VISA-backed reward cards. In addition, they can trade over 50 crypto coins on Crypto.com or trade 35+ market pairs on the Crypto.com exchange. There is also a crypto.com mobile app. Crypto.com users can borrow different stablecoins on a 50% loan-to-value ratio. They can stake these coins and earn interest.
These benefits and rewards will eventually push up the popularity of the CRO coin. Look for it to recover once the volatility related to the altcoin crash dies down.
Cryptos: Chainlink (LINK-USD)
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Market Cap: $11 Billion
YTD, Chainlink is up 115% from $11.87 at the end of December 2020 to $25.57 on May 24. And this is after the LINK token has come significantly off of its high of $52.20 on May 8.
Also, over the past year, LINK has risen 5 times from $4.07 on May 21, 2020. This shows that the cryptocurrency has been in high demand. After the present market dips closes out, expect to see Chainlink rebound.
Chainlink aims to connect smart contracts with data from the real world. It bills itself as a “defi” (decentralized finance) application. These are apps in cryptocurrency and blockchain which aim to disrupt traditional finance.
Chainlink was founded in 2017 by Sergey Nazarov. He wrote a “white paper“, along with a Cornell professor, focused on Chainlink as a decentralized smart contract or “oracle.” Chainlink got a big boost when Google began using Chainlink in 2019. Forbes described Chainlink as “a company that provides on ramps and off ramps for information necessary to run self-executing code called smart contracts.”
For example, according to Forbes, Chainlink offers a service called an oracle to integrate data. An example is linking finance information from well-known sites into smart contracts. Sergey Nazarov is also known as the founder of the smart contracts concept. He believes the Defi market is already at $80 billion and poised for huge growth from here.
At the end of last year, Nazarov told Decrypt there were already 300 applications using Chainlink. Among others, these include gaming, insurance, wallets (such as Crypto.com), and regulated finance operator Nexo.
Look for Chainlink to take off this year if his thesis about Defi continues to pan out.
Cryptos: Polygon (MATIC-USD)
Source: Shutterstock
Market Cap: $10.9 Billion
Polygon is trading around $1.35 as of late May 21, way off its of its peak of $2.4543 as of May 17. However, since March 31, it is up 270% from 36.244 cents per MATIC token. There is every good reason to believe that as its popularity as a blockchain grows the token will regain its heights as well.
Polygon is an Etherum-compatible blockchain platform or framework designed to get around some of Ethereum’s major issues. These include its high fees, congestion, and clogging risk, according to Altcoin Buzz.
It used to be known at the Matic Network and still has the MATIC token. According to Decrypt.co, its focus is on providing the framework for building Ethereum-compatible blockchains. It still uses the MATIC token, which it uses for governance, staking, and gas fees (transaction fees).
The goal of Polygon, after its rebranding in February 2021 and its name change, was to build inter-connected Ethereum-based networks. It also seeks to build these networks with solutions to Ethereum’s major issues, especially its throughput/cloggy network and the poor user experience with high fees. It also wants to get around Ethereum’s lack of “community governance.”
As Polygon gains popularity, the MATIC token should rise accordingly. Look to take a ride on Polygon before it recovers.
Cryptos: EOS (EOS-USD)
Source: Shutterstock
Market Cap: $5.1 Billion
The EOS token ended last year at $2.6345 and as of May 21, it was trading at $5.13 per EOS token. This is still off of its highs of $14.36 as of May 10. Expect to see EOS rebound once crypto trading volatility subsides.
EOS has big plans to become like Ethereum, but, like Polygon, without its list of issues. It has raised over $4 billion in a year-long initial coin offering (ICO), according to Decrypt.co in 2017 and 2019.
However, Decrypt., says “it’s untested as a network and has run into a number of problems.” As of Decmber 2020, a number of developers had left the platform, according to Decrypt.
Another site, Securities.io reports that EOS has had success and gained popularity by virtually eliminating user transaction fees through its structure. EOS is reportedly able to outperform even VISA (NYSE:V) in terms of the number of transactions per second. As such, EOS is now known as being a “perfect foundation” for Dapps (decentralized applications) or smart contracts.
Look for EOS crypto to rise as its Dapps gain traction and as its popularity increases.
Ethereum Classic (ETC-USD)
Source: Shutterstock
Market Cap: $7.6 Billion
Ethereum Classic is down to $56.87 as of May 21, from its May 5 height of $134.10. However, it is still up a ton YTD from its year-end price of $5.70. This token has a good chance of recovering once the crypto correction is over.
Based on a recent article that I wrote, Ethereum Classic has significantly outperformed Ethereum. And it has done so by a large margin. According to my calculations, it has risen 4 times faster than Ethereum so far this year, even after the recent dip in both prices.
Ethereum came about as a result of a “fork” in 2016. A fork is a split between developers of a cryptocurrency. The fork in 2016 was from a “dispute over how to best resolve a hack that stole over $50 million,” according to Decrypt.com. Ethereum Classic is is “free from external interference and subjective tampering.”
In late 2020, Ethereum Classic Labs introduced “Wrapped ETC”, which will allow ETC owners to “stake” their tokens. ETC has a limit of 210 million coins, but its circulating supply is only 55% of that compared to Bitcoin which has 89% token usage (11% float).
Look for Ethereum Classic to regain its former heights once Ethereum rebounds.
Summary: Cryptos That Will Recover
These seven cryptos all have valid and useful applications that can be used in the real world. Many companies are starting to adopt these platforms.
Moreover, many of these altcoins are now using or will soon use the proof-of-stake system. This will also make them more popular than the existing mining model, or proof-of-work system. Granted these cryptos are speculative in nature. Averaging down in these cryptos for a small portion of an investment portfolio will allow investors to gain a decent return when they recover.
On the date of publication, Mark R. Hake held a long position in Bitcoin and Ethereum. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.