Is Now the Time to Start Investing in Speculative Altcoins?
In the early days of crypto, altcoin was a catch-all term to describe any crypto that wasn’t Bitcoin. And for obvious reasons: Bitcoin led, and everyone else just followed. Subsequently, though, there has been a much-more nuanced understanding about the different types of altcoins available to investors, ranging from stablecoins to staking coins.
In 2022, we’ve already seen the potential of altcoins to lead a market higher, irrespective of what Bitcoin might be doing. Ethereum, for example, has been a summer standout, far outpacing Bitcoin’s performance during the same time period. Here are some of the best candidates to lead the market higher in the final months of 2022.
Altcoins to help investors beat inflation
All eyes are seemingly on the U.S. Federal Reserve these days now that Fed Chairman Jerome Powell has made inflation-fighting the focus of monetary policy. That means more interest rate hikes ahead. Powell warned that there could be “some pain” for consumers along the way, so one way to minimize that pain is with crypto investments that are going to provide a hedge against inflation.
One option here could be staking coins, which are coins that enable the holder to earn rewards or interest in exchange for lending these coins out to someone else. Depending on which coins you stake, your rewards will differ. Right now, for example, Crypto.com offers more than 40 different coins for crypto staking.
This represents an opportunity to earn as much as an extra 14.5% on your crypto investment. On Crypto.com, staking a popular crypto like Polygon will earn you 7% in annual rewards. As a rule of thumb, you should be looking for staking coins that offer rates that outpace inflation. Just be careful about a staking coin that promises absurdly high rates — this could be a clue that it is too risky for most investors.
The GameFi genre refers to all coins in which users can earn crypto rewards from playing online games. (GameFi is just a portmanteau of “game” and “finance.”) There are various iterations of this genre, including play-to-earn and move-to-earn. Basically, the better you play these games, the more crypto you can earn. And the more you play these games, the more you will need to acquire in-game governance tokens to power different activities. This leads to the corollary that the more popular a game is, the more popular its in-game token should be.
In 2022, the premier move-to-earn token is STEPN (GMT -0.84%), which powers the popular move-to-earn game of the same name. This is a game on the Solana blockchain, and it has rapidly become one of the most popular games right now in the blockchain space. As an investor, you can gain in two ways: You gain from the price appreciation of the governance token, and you gain from in-game crypto rewards. Over time, this can be very lucrative as long as a game remains popular.
Layer 1 Ethereum competitors
Finally, there is money to be made by speculating on Layer 1 Ethereum competitors, including Solana and Cardano. Right now, Avalanche is probably a little too hot to handle until it clears up some of the controversy surrounding it. And keep your eyes out for up-and-coming Layer 1 solutions that promise to be faster, cheaper, and more efficient than anything available today. One of these, for example, is Aptos, which is so new it doesn’t even have its own token yet.
The logic here is simple: Investors could decide to move on from Ethereum after the Merge, which is supposed to upgrade the blockchain and make it more efficient. There may be some profit-taking in September, as investors pull back after a fun summer ride. Or, they may start hearing stories that gas fees on Ethereum are still too high, or that the Merge didn’t achieve as much as promised. That could lead investors to search out Layer 1 Ethereum competitors that are not encumbered with all these problems.
The altcoin rally
With the end of the summer comes a new season: altcoin season. It’s time to start thinking about which cryptos are going to skyrocket higher over the next few months. Bitcoin may remain on the sidelines and not participate in this rally, and that’s perfectly OK. We’ve come a long way since Bitcoin was the only coin that could lead a market higher.