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1) Bitcoin (BTC)
Bitcoin will only get scarce over time.
At close to $50k a coin, it is easy to think that Bitcoin is expensive. However, that was the same perception that many had when it was trading between $10k and $20k.
However, when one looks at the supply dynamics of Bitcoin, then it becomes clear that Bitcoin could easily rally to $500k or even $1 million a coin. That makes its current prices pretty attractive for anyone who has a long-term view of the market.
One of the key factors behind Bitcoin’s supply and demand dynamics is its capped supply of 21 million coins. This is relatively low considering that Bitcoin is the largest and most adopted cryptocurrency in the market today. On top of this low supply, the difficulty of bringing new Bitcoin to existence is ever going up, further adding to the scarcity.
Back in its early days up to around 2012, it was very easy to mine Bitcoin with a laptop. However, as the difficulty went up, more complex machines were needed. Today, you need a pool to mine Bitcoin profitably.
However, the most significant aspect of Bitcoin’s scarcity is the halving. With each halving, the rewards that miners receive for mining are cut in half. The supply shock that this creates is one of the primary reasons Bitcoin is so highly valued today.
One year after the Bitcoin halving of 2016, Bitcoin was trading at $20k, up from lows of under $1000. Then after the halving of 2020, Bitcoin hit a high of $64k, up from lows of under $10k.
The next Bitcoin halving is scheduled for 2024 and is expected to shrink the reward per block to a tiny $6.25. Such a drastic drop in the supply of new Bitcoins will come at a time when Bitcoin has already gone mainstream.
Unlike in the past when Bitcoin’s demand was mainly by retail traders, its demand today is primarily pushed by institutional money.
Today, companies like Tesla and Microstrategy have Bitcoin in their portfolios. Hedge funds and other institutional players are also increasingly buying Bitcoin.
However, the most significant move towards the mainstreaming of Bitcoin is its adoption by El Salvador. The country announced that it would be using Bitcoin as legal tender and even created incentives for miners.
This has opened the doors for even more countries and corporations to adopt Bitcoin. Given that the 2024 Bitcoin halving will happen in this environment of mass adoption, the supply shock could easily push it to a million dollars or more per coin.
Going by its scarcity aspect alone, Bitcoin is easily one of the best long-term investments that one can make today.
2) Ethereum (ETH)
Ethereum technical capabilities are getting better
Ethereum is in the middle of an upgrade and will be much better than it has ever been ever since its launch. Ethereum is moving from a Proof-of-Work blockchain to Proof-of-Stake, and one of the benefits it will have is energy efficiency.
At the moment, Ethereum mining consumes the same energy levels as a small country. The worst part is that there are no guarantees that it is mined using clean energy.
This has been bad, not just for Ethereum but also for Bitcoin and all other Proof-of-Work networks. That’s because the world is at a point a critical mass of people are aware of the risks that global warming poses to the world. As such, even institutions are keen to make environmentally sustainable investments.
With the shift to Proof-of-Stake, Ethereum will no longer have this problem. This makes it very attractive to institutional investors and will play into its demand dynamics long term.
Besides energy efficiency, the ongoing shift to Proof-of-Stake will make Ethereum more scalable.
This will be done through Optimism Rollups and other layer two solutions. As part of the Ethereum 2.0 upgrades, Ethereum recently did a hard fork that has made gas fees more predictable.
All these points to a scenario where Ethereum is only getting better for dApps development. This is a big deal for two reasons. First, Ethereum is already the dominant player in the dApps ecosystem despite its scalability problems.
Now that it is set to become more scalable and affordable, it will only become more entrenched in the dApps market. This will play into its value dynamics going into the future.
Then there is the fact that the DeFi market is only getting started. It’s only now that most crypto investors are beginning to understand the potential of DeFi.
Regulations governing the space are coming up too and could aid this sector’s growth going into the future. Projections put the future of DeFi at $1 trillion or more by the mid-2020s.
So far, Ethereum is the dominant player in this market, with more than 90% of all DeFi projects running on the Ethereum blockchain. That’s despite its many inefficiencies as currently structured.
As such, once the transition to Ethereum 2.0 is complete, Ethereum has the potential to grow its dominance in DeFi even more. Being dominant in a potentially trillion-dollar market could play a role in pushing the value of Ethereum to new heights in the long run.
One factor that makes all this critical to Ethereum’s future is the coin burn feature that was introduced with the London fork. This is a big deal because it means that as the demand for Ethereum grows in DeFi and other projects, it will be chasing a very limited amount of Ethereum.
Simple economics dictate that Ethereum could be worth 10s of thousands of dollars in a few years.
3) Cardano (ADA)
Cardano’s slow but sure approach is working
Cardano has for years been criticized for its slow progress. However, it is a strategy that seems to be working in favour of this project. That’s because it has got it right on many of the issues that rushed projects have been unable to solve.
One of the biggest problems that blockchain problems have faced for a long time is striking a balance between scalability, security, and decentralization.
Back in 2018, after Ethereum’s scaling problems became clear, many projects came up offering all manner of throughput, with some hitting up to 1000 TPS.
However, most of them achieved this by compromising on decentralization. Due to this weakness, most of them fizzled away, and Ethereum’s dominance in the platform blockchains space continued.
Cardano did not rush. Instead, its team went into deep research and eventually came up with Ouroboros. This is a peer-reviewed Proof-of-Work algorithm. It is scientifically proven to solve the three problems that have been a challenge in the blockchain space for years.
Ouroboros allows Cardano to stay decentralized and secure while at the same time being able to handle up to 200 TPS on-chain.
Cardano also took time before it introduced staking, but when it did, it got it right as well. Investors can stake as low as one ADA. This is a factor that has helped guarantee that the addresses staking ADA are as diverse as possible. This is the whole essence of a decentralized project.
The Cardano team also introduced delegated staking, which allows those who may not have the know-how on ADA staking to delegate their responsibility to others.
However, the thing that has taken the longest to become a reality on the Cardano blockchain is smart contracts. The absence of smart contracts on the Cardano blockchain has meant that it cannot compete effectively with other top platform blockchains such as Ethereum.
However, this will soon be a thing of the past too. For months, Cardano has been testing smart contracts on its testnet. The idea has been to ensure that everything works as it is supposed to once it goes to the mainnet.
The testnet phase seems to have been a success, and on the 12th of September, Cardano will be launching smart contracts on its mainnet.
The whole thing has attracted so much buzz that Cardano is now the 3rd largest cryptocurrency by market capitalization. The buzz is not without basis, though. Cardano can be considered a 3rd generation blockchain and technically more advanced than Ethereum in many ways.
It is for this reason that investors expect it to go big once smart contracts are launched. Due to its ability to scale with ease, Cardano is expected to attract many dApps especially those targeted at the finance sector.
With DeFi just starting to gain traction, Cardano has a huge opportunity in this space. All these factors make it heavily undervalued despite the recent pump that has pushed it close to $3 per token.
4) Dogecoin (DOGE)
Dogecoin is going to the moon in 2022, literally.
Dogecoin has been a top crypto performer in 2021. Between early 2020 and April 2021, it rallied by 12,000%. While it may feel like the opportunity is gone after such a huge rally, the reality is that Dogecoin is just getting started. To understand this, one needs to look at the factors that led to its parabolic rise in the first place.
Dogecoin rallied solely on the tweets of Elon Musk. His regular tweets created a speculative wave that saw it come close to testing $1 in April.
This time around, Elon Musk is not just talking about Dogecoin; he is actually working to make it a significant cryptocurrency.
A few months back, he announced that they are working on a project to take Dogecoin to the moon literally. The mission to take Dogecoin to the moon will be funded in Dogecoin and is called Doge-1 to reflect its attachment to Dogecoin.
The mission is expected to take place in Q1 of 2022, and given how big of a deal space missions are, this mission is guaranteed to be covered by the largest broadcast media platforms in the world.
This means there are millions of people who do not know about Dogecoin today that will know about it in 2022. The impact on the price could be phenomenal and could see it surpass the percentage gains it has recorded in the recent past.
5) Ripple (XRP)
The ever-resilient XRP is set for more adoption.
XRP is probably the most resilient cryptocurrency in the market today. It has come head to head with regulatory challenges, yet it continues to grow.
In the last two months, it has gained by over 100%, beating both Bitcoin and Ethereum in gains.
XRP’s resilience and growth are driven by its adoption outside the US. Even as Ripple faces off with the SEC in the US, the adoption of Ripplenet (Ripple’s system that uses XRP for settlements) in Asia has been on a growth trajectory.
The latest one was the adoption of Ripplenet by an Omani bank that announced that it would start using XRP for cross-border payments. This news saw XRP gain by over 20% in a single day.
The fact that banks are adopting XRP means that the product is strong. The ability to cut costs while increasing transaction efficiency is a huge plus for banks.
As such, it can be expected that more of them will keep adopting XRP going into the future. This is a factor that could see XRP keep gaining in value long term.
Then there is the case between Ripple and the SEC. If, by any chance, the courts rule in favour of Ripple, the excitement it would create could send XRP to highs it had never seen before.
That’s because its use case is huge, and with regulatory uncertainty out of the way, even American banks would adopt XRP.
Essentially, XRP’s strong use case makes it a heavily undervalued cryptocurrency at current prices.