The cryptocurrency bull run has picked up pace over the past couple of weeks. Bitcoin was in the news yesterday, breaking to fresh all time highs. So far it has managed to hold on to these gains, trading at $65,500. As the team noted in a recent piece, we do think Bitcoin can trade higher into the end of the year. However, there are a few of our best cryptocurrencies that we think could outperform the ‘benchmark’ return of the crypto daddy.
Looking to the alt-coins
In the crypto space, we usually see a bull run start with Bitcoin. Other alt-coins follow to a modest extent. When Bitcoin consolidates around the recent gains, funds then usually flow into alt-coins. If history repeats itself in coming months, we eye up some of the smaller coins that are still a way off all-time highs.
The first one we are keen on is Polkadot (DOT). We wrote an extensive piece that can be read here. In it we explain how Polkadot is a cryptocurrency network. It has a base architecture within the network enabling different networks to communicate. It would be wrong to call it Ethereum 2.0, but you get where we are going with this. In fact, Polkadot was formed by Gavin Wood, who is a co-founder of Ethereum.
The technical picture looks supportive for the coin. It is still 10% away from all-time highs that were posted earlier this year. Judging by the previous peak to trough rally, a similar rally this time would take the coin close to $100 (from a current spot price of $44.15).
An undervalued classic
Our second coin that could have large upside is Ripple (XRP). This is somewhat controversial, given that late last year the SEC sued Ripple Labs for issuing and selling unlicensed securities to the public. The case is still ongoing, with no apparent deadline in sight.
In light of the lawsuit, many exchanges and brokers decided to delist trading in XRP. Although this stemmed volumes somewhat, over the past 24 hours it has seen the 7th highest crypto volume put through it.
The upside potential on Ripple is also something that warrants attention. It’s over 50% off the highs of the year. Further, it’s significantly off the $3+ levels seen back in the summer of 2018. Sure, the SEC action will act as a dampening on the price. But we feel that the coin has good upside in it this year to catch up with other coins, even with a premium attached to it in light of the legal cases.
Risks to our view
The risks to both alt-coins stems mostly from the actions of Bitcoin. If we continue to see the coin rally, then outperformance from DOT or XRP is likely limited. Further, if we do see a broad based market selloff, alt-coins tend to perform worse in this scenario.
Overall, we feel that if Bitcoin can stabilize at $65k+ over the next few weeks, alt-coins could be set for a strong end to the year.