What are the Most Promising Speculative Cryptocurrencies in the Market?

With the massive cryptocurrency correction still underway, a lot of speculative coins have seen their prices decrease drastically, as investors want to put their money into safer assets or blue-chip cryptocurrencies. This offers a great buying opportunity for those who have the risk tolerance to buy projects that are not fully developed or are still waiting on mass adoption. 

In a bear market, most investors flock to safe haven assets and blue-chips, which have the least risk of decreasing in value. Though this does appear to be a sound strategy, another group of investors have a different mindset: buy the most speculative, yet promising, projects, since they offer the greatest growth potential and are likely to decrease more in the bear market. Indeed, projects such as Cardano and Polkadot, both of which are smart contract platforms without smart contracts, have taken a beating and are down about 50% from their all-time high. These coins and many others who are still in development or are yet to experience mass adoption offer the potential for massive gains, but also for great losses if their project does not become a success. Let’s look at a couple of these coins and analyze the pros and cons of investing in them at their discounted prices. 

One of the highest speculative coins by market cap is Cardano, which hopes to be an Ethereum killer. Their technology is superb, and they offer everything that Ethereum 2.0 plans to offer and potentially more. At their current market capitalization of $50 billion, buying ADA is the same as buying ETH at $275. However, this is not as perfect as it seems, as the project is far from guaranteed to be a success. Even though their technology is superior to Ethereum’s, they do not have a single smart contract, token, or dApp on their blockchain, due to there not being smart contract capability. This will be released sometime in 2021, but even then, it will be difficult for them to overtake Ethereum’s first mover advantage. Projects that are coded in Ethereum’s programming language may not want to move to a completely different blockchain, which would require an overhaul of their code. 

In the 2017 bullrun, two similar projects were ARK and NEO, both of which tried to be Ethereum killers but never lived up to their expectations and have failed to hit all-time highs since then. Though it is unfair to compare NEO to ADA simply due to them both being smart contract platforms, it is important to mention the risk in investing in this sector’s secondary coins. For these reasons, Cardano is yet to be a blue-chip crypto, and falls into the speculative category with high risk and high reward.

Much like Cardano, Solana is building a fast and reliable smart contract platform. Though they have lots of support and funding from Sam Bankman-Fried and the FTX exchange, they have to overcome the hurdle of getting developers and users onboard. This could come with FTX’s support of the Serum decentralized exchange, but they still need to create an ecosystem of compelling dApps to have a chance to compete with Ethereum. 

Polkadot, which is planning to build an internet of interoperable blockchains, is also a speculative coin worth considering in this market dip. Like Cardano, they have great technology and partnerships, but have yet to release a working product, and as a result their success is to be determined. They are similar to ICON, an interoperability project who reached a high of $12 in the 2017 bullrun and could not break $3.50 in this previous bullrun.

A project similar to Polkadot and the DOT token is Cosmos and the ATOM token, which has a significantly lower market capitalization but is closer to releasing their final product. Both are solid bets on the interoperability space, but it is impossible to choose a favorite without knowing which will be adopted and used the most. 

The Terra blockchain, which is run using the LUNA coin, plans to completely revolutionize the financial sector. Some of the groundbreaking decentralized applications building on the platform include Mirror Protocol, which allows for the minting of synthetic stocks, and Anchor Protocol, which gives an expected 20% APY on stablecoin deposits. The team behind Terra is also developing Alice, an application that plans to merge the traditional financial world with the blockchain. Though their technology is sound, the LUNA coin has no maximum supply and an undisclosed amount in the hands of private investors, which helps explain its 40% drop in the past week. They appear to be struggling with adoption, as even though the economics are sound on Mirror and Anchor, there are only a couple billion dollars locked on their blockchain, and a project cannot ever be successful without mass adoption. 

A final token to consider would be Aave Protocol’s AAVE token. This token gives holders governance rights over all the funds locked in the Aave borrowing and lending protocol, which currently has over $14 billion locked. The ratio of the market cap of the AAVE token to the total value locked in the protocol is slightly less than .5, which may signify that the token is undervalued, as $5 in AAVE has governance rights over about $10 in the protocol. However, ‘locked’ is a strong term, as the funds in Aave can be removed at any time, and the value of governance is yet to be fully determined. Maybe the fair value for governance is 1:2, or maybe it is even lower, and AAVE will continue to fall until the market determines what this ratio is. This uncertainty is why AAVE is such a speculative investment, but it also offers large returns if the Aave platform continues to grow and investors begin to value governance more. 

Even though there seem to be a lot of great deals in the crypto market right now, absolute diligence needs to be done before buying, as a lot of projects may never reach another all-time high. These speculative coins and tokens, although not complete, offer investors a great chance at capturing the gains that everyone comes into crypto to find. They are by no means guaranteed, and their best days could be behind them. On the other hand, they may be the first to do a 100x in the next bull run, whenever that may be. 

By Lincoln Murr

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