Much like the U.S. stock market, the cryptocurrency market has been absolutely devastated through the first seven months of 2022. Although many cryptos have bounced off recent lows, even the largest cryptos, like Bitcoin, remain two-thirds or more off their all-time highs. In times like these, it seems inevitable that many will continue to fall out of favor with investors. But in the midst of this wreckage, some long-term winners may emerge, perhaps even stronger than ever with the demise of some competitors. Although every cryptocurrency should be viewed as a speculative investment, here are three cryptos that are showing promise in August and that might continue to bounce back.
- Price as of Aug. 4: $1,634.65
Ethereum is one of the most functional cryptos in existence, providing a very flexible platform on which developers can build decentralized applications. Its popularity has exploded to the point that it is far and away the second-most valuable crypto, behind Bitcoin, with a market capitalization of $201.78 billion as of Aug. 3. But the best may be yet to come with Ethereum. The crypto is in the process of upgrading to Ethereum 2.0, which will transition it away from the proof-of-work algorithms used by the likes of Bitcoin to a proof-of-stake platform. According to Ethereum’s developers, this will make the crypto “more scalable, more secure, and more sustainable.” In other words, it should make everything that investors love about Ethereum even better, which should theoretically draw more buyers into the crypto. Whether or not investors fully understand the ins and outs of Ethereum 2.0 might even be secondary to the fact that it should remain in the public eye as news outlets and financial pundits discuss the ongoing change. The crypto has bounced back about 57% in the past month but still sits about 66% below its all-time high.
- Price as of Aug. 4: 90 cents
Polygon flies a bit under the radar in the crypto world, but it still has the 13th-largest market cap of all cryptos, at $7.2 billion as of Aug. 4. Fans of Ethereum are often also supporters of Polygon because the latter crypto was designed as a “layer two” solution to work directly with Ethereum. A “layer two” solution is designed to increase the speed and efficiency of blockchains, which is an important and highly desirable feature.
Over the past month alone, Polygon has jumped over 90%, partially due to the overall crypto market bounce but also due to Polygon-specific news. On July 20, Polygon announced the world’s first zero-knowledge scaling solution, dubbed zkEVM, which is specifically designed to greatly enhance the experience of using and building with Ethereum. The new development will lower transaction costs and improve the scalability of Ethereum, which is a movement toward greater adoption of web3 technology. Investors may not fully comprehend the technical jargon of the latest Polygon news, but the bottom line is that Ethereum is one of the major players in the crypto/blockchain ecosystem, and Polygon is attached to its back making it better, faster and stronger.
Speaking of web3 technology, Polygon also announced a global strategic partnership with web3 game development studio Epic League on Aug. 4. This is just the newest of the over 19,000 decentralized services ranging from financing to gaming that run on the Polygon platform. Meta, Stripe and Adobe are just a few of the big tech names that are also working with Polygon on web3 development.
In spite of the recent huge bounce, the price of Polygon still sits nearly 70% below its all-time high, perhaps marking an entry point for risk-tolerant investors who want to catch a crypto on sale.
- Price as of Aug. 4: $8.09
Polkadot is another crypto that might not be a household word but that still sports a market cap of $9 billion as of Aug. 4, good enough to make it the 10th-largest crypto. Polkadot’s supporters believe that its own version of a decentralized internet infrastructure is strong enough to eventually usurp Ethereum’s domination. Polkadot operates using parachains, which allows it to be compatible with all external blockchains. It’s also fast. Polkadot has the goal of being able to process 1 million transactions per second, far greater than Ethereum’s pace of about 15 transactions per second. As speed and compatibility are two of the bugaboos that Ethereum and crypto platforms, in general, are saddled with, Polkadot could be providing the solutions.
If you’re the type of investor who believes in the power of “smart money,” then Polkadot may also hold appeal for you. After industry giants Bitcoin and Ethereum, Polkadot was the most widely held cryptocurrency by venture capitalists and hedge funds as of 2021’s fourth quarter. Considering the first release of Polkadot was just in May 2020, this show of support is impressive. Institutional backing doesn’t guarantee a winning investment, of course, but it does show that some of the smartest minds in finance think that Polkadot is worth a look.
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