Cryptocurrency investors are increasingly turning to low-risk cryptos that may generate lucrative returns even during a potential crypto winter. The global cryptocurrency market has taken a severe beating so far in 2022, shrinking from almost $3 trillion in November to well under $1 trillion.
Despite a roughly 10% comeback over the past 30 days, the Bitwise 10 Crypto Index Fund (OTCMKTS:BITW) and the Defiance Digital Revolution ETF (NYSEARCA:NFTZ) are down 70% and 60% in 2022, respectively. Such a downturn suggests a compelling opportunity for patient investors to profit from the bargain valuations of cryptos.
Martin Hiesboeck, the head of blockchain and crypto research at Uphold, says that “every move down [of Bitcoin) is immediately met with large orders” from entitles that are “likely” institutional investors. Put another way, while retail investors sell Bitcoin (BTC-USD), institutional investors appear to have been buying the dips.
Amid macroeconomic headwinds, investors need to focus on stable blockchain projects that create utility. The cryptocurrencies outlined in this column boast compelling real-world uses, significant competitive advantages, and vast funding.
Here are three low-risk cryptos that could gain traction in the coming months:
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Avalanche (AVAX-USD) has a robust decentralized finance (DeFi) ecosystem that’s designed to incorporate customizable blockchain solutions which have unique staking systems. Since the network is compatible with Ethereum (ETH-USD), developers can launch an existing Ethereum decentralized app (dApp) on the Avalanche platform.
Avalanche’s blockchain network is highly regarded due to its speed and unlimited transaction capacity which is enabled by its multi-layered structure. As a result, almost all of its transactions get executed in a few seconds.
AVAX-USD is the native token that powers transactions throughout the network. Users can stake the crypto on the Avalanche platform and win staking rewards.
Launched in 2020, Avalanche has already gained a solid foothold in the DeFi space. It is currently the fourth-largest crypto, with around $2 billion in total value locked (TVL) within its DeFi apps.
Meanwhile, the crypto’s low fees and high transaction speeds have helped accelerate the development of gaming on Avalanche.
So far in 2022, AVAX-USD has plunged close to 85%. Its market capitalization of $5.1 billion positions the crypto among the top 20 altcoins in the market.
Ethereum is the second-largest cryptocurrency, with a market capitalization of over $170 billion. With its first-mover advantage, it has become the leading network for dApps, including DeFi projects and NFT marketplaces. The platform dominates the DeFi space with close to $35 billion of TVL, accounting for over half of the total TVL among cryptos.
Ethereum’s long-awaited upgrade, referred to as The Merge, is scheduled for Sept. 19. This change will combine Ethereum’s original blockchain with the Beacon Chain, improving the scalability and security of the network. By providing Ethereum with faster transaction times and reduced transaction costs, the Merge is expected to help Ethereum better compete with rivals like Solana (SOL-USD) and Cardano (ADA-USD).
ETH-USD is currently down 60% in 2022. In other words, anticipated gains from this upgrade have not yet been baked into Ethereum’s market price, creating a buying opportunity for crypto investors.
Solana (SOL-USD) is a smart contract blockchain that’s well-known for its significant scalability. Its high-throughput platform boasts some of the fastest transaction speeds, processing up to 60,000 transactions per second. This blockchain uses the proof-of-history process, incorporating timestamps in data blocks to streamline the verification of transactions.
The platform is powered by the SOL-USD token. Faster transaction speeds and lower costs have transformed Solana into a key player in the NFT space. Metrics suggest Solana currently ranks behind Ethereum and Ronin (RON-USD) as the third-largest blockchain when it comes to NFT sales volume.
According to Messari, Solana’s average active unique fee payers averaged about 320,000 during the second quarter of 2022, up from 205,000 in the previous quarter.
Meanwhile, Solana Labs is developing its own flagship Android mobile phone for Web3. Dubbed Saga, the phone boasts unique features that are integrated with the Solana network. Saga is expected to start shipping in early 2023.
So far in 2022, SOL-USD has lost 83%. Its market cap of over $10 billion positions the token among the top ten altcoins in the crypto market.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.
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