Crypto investors had two surprises this week.
Source: heikoneumannphotography / Shutterstock.com
First, Bitcoin (CCC:BTC-USD) climbed back to over $ 50,000. Anyone who bought the dip last month would be sitting on 35% profit.
Second, crypto entrepreneur Justin Sun bought an NFT of a laser-reviewed rock art for $ 600,000. “It wasn’t even a good picture of a rock,” wrote Jared Dillian, editor of the Daily Dirtnap, in his review of the purchase. “It had little to no artistic value.”
These two events were certainly related. Much like the technology of 1999 or the housing bubble of 2006, rising markets create pockets of unimaginable wealth. Just ask a Florida house flipper where they vacationed this year.
Today the same pattern is forming with cryptocurrencies. Soaring crypto prices have sent speculators into some of the lowest assets imaginable – think of the huge sums of money being spent on seemingly ridiculous NFTs. And the eventual shake-out will inevitably kill weaker players while the stronger ones fill the void.
So how can Moonshot investors benefit? The short-term traders among us will enjoy buying up hot potatoes and passing them on quickly (I’ll have three tips for you later in this email). In the meantime, longer-term investors will be looking for the best cryptocurrencies that will survive the shakeout (and I have five options in this category).
But regardless of your strategy, you should know this. If you’re ever in doubt about what stage of the crypto cycle we are in, consider what selling a $ 600,000 JPEG of a rock can tell you about the world today.
Source: Catalyst Labs / Shutterstock
NFT bubble 2.0? Why quality cryptos win
Typically, bubbles mean that low quality assets are outperforming. In 2006, real estate investors seemed more excited about Florida wetland development than Class A office buildings.
NFTs have followed the same path, with JPEGs of rocks selling for more than works by recognized artists like Alberto Seveso or José Delbo. People buy because of hype, not for merit.
But there is one exception to this rule: cryptocurrencies.
Since crypto bottomed out in late July, the 5-star coins from my comprehensive Cryptocurrency Guide 2021 have outperformed the most viewed coins on the cryptocurrency aggregator site CoinMarketCap by a 9-to-1 ratio.
In other words, quality beats popularity.
The reason is simple: tokens are so easy to trade that speculative bubbles rarely last longer than several weeks. With Chain pots, MaestroPups and countless other forgotten NFT projects as a guide, there’s a good chance few people will remember EtherRocks by next week.
Five cryptocurrencies to ride the NFT wave
There are certain exceptions to the rule. Shiba Inus (CCC:SHIB-USD) Perseverance and general code quality have landed the Ethereum-based token on my medium-term buy list. It’s a low quality currency that could still rise due to investor interest (note: the closely related ShibaSwap has more serious governance issues).
Dogecoin (CCC:DOGE-USD) has remained at the top of my list thanks to the broad support.
The other winners from the NFT boom are ether (CCC:ETH-USD), Cardano (CCC:ADA-USD) and Stellar (CCC:XLM-USD). For Ethereum, most of the NFTs in the world run on the Ethereum network, and only a few see the point in switching to a new protocol. Meanwhile, Cardano and Stellar have stakes beyond NFTs, so they don’t have to compete directly with Ethereum’s dominance.
Medium and long-term cryptocurrencies for sale
- Dogecoin (DOGE)
- Cardano (ADA)
- Star (XLM)
- Ethereum (ETH)
- Shiba Inu (SHIB)
Spamcoins with momentum
For investors looking for more short-term trading ideas, the Momentum Master Strategy has identified several promising leads. Remember, these are for day trading – everyone has little reason for profits beyond 3-4 days.
- Covid vaccination (CCC:COVAC-USD). The self-proclaimed “community-run, fair-launched DeFi token that is used to track the number of people vaccinated by COVID” has little to do with the Covid-19 vaccine. But that didn’t stop believers from sending the token up 400% over the past week. A listing on CoinGecko or CoinMarketCap could send the token even higher before people notice the split.
- MktCoin (CCC:MLM-USD). Similar to fans of FraudCoin (CCC:Fraud USD) and PooCoin (CCC:POOCOIN-USD), speculators who buy MktCoin are full of jokes. First, the coin’s “MLM” ticker would make any Reddit reader laugh – many Redditors have long viewed multilevel marketing as a scam. And secondly, with its 13-fold profit from yesterday, speculation as a cryptocurrency will surely come back on people’s radar.
- Tiger King (CCC:TKING-USD). After essentially getting dark for two weeks, the volume is back in TigerKing. Netflix (NASDAQ:NFLX) had barely teased an “upcoming” season 2 of Tiger King when crypto investors jumped on board again. The token, owned 1% by jailed television personality Joe Exotic, depends on the public to be successful. And that’s exactly what TKING investors get this week.
Source: Catalyst Labs / Shutterstock
Where did SafeMoon go?
Some Moonshot investors may hate me for saying this, but I have to say it. I am not tall SafeMoon (CCC:SAFEMOON-USD) Fan.
This is what got me in hot water with SafeMoon evangelicals:
“I read your article on Yahoo Finance about #safemoon. Only time will tell and this article won’t age well if you doubt the # SafeMoonCommunity movement. See you haters! “(May 15, 2021)
Unfortunately for my loyal Twitter commenter, the token has fallen 80% since then. The flood of social media fans just couldn’t keep up with the momentum.
Nor is it the only sign that has fallen to earth.
- Baby cake (CCC:BABYCAKE-USD): 68% down
- SafeDoge (CCC:SAFEDOGE-USD): 76% less
- Dogelon Mars (CCC:ELON-USD): 97% down
- Mars token (CCC:OMT-USD). Minus 98.6%
The return of NFTs has been a disaster for these Binance tokens. A smooth one Twitter (NYSE:TWTR) Campaign only gets you so far if multimillion dollar NFT sales attract people’s attention and their money elsewhere.
Maybe that makes me a value investor in part. My golden rule for penny stock investing directs people to buy good quality assets cheaply. But it is also a reflection on the crypto world. Similar to non-art NFTs, there are virtually unlimited numbers of tokens based on Binance. And relying on luck alone isn’t a particularly long-term strategy.
|1,150||Average number of daily trades by Reckless Whales in July. The NFT project, which depicts the card-playing marine mammals, was briefly the most traded ERC-721 token, according to Etherscan.io.|
|38||Average number of daily trades in Reckless Whales in August. The liquidity for pieces has dried up as the speculators have moved on.|
|1.3||Ethereum paid for Reckless Whale’s highest price in July – over $ 4,000 in today’s dollars.|
|0.003||Value in Ethereum for a Reckless Whale NFT today. The cheapest options start at $ 10.|
Ride higher in the stock market
According to InvestorPlace writer David Moadel, short-selling a stock is very different when long-side traders ride the bus. Therefore, he warns investors not to go short GameStop (NYSE:GME).
Muslim Farooque identifies seven penny stocks with millionaire potential. A 5G game in it looks especially interesting for your Mr. Moonshot.
A groundbreaking LiDAR technology could change the way self-driving cars work, according to Luke Lango. He’s offering a new addition to his 1 to 30 hypergrowth portfolio this week.
The value of bitcoin
I rarely talk about politics in polite company. What better way to spoil a good meal with family and friends?
But an article by CNBC writer MacKenzie Sigalos caught my attention this weekend.
“Chainalysis’ 2021 Global Crypto Adoption Index ranks Afghanistan 20 out of 154 countries it rated for overall crypto adoption,” she wrote. “And if you isolate the P2P exchange trading volume, Afghanistan jumps to seventh place.”
In other words, Afghans are turning to cryptocurrency to hedge their bets against political and financial instability.
It is not the first time a nation has overcome a weak banking system. Almost three quarters of Kenyans use M-Pesa, a mobile banking app from the telecommunications giant Safaricom. Almost 90% of payments in China are now processed electronically.
But it’s one of the first times people take cryptocurrency seriously on a national level. At current rates, Afghanistan, along with El Salvador and Paraguay, could soon introduce these next-generation digital payments.
Diners Club changed the world of payment in 1950 with the introduction of the credit card. With a little luck, cryptocurrencies could change this world again.
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Thomas Yeung is an expert at finding rapid growth opportunities on Reddit. He recommended Dogecoin before it skyrocketed over 8,000%, Ripple before it surged more than 480%, and Cardano before it surged 460%. Now he names 17 of his favorite penny stocks from Reddit in a new report. Request your FREE COPY here!
At the time of this writing, Tom Yeung held (neither directly nor indirectly) positions in the securities discussed in this article.
Tom Yeung, CFA, is a Registered Investment Advisor with a mission to make the world of investing easier.