As most of you know, I’m long-term bullish on the cryptocurrency market.
I believe that the revolutionary blockchain technology underlying cryptos represents the most profound and disruptive technological innovation since the internet. It will allow us to disintermediate multi-trillion-dollar economic systems, which are presently controlled by unnecessary middlemen, and replace them with decentralized systems that are freer, fairer, and faster.
The blockchain is the future. Of finance. Of media. Of work. Of everything. Cryptocurrencies are the medium to that future. Long-term, cryptos will make patient investors a lot of money.
But, despite this long-term bullishness, I’m also cautious on the near-term outlook for cryptos.
That’s because cryptos have been on an amazing run over the past few years. At the start of the Covid-19 pandemic just 21 months ago, the entire crypto market measured about $140 billion in size. Today, cryptos are a $2.1 trillion market – up 15X in less than two years.
Stocks don’t go up in straight lines. And cryptos especially do not go up in straight lines. This is a market that has historically been defined by enormous volatility, wherein crypto prices can rise thousands of percent one year, and then collapse by 80% or more in the following year.
It’d be foolish to think that an asset class with this much historical volatility and on the heels of a 15X gain in two years, is not due for a near-term correction.
We think that near-term correction could come in 2022.
The Fed has targeted three interest rate hikes for 2022, after a period of excessive stimulus and liquidity. Typically, monetary policy tightening such as rate hikes tends to stymie risk-taking appetites in the financial markets. Cryptos are considered risky assets. As such, investor appetite to buy cryptos as we enter a new rate hike cycle could dwindle.
At the same time, the bond market is strongly signaling that inflation will come down dramatically in 2022. Despite the Fed signaling three rate hikes for next year, the 10-year Treasury yield has plunged to below 1.4%. If inflation does meaningfully cool off next year, then less investors will look to hedge against inflation, which could have a negative impact on crypto prices (since cryptos are widely considered a great hedge against inflation).
And, even further, the current technical picture is skewing near-term bearish. Bitcoin has broken below its 50-, 100-, and 200-day moving averages for the first time since May 2021 – and Bitcoin prices struggled throughout June and most of July. The next point of technical support appears to be around $42,000. A move lower toward that level seems entirely probable, if not likely.
All in all, we are near-term cautious on the crypto markets. We think that over the next few months, the crypto markets could struggle.
But, as long-term bulls, this is music to our ears. Near-term weakness is a long-term opportunity. We believe healthy fundamental adoption trends coupled with favorably shifting legislation and improving technology on the back of still-robust funding will power the crypto markets significantly higher over the next 12 months, 3 years, and 10 years.
We’re ready to buy this dip!
Still, we will be buying this dip very carefully. The reality is that while cryptos are the future, the crypto markets are full of trash investments.
Look no further than Chainalysis’ recent report, which found that investment scams involving digital coins wherein coin developers create a fake project, raise a bunch of money via coin sales, and then dump all their tokens on unknowing retail investors – a dynamic known as “rug pulls” – have turned into a $2.8 billion business in 2021.
And all those so-called “pup coins” aren’t much better. They claim to have underlying value. Most don’t. Most will fail.
In fact, I’d venture to say that about 90% of the cryptos out there today will fail. This isn’t unusual for emerging tech markets. Look at the Dot-Com Bubble of 1999-2000. Dozens of internet startups promising to change the world – from Pets.com to Webvan – failed.
But a few succeeded, and the ones that did succeed turned into the biggest wealth-creating investments of all time. I’m talking Amazon. I’m talking Google. I’m talking Netflix.
That’s why when the crypto markets do inevitably dip in 2022 – when this big crypto crash does finally materialize – most investors are going to get crushed… but we’re going to make fortunes.
We’re going to buy the dip in the highest-quality altcoins in the market with great operating fundamentals, strong projects, solid teams, and huge long-term potential. We’re going to buy the dip in the next Amazon, the next Netflix, and the next Google – all while letting the next Pets.com and Webvan slip into oblivion.
Right now, we have eight cryptocurrencies on our radar, which we hold in our flagship Crypto Investor Network portfolio, that we think could be among the crypto market’s biggest winners over the long term.
These are the cryptos you want to buy on weakness in 2022. Not Dogecoin. Not Shiba Inu. Not even Bitcoin.
You want to buy these eight cryptos.
To find out their names, ticker symbols, and key details, click here. Trust us. You don’t want to be left holding the bag on “trash cryptos” when the market crashes. You want to be holding these high-quality cryptos with 10X long-term upside potential.
Click here to find out more.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.