The crypto market hit a brick wall in November 2021. Cryptocurrencies that had soared over the previous two years saw their price charts turn south in a hurry as investors everywhere focused on soaring inflation rates. Anything resembling a risky investment was kicked into Wall Street's bargain bins, and cryptocurrencies were at the top of that list.
Now it's almost two years later. Some cryptos have staged a lively comeback in 2023, but they still sit far below the all-time highs of 2021. As the next bullish upswing looks likely to start in 2024, this could be a great time to stock up on some deeply discounted cryptocurrencies with bright long-term prospects.
Let me show you a couple of prime examples. I'm practically drooling over Bitcoin (BTC 0.74%), Polkadot (DOT 1.13%), and Chainlink (LINK 0.30%) right about now.
CRYPTO: BTC
Key Data Points
Bitcoin: Down 58%
The oldest, largest, and arguably most important cryptocurrency has several crucial price catalysts on the horizon. One of Bitcoin's catalysts is guaranteed to play out in the spring of 2024 and the others could take the spotlight anytime.
- The next "halvening" is coming up near the end of April. The reward for mining new Bitcoins will be cut in half, from 6.25 to 3.125 tokens. This process takes place every 210,000 blocks, which tends to take about four years. Lowering the reward per mining cycle every few years reduces Bitcoin's long-term inflation and changes the economic rewards of running crypto miners to validate the blockchain ledger's transactions. Essentially, investing in mining hardware and sky-high electric bills only makes sense if Bitcoin prices rise over time -- and the whole system grinds to a halt without miners. So this is the economic heartbeat of the Bitcoin market, and it's about to go "ba-dum" again next year.
- Several financial institutions are trying to launch Bitcoin-based exchange-traded funds (ETFs). The Securities and Exchange Commission (SEC) is dragging its feet on approving these applications, but regulators can't kick that can down the road forever. This process may require new rules and regulations, but with traditional financial service heavyweights like Blackrock (BLK +0.00%) and Franklin Templeton (BEN 1.77%) leading the charge, the pressure is rising. And when proper Bitcoin ETFs become available, that move should result in lots of large-scale investor capital flowing into the Bitcoin market.
- Several high-profile cryptocurrency lawsuits are working their way through the legal system. Settlements, judgments, and appeals in these legal cases will help the U.S. government construct a robust framework for cryptocurrency trading and ownership. A fully formed system will probably take several more years, but every step forward counts as progress and could drive crypto prices higher. As the elder statesman of that market, Bitcoin could see large price moves on any tidbit of legal news.
And while waiting for these potential price boosters to play out, Bitcoin is changing digital hands at a 58% discount from the all-time highs of 2021. If you believe that cryptocurrencies will play a significant part of the long-term global economy, the foundational Bitcoin token looks like a no-brainer buy these days.
CRYPTO: LINK
Key Data Points
Chainlink: Down 79%
Some of Bitcoin's upcoming events also apply to other cryptocurrencies. The first Bitcoin ETFs should spark applications for other crypto-based ETFs, inspiring institutional investments across the sector. Likewise, solid regulations may start with explicit references to Bitcoin but will eventually address the entire crypto sector. Therefore, the leading names in many unique niches of the cryptocurrency market should enjoy impressive gains as the legal and regulatory drama runs its course.
On that note, Chainlink has a commanding lead over challengers in the category of oracle coins. App and service developers rely on oracles to deliver real-world data to smart contracts in the crypto world. This is how crypto-based programming systems take automated action based on crypto prices, stock prices, weather reports, and so on. If you want a secure data feed to a smart contract, you grab it from an oracle.
And like I said, nobody offers oracle services quite like Chainlink. Its market value is more than 25 times greater than the second-largest option. Chainlink's daily trading volume is five times the nearest rival. This is the no-brainer choice for data-hungry applications, and that massive lead looks secure in the long run.
Now, Chainlink wasn't designed to serve as a robust carrier of sustained value, like Bitcoin was. As a result, its price chart tends to be more volatile than Bitcoin's. But at the moment, the unpredictable price swings have landed Chainlink's price nearly 80% below the pre-inflation crisis record. That's another obvious choice for long-term crypto investors.
CRYPTO: DOT
Key Data Points
Polkadot: Down 91%
I may have saved the best for last. As much as I expect strong multi-year gains for Bitcoin investments and a safe-as-houses market position for Chainlink, the Web3 network known as Polkadot could be the best crypto investment in this market.
The DOT token (often known by the Polkadot blockchain system's name) was created as the lifeblood of the Web3 vision of future internet services. This ambitious plan takes today's social network giants down a peg, giving more power and freedom to individual network users like you and me. Everything from content publishing to banking services enjoys the low fees, high transaction speeds, and ironclad security of blockchain ledgers in a fully evolved Web3 market. The current group of gatekeepers and content paywall operators should fade out as direct person-to-person connections take over.
Many cryptocurrencies have important roles to play in a Web3 future, including money management with Bitcoin and smart contract data delivered by Chainlink. But the common denominator that makes the whole bundle work is Polkadot, which was designed by the Web3 Foundation for that specific purpose.
It is a sophisticated ecosystem with many sub-projects and related crypto tokens. Early Polkadot holders may have lost patience with the Web3 revolution's slow introduction, driving DOT prices more than 90% lower in less than two years. However, I see that cautious approach as a valuable feature, not a dangerous bug. It may take a while to see Polkadot's undervalued crypto token growing into its peer-to-peer britches, but I don't mind. Investing was always more of a marathon than a sprint anyway, so I'll gladly watch as this token multiplies in value over the years.
