Chiliz, Nexo, and Ankr Are August's Biggest Crypto Gainers. Should You Buy?

August's top crypto performer has gained almost 60%, in spite of heavy headwinds.

August was another rough month for cryptocurrency prices. Market leader Bitcoin (BTC) lost almost 17%, slipping below the $20,000 mark on more than one occasion. Ethereum (ETH) fell by almost 11%, according to CoinMarketCap data. The drop came in spite of excitement around its upcoming switch from proof-of-work to proof-of-stake, dubbed "The Merge."

However, these three cryptocurrencies bucked the downward trend with gains of between 14% and almost 60%. Here's why.

Chiliz (CHZ) gained 58% on upgrade news

Fan engagement token Chiliz soared on news that it would soon be able to move to its own blockchain. The move will significantly reduce transaction costs on the Chiliz network and improve its utility. Sports enthusiasts can use the CHZ token to buy tokens for their favorite teams and access exclusive community products and experiences. For example, fans might be able to meet their sporting heroes, or vote on their team's warm-up entrance song. Chiliz already has over 120 partnerships with different sports teams and the token is available from most top crypto exchanges.

Nexo (NEXO) gained 36% as it starts to regain investor confidence

Nexo's native token initially struggled in the summer as news broke of the extreme difficulties faced by other crypto lending platforms like Voyager, Celsius, and BlockFi. However, Nexo has repeatedly stressed that it did not take on the same risks as other lenders, and that it hadn't used investor money to meet its obligations. NEXO's price increase this month suggests its message is starting to reassure investors.

Nexo recently announced another $50 million token repurchase as part of its buyback program. Repurchased tokens will be kept in a reserve and are eligible for interest payouts. The idea is to reduce volatility and increase growth potential for the long term. This news, along with the decision to add two new tokens to its platform, and its support of the Ethereum Merge, all boosted its price in August.

Ankr (ANKR) gained 14% on Binance Labs investment

Ankr soared earlier this month after Binance Labs announced a $500 million investment in the Web3 infrastructure project. Ankr is interoperable -- meaning it connects different blockchains. Its technology simplifies the staking process and can also help NFT projects and decentralized gaming. It's a bit like Amazon cloud meets blockchain technology.

Should you buy?

Last year, crypto investors could be forgiven for thinking they could do no wrong. Prices soared, and in many instances, short-term trading activity -- such as trying to ride the wave of soaring cryptos -- paid off. However short-term trading is highly risky even in the good times and these are decidedly not good times.

Don't buy any investment only because the price is going up. Cryptocurrency prices are extremely volatile and there's a good chance the price will fall again in the coming weeks or months. Instead, look at how you think it might perform in the long term and research how it stacks up against its competitors.

Smaller altcoins are a bit like penny stocks in that they can produce incredible gains, but they are also riskier than more established projects. It's important you understand and manage that risk, especially as we are in a prolonged period of low crypto price action and uncertainty. We don't know how long prices will remain low and which projects will survive. As such, if you do decide to buy, only invest money you can afford to lose, and make sure that crypto only represents a small percentage of your wider investment portfolio.

Chiliz, Nexo, and Ankr are all interesting crypto projects with a lot of potential, and they've certainly earned their moment in the spotlight. But as an investor, the trick is to consider what may happen longer term when that hype and speculation has fallen away.