3 cryptocurrencies that are down 33% to 71% and ready to pop

The crypto market is back to its volatile old ways again. The relentless downtrend in 2022 gave way to some strong gains in January, but the market’s general trend is going sideways these days. The leading crypto names are up one week and down the next.

That said, I am convinced that digital currencies will disrupt many industries over the next few years, from banking and financial services to online gaming and insurance. Therefore, I see this dip as a great time to separate the wheat from the wheat and pick up high-quality cryptocurrencies on the cheap.

So let’s push through the crowd of lesser lights and wannabes to find some of the best cryptocurrencies on fire sale in February 2023. The crypto names below are down at least 33% in the last year. Still, they have some seriously valuable real-world use cases, and with a little patience, they’re sure to regain their value in the long run.

Bitcoin: The Great Grandfather

Let’s start with the digital elephant in the room. Bitcoin (BTC 2.31%) set the standard for what a cryptocurrency can be, and it’s still the biggest and most respected crypto name 14 years later.

Bitcoin’s price is down 50% over the past 52 weeks, but also up 38% from last year’s low in November. Many experts agree that the long-term price target is well above today’s modest price.

For example, well-known growth investor Cathie Wood and her ARK Invest firm recently reminded investors that Bitcoin should be worth nearly $1.5 million per coin by the year 2030. The reason for the parabolic price gain is that Wood expects demand for Bitcoin to skyrocket the weather while the lifetime lasts The supply is limited to 21 million Bitcoins. Almost 92% of the limited supply is already mined by Bitcoin miners, so there isn’t much room for inflation.

And if you look for Micro strategy (MSTR 5.57%) chairman Michael Saylor, you don’t get a firm price target, but a pretty solid analysis of what’s next for the biggest cryptocurrency. Over the next four to eight years, Saylor expects the regulatory framework around crypto to straighten out, allowing large institutional investors to get involved.

Based on this estimate, Saylor’s MicroStrategy is going all-in on Bitcoin. The data analytics company has essentially converted all of its cash holdings to Bitcoin, taking out loans and selling shares to acquire more digital tokens. The company even took out a $205 million loan from Silvergate capital (SAY 7.48%)secured by some of MicroStrategy’s existing Bitcoin holdings, with the sole purpose of buying another bunch of Bitcoins.

Whether you call it “skin in the game” or “bias,” Saylor’s company matches your wallet.

The company now has approximately 132,500 Bitcoin tokens, worth approximately $2.88 billion at today’s price. That’s 55% of MicroStrategy’s enterprise value and almost more than the company’s current market cap. If Bitcoin goes bankrupt in the future, so will MicroStrategy. But if it reaches Cathie Wood’s target price for 2030, MicroStrategy’s current tokens will be worth $196 billion (and I’m sure the company will buy more Bitcoin along the way).

So two smart people agree that Bitcoin has a bright future. They could still be wrong, and some other cryptocurrencies could steal Bitcoin’s thunder in the next few years, but it’s not easy to upset a first mover with such a big head start. The “digital gold” looks set to live up to its nickname over the next few years, and this downturn seems like a good time to pick up tokens at a low price.

Litecoin: A more practical version of Bitcoin

Where Bitcoin Goes, Litecoin (LTC 3.87%) will follow. Litecoin started in 2011 as a fine-tuned clone of Bitcoin. Some of the main differences are:

• Litecoin generates new data blocks more frequently than Bitcoin does.
• As a result, new transactions on the blockchain ledger are validated faster and with lower transaction fees.
• The mining algorithm was explicitly chosen for its high processing speed by using consumer-grade graphics cards instead of custom-designed cryptomining chips.

Litecoin’s fast and cheap transactions make it more useful for daily retail use than Bitcoin. It’s like whipping out a quick and easy debit card instead of Bitcoin’s familiar gold nuggets. As a result, the smaller Litecoin community has drummed up payment support from more than 5,000 e-commerce stores and services. That’s fewer than Bitcoin’s 12,000 sellers, but far ahead of most other altcoins.

The coin crashed hard last year, partly due to a controversial privacy upgrade known as Mimblewimble. The code change led to regulators banning Litecoin in markets such as Thailand and South Korea. However, most of the crypto world is still comfortable with allowing Litecoin trades, and the coin is widely available on popular exchanges such as Coinbase Global and Robinhood Markets.

The South Korean panic didn’t trigger a wave of Litecoin bans in other markets, and investors are starting to relax their tightly held nerves. Overall, the Litecoin token is down 33% over the past year and should see fantastic returns from this low.

Polkadot: Knitting a Web3 fabric from other cryptos

I can’t in good conscience end this list without including Polka dot (DOT 3.02%). It’s the cryptocurrency at the heart of the Web3 sea change, destined to soar as the next-generation version of the Internet takes over from the mix of ad-supported social networks you see in the current Web 2.0 model.

With smart contracts, bankless peer-to-peer value exchange transactions and transparent content publishing systems, Web3 is poised to turn the online publishing and e-commerce world upside down. As the official blockchain network of the Web3 Foundation, providing developers with easy ways to combine the power of many different cryptocurrencies and blockchains into a cohesive application, Polkadot is sure to gain a lot of value as the revolution unfolds.

Nevertheless, the price of the Polkadot token is down 70% in 52 weeks. It is the 12th largest cryptocurrency, with a market capitalization of $7.06 billion, just ahead of Litecoin at $6.56 billion, but far behind Bitcoin’s dominant footprint of $419 billion. Thanks to Polkadot’s special and uniquely useful place in the Web3 ecosystem, I expect the token to start rubbing shoulders with Bitcoin and friends over the next couple of years. The possibility of oversized growth is too obvious to ignore, and I take every chance I get to help you see it.

So if I could suggest only one cryptocurrency in today’s market, my choice would depend on what you want your investment to achieve.

• Bitcoin is the safe-as-houses (in the digital sense) bet on long-term value storage.
• Litecoin is more of a digital dollar, to be used in everyday shopping transactions – more liquid, but perhaps more volatile in the long run.
• And Polkadot plays a completely different game, serving up a whole new vision of what the internet can be.

For what it’s worth, I’ve been holding Litecoin and Bitcoin lately while buying several lots of extra Polkadot. I can’t wait for Web3 systems to go mainstream in a big way, so I’m doing what I can to take advantage of the coming metamorphosis.