Chiliz, Nexo and Ankr are August’s biggest crypto winners. Should you buy?
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August’s top crypto performer has gained nearly 60%, despite strong headwinds.
Important points
- Chiliz gained 58% in August as it reaches the final phase of its move away from Ethereum.
- Nexo gained 36% on token buyback news and platform development.
- Ankr gained 14% after an investment announcement of 500 million dollars.
August was another tough month for cryptocurrency prices. Market leader Bitcoin (BTC) lost nearly 17%, falling below the $20,000 mark on more than one occasion. Ethereum (ETH) fell by nearly 11%, according to CoinMarketCap data. The decline came despite excitement surrounding the upcoming transition from proof-of-work to proof-of-stake, dubbed “The Merge”.
However, these three cryptocurrencies bucked the downtrend with gains of between 14% and nearly 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 utility. Sports enthusiasts can use the CHZ token to purchase tokens for their favorite teams and gain access to exclusive community products and experiences. For example, fans might be able to meet their sports heroes, or vote for their team’s warm-up entrance song. Chiliz already has over 120 partnerships with different sports teams and the token is available from most popular crypto exchanges.
Nexo (NEXO) gained 36% as it begins to regain investor confidence
Nexo’s original token first struggled in the summer when news broke of the extreme difficulties faced by other crypto lending platforms such as Voyager, Celsius and BlockFi. However, Nexo has repeatedly emphasized that it did not take the same risk as other lenders and that it had not used investor money to meet its obligations. NEXO’s price increase this month suggests the message is beginning to reassure investors.
Nexo recently announced an additional $50 million buyback as part of its buyback program. Redeemed tokens will be held in a reserve and are eligible for interest payments. The idea is to reduce volatility and increase growth potential in the long term. This news, along with the decision to add two new tokens to the platform, and the support for Ethereum Merge, boosted the price in August.
Ankr (ANKR) gained 14% on Binance Labs investment
Ankr rose earlier this month after Binance Labs announced a $500 million investment in the Web3 infrastructure project. Ankr is interoperable – meaning it connects different blockchains together. The technology simplifies the betting process and can also help NFT projects and decentralized gaming. It’s a bit like Amazon cloud meets blockchain technology.
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Should you buy?
Last year, crypto investors could be forgiven for thinking they could do no wrong. Prices skyrocketed, and in many cases, short-term trading activity – like trying to ride the wave of skyrocketing crypto – paid off. However, short-term trading is very risky even in good times, and these are definitely not good times.
Don’t buy any investment just because the price goes up. Cryptocurrency prices are extremely volatile and there is a good chance that the price will drop again in the coming weeks or months. Instead, look at how you think it might perform over the long term and examine how it stacks up against the competition.
Smaller altcoins are a bit like penny stocks in that they can yield incredible gains, but they are also riskier than more established projects. It is important that you understand and manage this risk, especially as we are in a long period of low crypto price action and uncertainty. We do not know how long prices will remain low and which projects will survive. As such, if you decide to buy, only invest money you can afford to lose, and make sure that crypto only represents a small percentage of your broader investment portfolio.
Chiliz, Nexo and Ankr are all interesting crypto projects with a lot of potential, and they certainly deserve their moment in the spotlight. But as an investor, the trick is to consider what might happen in the longer term when the hype and speculation has died down.
