2 Cryptocurrencies to Avoid in 2022 — and 1 to Grab!

Many cryptocurrencies look weak in 2022, but Purpose Bitcoin ETF (TSX:BTCC.B) may do all right.

| More on:

The cryptocurrency market is starting 2022 on a down note. Bitcoin (CRYPTO:BTC) fell 13% in the first week of the year, recovering slightly on Sunday. It was much the same story with alt coins, including the “meme coins” that stole the spotlight in 2021. Dogecoin (CRYPTO:DOGE) shed 13% of its value in the first week of the year, and Shiba Inu (CRYPTO:SHIB) fell by about the same amount.

Unlike the previous meme coin selloff, the various alt coins were pretty well correlated with BTC this time around, suggesting that investors are losing their appetite for crypto as a whole. In this article, I will explore three cryptocurrencies that are particularly vulnerable to the current market conditions — and one that might actually be worth buying.

Dogecoin

Dogecoin is the cryptocurrency that started the meme coin phenomenon. It was created as a joke many years ago and started actually gaining value last year when Elon Musk pumped it. Musk is the richest person in the world, and he has a huge social media following. Naturally, his Tweets were followed by a quick appreciation in Doge’s price.

At one point, DOGE went for as much as $0.56. At the time of this writing, it traded for just $0.19. There appear to be relatively few catalysts that could result in DOGE having a better run in 2022 than in the second half of 2021. Elon Musk did Tweet about it once recently, but the actual story was underwhelming (he said his company might start accepting the coin for “merch” purchases). Unless Musk actually starts accepting DOGE for car purchases, I wouldn’t imagine his pumps will trigger much more than very brief price spikes.

Shiba Inu Coin

Shiba Inu Coin is another meme coin like Dogecoin. This one has even fewer catalysts than Doge. It started as a Dogecoin imitator and picked up steam when people went looking for “the next Dogecoin.” Unlike DOGE, SHIB does not have any high-profile billionaires pumping it or accepting it as a payment method at their businesses. So, it’s hard to come up with a plausible reason for it to rise, when DOGE, ETH and BTC get so much more publicity.

Bitcoin

Turning to the one crypto that may be worth buying in 2022, we have Bitcoin. This year, Bitcoin has a number of things going for it:

  • Adoption as legal tender by one country.
  • Reports that it will be adopted as legal tender by two more countries.
  • A decent number of major companies accepting it for transactions.
  • Wide publicizing by influential figures like Elon Musk, Jack Dorsey, and Cathie Wood.

All of these factors combine to ensure there will be some level of demand for BTC in the future.

Another fact about BTC is worth noting:

You can hold it through an ETF like Purpose Bitcoin ETF (TSX:BTCC.B) in a TFSA or RRSP and pay no taxes on your holdings. Normally, Bitcoin is subject to capital gains tax. The same goes for other cryptocurrencies. If there is no pure play ETF for a cryptocurrency, then it is pretty much 100% taxable forever. Nothing you can do about it. With Bitcoin, though, you can easily hold it as BTCC.B in a TFSA and pay zero tax. Sure, you pay the fund’s managers a 1% fee, but capital gains tax can run as high as 25%. If you double your money on Bitcoin and then sell, Purpose Bitcoin ETF’s TFSA-friendly structure saves you money compared to direct holdings.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Andrew Button has no position in any of the stocks mentioned. The Motley Fool owns and recommends Bitcoin.

More on Investing

woman looks at iPhone
Tech Stocks

Shopify, Lightspeed, and WELL Health: Are They Good Buys Today?

While broader markets have rallied, Shopify, Lightspeed, and WELL Health stocks haven't followed suit, showing weaker performance.

Read more »

dividends grow over time
Dividend Stocks

4 Top Canadian Stocks I’d Buy for Dividends and Capital Growth

If you want dividend income and capital growth, these four Canadian stocks are the kind of stocks you want to…

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Retirement

How to Make Your $7,000 TFSA Contribution Work Harder This Year

Let's dive into three key tips for Canadian investors looking to win by putting $7,000 into their TFSA for the…

Read more »

A worker uses a double monitor computer screen in an office.
Bank Stocks

Where Will iA Financial Be in 10 Years?

With strong earnings growth and a rising market presence, iA Financial stock may just be getting started.

Read more »

Piggy bank with word TFSA for tax-free savings accounts.
Dividend Stocks

3 Top Stocks to Buy With $7,000 and Hold for Decades in Your TFSA

These stocks pay good dividends that should continue to grow.

Read more »

Canada national flag waving in wind on clear day
Dividend Stocks

3 New Red Flags the CRA is Watching for Old Age Security Pensioners

OAS payments can be an amazing income stream, but watch out for CRA warnings!

Read more »

dividends grow over time
Stocks for Beginners

3 TSX Stocks to Build Wealth Over the Next Decade

From logistics to construction supplies, these TSX stocks could quietly build real wealth in your portfolio over the next 10…

Read more »

investment research
Dividend Stocks

Where to Invest $5,000 in the TSX Today

Don't know where to put a $5,000 investment? Consider essential stocks like this one.

Read more »