From an investment perspective, most cryptocurrencies seem similar. Almost all of them seem volatile, and while some get more limelight than others, almost all feel the impact of regulatory attention. However, just like two tech companies can be radically different despite being in the same sector, cryptocurrencies can be substantially different from one another as well.
Let’s take Ripple (CRYPTO:XRP) as an example. Even though often tarred with the same brush as Bitcoin, it’s quite different. It’s doesn’t rely on crypto mining for payment transaction validation, for one thing. Ripple transactions are logged and charged by the network that facilitates them (same name), and there is a lot of supply compared to the just 21 million Bitcoins that there will ever be.
The most characteristic difference, however, is what Ripple is mostly used for nowadays: facilitating exchange between different currencies. As an investor, though, you might be more interested in determining whether the crypto has what it takes to grow 100% or more in 2022.
Ripple’s 2022 prospects
One factor outside the crypto mainstream market that has been pushing Ripple down for a while is its legal troubles with the SEC. Many crypto experts are hoping that the case will end in Ripple’s favour, most likely in April. And it would be one of the most significant wins for crypto institutions against federal authority.
Such a win alone could push Ripple high enough to double its investors’ capital. But if it’s in sync with a crypto market recovery as a whole, the growth might be much more significant. But the opposite is just as plausible.
A different crypto
If you are not hopeful about Ripple’s recovery but you are optimistic about cryptos (as a whole), then a crypto stock like Bitfarms (TSXV:BITF) could be a great place to start. The stock is crashing hard, following the Bitcoin trajectory, but it’s not nearly as low as it can potentially go, considering its history. It’s still trading at $4.4 per share, but if the decline continues, the company may see its price fall below $1.
And if you are still sure that crypto will eventually recover, if not this year, then the next, that would be a great time to buy. Because then you would be able to capture the massive upside a stock like Bitfarms can offer when its underlying assets recover. The bast case scenario would be the company replicating its 3,100% growth between October 2020 and November 2021.
Whether it’s through a tech stock like Bitfarms or by holding the asset directly, gaining exposure to the crypto market amid the current volatility is a decision that has the potential to make you rich if the best-case scenario pays off. But if not, you may be at risk of losing all or at least most of the capital you tie to this volatile market.