COMP, LINK, DOT, ATOM, BNB, have you picked your altcoin for the next alt season?
So, which are the altcoins that will help you maximize your returns in the next alt season without actually letting you lose sight of the long-term goal, that is bitcoin? Answering this question will be the goal of this article.
Markets, be it stock or crypto are mysterious, to say the least. However, from time to time, and in hindsight, we observe trends that drive these markets, at least for a brief time. Identifying these trends can be quite helpful in investing and two such trends we are going to discuss here are the altcoin cycle and the DeFi bubble.
The Altcoin cycle
This one is more of a cycle than a trend, nonetheless, it is a cycle where money flows into alts. Obviously, this happens when investors/users take profits from their investments in bitcoin and invest it elsewhere. This topic has been discussed widely, refer to previous articles for more information.
The Defi Trend
Last summer, decentralized finance was in for a ride of its lifetime. The amount of value locked in defi soared to $10+ billion in a matter of months and new trends developed in the defi space such as yield farming, liquidity mining, etc. While the space, in general, holds promise, it was too early for defi and the trend died out as bitcoin once again took center stage.
However, the coins/projects that showed promise are new and are trying to solve real-world problems, unlike in the case of phony ICO projects. These coins will face a fate similar to what ICO-based altcoins faced in the 2017 bull run. Hence, picking out a few defi projects to ride the next wave of the alt season would be a good idea.
Picking out the altcoins
The Compound project paved the way for the defi summer. With innovations like these, the Compound project and its COMP token are valuable and make it a necessary investment that can be held for short term gains or as an asset for long term investment in your portfolio.
With each Comp token valued at $143, it’s potential upside [assuming it hits ATH] is 93.70% or almost 2x. In BTC terms, however, it is 364%, ie., a ~7x.potential.
Below is a comprehensive table of the theoretical potential returns of coins in the short-term rally. The table assumes three possibilities [in BTC terms], a complete surge to its previous ATH, a 23.6% surge from the current price, a mid-way point from its ATH to the current price.
Clearly, COMP has huge potential even if it’s just a 23.6% hike from the bottom, as one could 1.7X his/her investment in this alt season. Following COMP is ATOM, with a 1.1X potential during a 23.6% surge.
Although the above arguments revolve around theoretical calculations made in anticipation of the alt season, one should note that the main intention is to accumulate more BTC. This aligns with our long term goal of making a good profit when bitcoin hits $118,000 in late 2022.