Amid what’s been a rocky cryptocurrency market this year, the search for the cheapest cryptos with upside potential is on.
However, there’s cheap, and then there’s value. Indeed, the search for undervalued cryptos with meaningful upside potential is what most investors are really after.
The question is, how does one define value in the world of digital currencies? After all, many of these projects don’t have cash flows to base a valuation upon. Modeling out what these tokens should be worth is a rather difficult mathematical exercise. Accordingly, at times, this sector can be viewed as one that’s purely driven by animal spirits.
While there may be some truth to that premise, the reality is that there are plenty of crypto projects providing real value. Here are three I think are worth taking a look at during this market downturn.
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Polkadot (DOT-USD) has been on my watch list for some time and is an intriguing option for long-term crypto investors to consider. Its “layer 0” blockchain network provides for interoperability, i.e., the ability for projects to talk to each other.
Via parallel chains (or parachains), Polkadot has developed what many call a decentralized internet of blockchains. The idea is relatively simple: provide some sort of Web3 base upon which developers can tag along. Via Polkadot’s centralized staking model, developers who launch applications on a parachain can benefit from the security and validation of the overall network. Thus, this network provides a hub, of sorts, for a whole ecosystem of real-world utility to be created.
That’s something that creates real value. Of course, as activity has slowed to some degree in the crypto world, Polkadot’s valuation has taken a hit. DOT is currently trading 86% below its all-time high of $55 per token. For those thinking long term, this could be a great opportunity to get in at an attractive valuation.
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Decentraland (MANA-USD) is a great pick for those who believe the metaverse isn’t just some abstract term, but rather a long-term growth area to focus on. It’s arguably the most popular and most valuable metaverse project out there.
Much of that is attributable to the ongoing developments in Decentraland’s blockchain-based virtual world. This metaverse project has integrated NFT technology and is working on integrating other Web3 programs and decentralized applications to its platform. Among the most exciting prospects is the potential for play-to-earn games to coincide with Decentraland’s platform. Over time, such integrations could provide some real value, as this project battles for market share in this nascent corner of the crypto market.
It’s hard to say which blockchain-based crypto project will come out ahead. But Decentraland is among the most promising. Thus, at just $0.83 per token, this crypto may be worth a look.
In my view, Cardano (ADA-USD) is one of the more undervalued tokens in the crypto world and its ecosystem is one that’s worth considering as an investment.
That’s partly because of Cardano’s growth of late relative to its peers. This smart contract-enabled proof-of-stake blockchain has seen developer interest grow along with the need for more efficient, secure blockchains.
With a market capitalization of more than $15 billion, it may seem expensive. However, ADA is trading 85% below its all-time high. Considering it had a market cap of around $100 billion at its high, those who believe this network’s valuation will eventually catch up to its growth have some serious upside potential to consider.
Cardano’s approach to upgrading its network is another key reason many are starting to look at this cryptocurrency. Cardano has taken a slow-and-steady approach rather than integrating fast-paced changes. This has ensured network stability, something that’s becoming increasingly valuable.
As a long-term investment, I think Cardano is worth a look here at around $0.45 per token.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.
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