As bitcoin, crypto’s largest asset, continues to consolidate in price, numerous other non-bitcoin crypto assets, known as “altcoins,” are showing a little bit of life in the price department after months of losing value. Nicholas Merten, host and creator of one of YouTube’s top-subscribed cryptocurrency channels, DataDash, listed three altcoins he expects the most growth from over the next year.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
“At the current moment, taking a look at [bitcoin] market dominance, it does look like we’re starting to enter into a trend shift where altcoins can start to gain as we retest back toward bitcoin’s highs at $20,000,” Merten said to me in a September 19 interview. “The last two [altcoin cycles] that we had were at the end of the overall bitcoin cycle where bitcoin reached $20,000,” he explained. “The first one happened at the beginning of 2017 when bitcoin retested its highs at $1,100.”
Bitcoin (BTC) has had a fantastic year in the price category, rising from under $4,000, to more than $13,000 per BTC according to Messari’s price data, in what could be labeled as a storybook comeback. In contrast, the altcoin market, composed of more than 2,800 crypto assets, as listed on CoinMarketCap.com, has had a rocky year.
The tides could be turning for altcoins however, as shown in Merten’s reference to bitcoin dominance, a metric that shows the amount of money invested in bitcoin compared to altcoins. Merten commonly references this metric on his YouTube channel, which touts more than 320,000 subscribers and over 21 million views, according to his channel’s analytics page on Social Blade.
As the dominance and growth of crypto’s top asset increases, Merten said he sees money eventually funneling into other areas.
“As bitcoin does increase over time, as we tend to see a general growth in bitcoin’s price, we tend to see more risk taking in different types of digital assets. As more liquidity has entered into bitcoin, you have the ability now, through exchanges, for that liquidity to exit into other alternative investments. Sometimes that can be rampant speculation, and, in other cases, it can be driven through fundamentals. I believe this time around, in this cycle, were going to see more going toward fundamental developed projects that actually have real demand.”
In terms of altcoins ranked in the top 100 by market cap on CoinMarketCap.com, Merten singled out Chainlink (LINK), Basic Attention Token (BAT) and Ravencoin (RVN) as the three crypto assets he sees performing the best between now and the end of 2020.
The Chainlink project, with its token operating under the ticker symbol LINK, looks to provide a solution in the area of connectivity. “Chainlink is helping to solve something that’s known as the oracle problem,” Merten said. “The problem with blockchains [such as] ethereum, who aim to have enterprise use case in utilizing blockchain, is that they struggle to connect with the outside world,” he explained. “Nodes on the network or the blockchain can only communicate and do basic transactions or token exchanges,” he said.
Lacking in the mentioned structure, however, is the ability to execute “if-then scenarios,” Merten explained. “If so-and-so does this through a traditional data system that a business might use, then this transaction can go through,” Merten explained as one such scenario. Such an instance would “need something like Chainlink that can help have a decision-maker outside of the ethereum network as a middleware solution, in order to make the transactions on the ethereum network much more functionable.”
Chainlink has made several big steps forward in 2019, including a partnership with software giant Oracle.
Basic Attention Token (BAT)
BAT is the digital asset associated with Brave Software, the company behind the Brave internet browser, a browser option that “blocks ads and trackers,” according to its website.
Brave’s BAT is Merten’s second pick in terms of expected performance over the course of the next year. Explaining his rationale, the YouTube host pointed toward BAT’s affiliation with the Brave browser, and the “incentive structure” around the asset. “The token incentive structure […] benefits all parties involved,” he said. Brave and its asset work in a way that compensates advertisers, content creators and viewers, Merten added.
“Those are the things that really excite me,” Merten said. “Having that kind of trifecta of providing incentive for all users and a way to actually earn for your attention, because, quite frankly right now, there’s not a good respect for data privacy for Google and a lot of the major tech companies,” he said. “Not to mention, even if you want to receive advertisements and things of the like, you’re not getting any form of monetization for it, which Brave, in that case, offers through BAT as a token.”
Merten’s third pick is Ravencoin, a “platform for digital assets ” that allows users to develop their own tokens, backed by various different things. “You can actually make digital tokens that represent physical real-world assets or digital assets themselves,” he explained.
Merten compared the project to the work many entities are doing with tokenized securities platforms, except with “the mindset of bitcoin,” Merten explained. “It’s created cypherpunks, it is censorship resistant, you can create digital tokens that represent any asset across the world and you can transmit it digitally across the world as well.”
Disclaimer: I actively trade cryptocurrencies, as well as hold a small amount of BTC, ETH, LTC, XMR, NEO, ZEC, BEAM, BCH, DASH and various insignificant other altcoin positions.