Whether you’re a seasoned crypto trader or a beginner looking to expand your investment portfolio, investing in undervalued cryptos is a smart idea. That said, the volatility of cryptocurrencies goes both ways, which is why investing in intrinsically undervalued projects with little downside is a good idea.
Of course, the term “undervalued” applies differently to cryptos than any other asset class. Cryptocurrencies are primarily driven by marketing and speculation, and very few crypto investors invest in a project solely because of its utility unless the developers can market that utility well. It also matters what sort of gains you are targeting. If an investor is targeting oversized short-term gains, it is best to go for small-cap tokens, while investors with a more conservative risk appetite should stick with Bitcoin (BTC-USD) and Ethereum (ETH-USD).
With that in mind, the following seven undervalued cryptos are a mix of high and low-risk tokens that should satisfy almost all types of portfolios due to their underlying fundamentals:
XRP (XRP-USD) best fits the definition of being among the undervalued cryptos due to its court case with the U.S. Securities and Exchange Commission (SEC) suppressing the project’s value. Ripple’s XRP is among the only cryptocurrency projects that offer real-world utility through its partnership with banks. The technology can make international remittance transfers between different currencies easier, faster, and cheaper to process.
Many established names, such as Bank of America (NYSE:BAC), JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC), and Deutsche Bank (NYSE:DB), have some form of partnership with Ripple. Furthermore, Ripple’s technology is the go-to for countries looking to create Central Bank Digital Currencies (CBDCs). These positive tailwinds should justify a much higher value for Ripple if it wins the case, a promising outcome after a recent “crucial victory” for Ripple.
Cardano (ADA-USD) is a cryptocurrency project that aims to solve Ethereum’s shortcomings to increase its market share in the Web3 space. With the addition of smart contract functionality in 2021, Cardano is among the most well-known cryptocurrencies.
The project has a solid developer team and has very constant upgrades. The most recent one, “Hydra,” could theoretically increase the transaction capacity of Cardano to a million transactions per second. Much higher than Ethereum’s 13. While that would make the Cardano blockchain very compelling due to higher fees on the Ethereum blockchain, there is much more to consider than just TPS.
First, Hydra will not increase Cardano’s TPS to one million on the main blockchain. It is a layer 2 scaling solution, of which Ethereum already has many. Second, Cardano processes around a tenth of what the Ethereum blockchain does every day, and increasing the blockchain’s capacity won’t equal success, as we’ve seen with projects like Solana (SOL-USD).
So why am I talking about Cardano in this list? The argument behind Cardano’s undervaluation lies in its marketing. During a crypto bull market, many crypto investors will invest in whatever project promises the most, and delivering those promises is a secondary priority. A good example is Cardano Africa, which aimed to transform Africa and lay the groundwork for millions of Africans to use Cardano as their day-to-day payment method. Unfortunately, the Cardano Africa website is no longer available after ADA’s selloff last year, but its clever marketing certainly drives much hype in the space.
Many companies are reporting a boom in their cloud storage segments, and this can spill over into blockchain storage projects. Filecoin (FIL-USD) is the largest of such projects and offers a lot of advantages over its centralized competitors. First, the project is peer-to-peer, which means there is no censorship or a central server. This also makes Filecoin have better uptime and security.
Second, Filecoin has lower costs than centralized servers, as users who dedicate their storage are paid with the FIL token. Overall, the advantages of a decentralized storage platform could make Filecoin surge on the back of a burgeoning cloud storage industry.
MixMarvel (MIX-USD) is a platform token representing the growth of MixMarvel’s ecosystem. It has a fixed circulation of 10 billion under its mature and relatively deflationary economic model.
The MIX token demonstrates high growth potential because of the gearing expansion of the MixMarvel ecosystem, well-known industry partnerships that stimulate the token liquidity, convenient trading on multiple centralized exchanges (CEXs) and decentralized exchanges (DEXs), as well as upcoming projects like MetaCene, a next-gen multi-chain MMORPG blockchain game, and DeHeroGame, a TCG blockchain game that MixMarvel community members largely anticipate.
Additionally, the MixMarvel brand is of high quality and stability with dedicated and experienced founders, active global users, and great potential in its niche market of the Web3 world. With Web3 games accelerating in popularity, MIX could be a multibagger during the next crypto bull run. Thus, it is among the undervalued cryptos to buy if you are looking for highly cyclical assets at their trough.
Ethereum is the crème de la crème of cryptocurrencies due to its utility and popularity. The cryptocurrency project is the driving force of Web3 innovation and hosts most non-fungible tokens traded using ETH. The blockchain is arguably the most robust due to its flexibility and developer friendliness and is only second to Bitcoin in terms of security.
No other cryptocurrency has as many smart contracts as Ethereum, and the Ethereum ecosystem hosts 761,000 ERC-20 tokens, generating significant demand for ETH. Moreover, the Ethereum network is being constantly upgraded with a focus on utility and security, while layer-2 solutions are remedying scalability issues.
“The Merge” upgrade also decreased issuance by 88%, which is another long-term catalyst that will keep ETH in demand. Therefore, Ethereum is the best choice among the undervalued cryptos due to its low downside risk and high upside prospects.
Most people are already aware of the arguments favoring Bitcoin’s long-term upside potential. But to summarize, BTC’s halving of mining rewards, combined with its popularity, is the most significant catalyst that causes it to surge every four years. The next halving in Mar. 2024 will reduce BTC rewards to 3.125. That will significantly boost Bitcoin’s value in the longer run.
Furthermore, Bitcoin might not be the fastest, but layer-2 solutions such as the Lightning Network can still make it one of the top payment methods if crypto ever becomes accepted by big-name retailers. Overall, it is a time-tested and reliable asset that is here to stay for decades to come—a must-buy crypto to have in your portfolio.
PAX Gold (PAXG-USD)
PAX Gold (PAXG-USD) is arguably the safest cryptocurrency. The cryptocurrency is pegged to gold and is not prone to flash crashes and selloffs in the crypto market. If you are looking for an asset that generates long-term returns and has minimal risk, PAXG is definitely among the top cryptos to buy.
As Coinmarketcap explains: “Each PAXG token is backed by a fraction of a piece of London Good Delivery gold bar, stored in Brink’s gold vaults, which is the approved storage company by the London Bullion Market Association.”
Of course, physical gold is far superior in terms of safety. But if you cannot properly store it or find a trustworthy seller, PAXG offers a straightforward way to buy gold without worrying about storage or authenticity.