Most Undervalued Crypto (2022)

MORITZ PUTZHAMMER

13 April 202211 min read

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If there is one thing everyone knows about cryptocurrencies, it’s that they are incredibly volatile. Inspiring stories of people making millions during a market upswing make headlines about as often as the dark tragedies of people losing everything during downswings. And with so many cryptocurrencies from which to choose, picking the most undervalued ones only complicates matters.

It is understandably tough to assign value to a cryptocurrency because there is no physical product or centralized organizing body that investors can look to for positive indicators. However, there are many concrete ways that crypto acquires value, and these include things like technological developments, supply and demand, celebrity endorsements, whales, and competition, among other things.

In today’s article, we’re going to focus on the most undervalued cryptocurrencies in 2022 and how to spot them.

The 7 Most Undervalued Cryptos to Buy

The cryptocurrency market took a big hit in early 2022 as inflation, global market uncertainty over crypto risks, and the Russian invasion of Ukraine pushed crypto price thresholds to new lows. What does this mean for you as an investor? Well, there’s no better time to invest, as the next crypto bull run might be right around the corner. FOMO, anyone?

Below are seven of the most undervalued cryptocurrencies in 2022.

Cardano (ADA)

Cardano is a proof-of-stake blockchain platform that was launched in 2017. It’s designed to be secure enough to protect large quantities of data, scalable enough to accommodate global systems, and robust enough to support foundational changes.

In terms of tech developments, Cardano was specifically created to solve many of the problems Ethereum was facing (and still is) due to its proof-of-work consensus model. In fact, Cardano is regularly touted as an Ethereum killer. The platform was built using a peer-reviewed methodology and consistently ranks high among crypto projects with the highest developer activity, which makes it a strong competitor for projects like Ethereum, Cosmos, and Polkadot.

Cardano has also received some celebrity endorsements. For example, in February 2021, Gene Simmons announced that he had bought $300,000 worth of Cardano’s native currency, ADA. In his tweet announcing the purchase, Simmons stated that he invested in Cardano because “it’s pennies compared to my other holdings like Bitcoin” and that he “believes everyone should be able to afford cryptocurrency.” Simmons has reportedly invested in Bitcoin, Ethereum, and Litecoin.

A recent data analysis performed by crypto-analytics platform Santiment concluded that ADA is undervalued based on its performance and growth over the past year. Santiment analyzed Cardano’s Market Value to Realized Value (MVRV) indicator to reach that conclusion.

According to market data, ADA managed to reach an all-time high of $3.10 in September 2021, but it failed to maintain that upward momentum. 2022 started rough for ADA as its value slowly tumbled to less than $1. It’s a great time to buy!

Ripple (XRP)

Ripple is a digital payment network and cryptocurrency that was first released in 2012. The network is similar to the SWIFT system used by banks and financial institutions to initiate global money transfers. The concept behind Ripple is to create a trusted agent that can facilitate fast and extremely cheap exchanges for fiat currencies, cryptocurrencies, and even commodities like gold.

Ripple’s use case was novel when it was originally launched, and, while other blockchain projects offering digital payment solutions have emerged over the years, it still remains at the forefront. Endorsements by a range of celebrities, including Ashton Kutcher (who donated $4million in XRP to charity), Madonna (who partnered with Ripple to fundraise for orphans in Malawi), Bill Clinton (who gave a keynote address at a Ripple conference), and Snoop Dogg (Shizzle my Ripple at a NYC event) have all helped Ripple’s public image.

The native currency, XRP, functions as the bridge that enables transfers on the Ripple network. While the system is primarily intended to be used by banks, anyone is free to speculate on the price of XRP. In fact, we praised Ripple back in 2021 in our price prediction and it’s landed on our radar of undervalued coins once again.

As of April 2022, the value of one XRP is approximately $0.81, which is significantly less than its all-time high in 2021 of $1.79. It’s hard to say how long this bullish sentiment will continue.

Polygon (MATIC)

Polygon (formerly known as Matic Network) is a platform designed for Ethereum scaling and infrastructure development that bills itself as “Ethereum’s internet of blockchains”—that is, a multi-chain ecosystem for Ethereum-compatible blockchains.

Ethereum in its current form has some serious limitations. As the most popular hub for decentralized finance (DeFi) and smart contract development, it suffers from serious network congestion problems due to high user demand.

Polygon’s core component is the Polygon SDK, which is a modular framework that can be used to easily deploy and configure custom blockchains. It includes governance and consensus modules as well as a variety of virtual machine implementations and execution environments.

The project has caught the interest of a few notable crypto investors, including billionaire entrepreneur Mark Cuban, who reportedly gave a “sizable investment” to the India-based  blockchain company in May 2021.

MATIC’s value rose to incredible highs in 2021, reaching an all-time high of $2.92 in December 2021. Its value has dropped by more than half that as of April 2022, reaching $1.65. Currently, most forecasts regarding MATIC’s future value are bullish. However, many experts believe the token could potentially triple in value by 2024.

Tezos (XTZ)

Tezos is a proof-of-stake blockchain network with smart contract support that was launched in 2014. It features its own native cryptocurrency called XTZ, which is used for staking, governance, and payment of transaction fees. The token was launched following a very successful initial coin offering (ICO) in 2017 that raised the crypto equivalent of $232 million.

The project was mired with controversy in 2018, which resulted in lawsuits from ICO investors as well as a complete board replacement at the Tezos Foundation. These events had a big impact on the market value of XTZ, and it wasn’t until 2020 when the Tezos Foundation finally settled all of its lawsuits that the project started to regain the trust of investors.

Tezos doesn’t have a lot of notable endorsements, likely because of its complicated history, but John McAfee did tweet “XTZ is the bomb” in August 2019. No other celebrity or institutional investor has publicly endorsed the project.

Today, Tezos is a robust platform with decentralized governance and an active community of stakers who regularly vote on amendments that improve the network. Even though it might be lagging behind its competitors, the project appears to have carved a niche for itself in the NFT space, and its future prospects are bright.

2021 was a good year for XTZ. Its value rose to an all-time high of $9.12 in October. As of April 2022, Tezos has lost more than 65% of its value from October 2021 because of overall market drawback.

Polkadot (DOT)

Polkadot functions as a bridge that connects blockchains, allowing data and value to be transferred across previously incompatible networks. It was founded by Gavin Wood, who was the co-founder of Ethereum alongside Vitalik Buterin. Wood also played an integral role in the development of the Solidity programming language, which is used for implementing smart contracts by various blockchain platforms, including Ethereum.

Many experts believe Polakdot is undervalued largely because the project’s technical innovations may be tough for the average investor to grasp. In simple terms, Polkadot is a blockchain that helps cryptocurrencies talk to each other. It is the “Internet of Blockchains.”

The base network is a relay chain that connects other individual chains. It supports so-called “parachains,” which are essentially unique individual blockchains that run parallel to the main relay chain. Parachains make it simple for developers to deploy blockchain apps with high throughput and traffic without needing to build a solo blockchain.

No notable celebrities or crypto whales have endorsed Polkadot, but DOT experienced a huge surge of interest in 2021 when it reached an all-time high of $54.98 in November. However, like Tezos, it has also lost just over 65% of its value as of April 2022. The value of one DOT token reached less than $20.

Enjin (ENJ)

Enjin Coin (ENJ) is the native cryptocurrency of Enjin, a Singapore-based company that has launched several blockchain projects, including a developer platform, marketplace, and smart wallet.

Enjin’s goal is to enable developers to create and manage virtual assets on Ethereum. It has released software development kits (SDKs) that make it easy for devs to create digital assets on Ethereum and integrate them into apps and games.

ENJ coins, which are ERC-20 tokens that were first launched in 2017, are central for managing assets created on Enjin, and every asset created is assigned a value in ENJ. The tokens function as the currency used to buy, sell, and trade assets via the Enjin wallet.

While Enjin doesn’t appear to have any big celebrity endorsements, the project did announce a partnership with Samsung in March 2021 to enable support for ENJ in the Samsung Galaxy S10. The announcement led to a significant surge in the market price of ENJ.

Like many altcoins, 2021 was a good year for ENJ. The value of one token managed to reach an all-time high of $4.82 in November 2021. It wasn’t able to ride that uptrend into 2022. As of April 2022, ENJ has lost over 65% of its value from November in the previous year, and tokens are trading for just over $1. The value of ENJ coins may appreciate if the project’s developers can successfully complete their timeline objectives.

Fantom (FTM)

Fantom is a unique blockchain that uses an asynchronous Byzantine Fault Tolerance (aBFT) consensus mechanism (trying saying that five times in a row) to validate transactions on a simultaneous basis. The aBFT consensus tackles the security, scalability, and decentralization trilemma that famously plagues blockchain development.

Fantom’s fast transaction speeds and high-throughput potential have made it a popular platform for developing decentralized finance (DeFi) projects. It has announced partnerships with numerous venture capital firms, including 8Decimal, Arrington XRP Capital, BlackEdge Capital, Bibox, and more.

Use soared in 2021 with Fantom wallet addresses increasing from only 5,000 at the beginning of the year to more than 1.5 million by the end of 2021. This surge in use naturally translated into more value for Fantom (FTM), which reached an all-time high of $3.46 in October 2021. However, FTM hasn’t been able to maintain its upward trajectory thanks to the bear market. Its value has dropped 65% (noticing a pattern here?) to approximately $1 as of April 2022.

Still, Fantom is doing reasonably well when compared to its competitors. The currency appears to be undervalued when you compare its Total Value Locked (TVL) to its market capitalization. According to Defi Llama, FTM’s TLV is $5.94 billion as of April 2022, which is almost double its market cap of $2.95 billion. Surging use and increasing interest from investors may help push its value up in 2022 and beyond.

How to Identify the Most Undervalued Crypto

The value of any currency is primarily determined by its supply and demand. For example, the value of the U.S. dollar can be determined by looking at the number of dollars held in foreign exchange reserves—the more dollars foreign governments hold, the scarcer the supply, and the greater its value.

The mechanisms that determine the value of cryptocurrencies (whether they’re undervalued, overvalued, or just about right) are actually similar. Just like the U.S. dollar, a cryptocurrency’s value is determined primarily by supply and demand and a few other factors, which we will take a look at below.

Crypto Supply and Demand

The supply of a cryptocurrency and the demand for that supply is fundamental to determining an asset’s price. A scarce digital asset is likely to have much greater value than something that is widely available.

We can illustrate this by looking at the values of Bitcoin and Dogecoin. Bitcoin’s supply is capped at 21 million coins. New coins are minted at a fixed rate that is halved every four years. The halving event has become a highly anticipated event because every time Bitcoin has halved, the number of newly minted coins has corresponded with a significant price increase as it indicates a reduction in supply. For example, the first halving in 2012 saw an increase in the price of Bitcoin from $12 to approximately $964 one year later.

On the other hand, Dogecoin has an unlimited supply because it is a meme currency that was never meant to function as a serious investment. New coins are minted at a rate of 10,000 per minute, which is why there are over 130 billion DOGE in circulation in 2022.

Crypto Competition

The early days of cryptocurrency had very few competitors in the space, and that helped Bitcoin carve out a niche for itself that makes up more than half the crypto market by market capitalization. However, times are changing, and now there are over 18,000 cryptocurrencies on the market all vying for attention.

New coins are launched every day as the barrier to entry is relatively low. However, creating a viable and successful project also requires building a network of users for that project. A project with a useful application can quickly build a network, especially if it improves upon a limitation of existing competition. If a new competitor gains steam, it takes value from its competition, sending the price of the incumbent down as its price moves up.

Crypto Tech Developments

New tech developments can have a big impact on the value of cryptocurrencies. Many gain value as a result of improvements to existing infrastructure. For example, hard and soft forks often create buzz around a coin, altering the market’s perception of value.

However, it’s important to point out that tech developments can sometimes have the opposite effect. For example, in August 2021 the value of Cardano (ADA) surged approximately 22% in anticipation of a hard fork that would lead to a smart contract update. The hard fork received a lukewarm reception and ended up having very little impact on the value of ADA. In the aftermath of the hard fork, the value of ADA dropped 10%.

Crypto Celebrity Endorsements

Celebrity endorsements can have a huge impact on the value of a cryptocurrency. In fact, countless A-list celebrities have gone crypto. Billionaires like Elon Musk and Mark Cuban and celebrities like Snoop Dogg, Reese Witherspoon, Bill Gates, Paris Hilton, and Kanye West (just to name a few) are all crypto investors.

The rise of Dogecoin in 2021 is a great example of celebrity endorsement in action. The coin itself was created purely as a meme that wasn’t meant to be taken seriously, but its value jumped significantly following a series of tweets by Elon Musk. In December 2020, Musk tweeted out, “One Word: Doge,” and that caused the value of Dogecoin to rise by 20%. BOOM.

A few months later in February 2021, DOGE’s value rose by almost 40% after Musk called it “the people’s crypto” on Twitter. Musk continued to promote Dogecoin, which significantly boosted the coin’s value in 2021. In January 2022, the billionaire announced that DOGE could be used to buy Tesla merchandise, which caused its value to increase by 15%. By that point, the meme coin’s value had soared over 5,859% over the past 12 months, according to data from Coinbase.

Of course, the hype for DOGE can’t really last forever due to how it is designed. Dogecoin has an uncapped market supply and there is no limit to the amount of DOGE that can be created via mining, which means the coin is highly inflationary. Millions of new Dogecoins are minted every day, making it impossible for speculative price gains to stick over time.

Crypto Whales

Celebrities aren’t the only people with the power to shake up the crypto market. The majority of crypto whales—investors who hold a large amount of a particular cryptocurrency—are actually not celebrities.

Massive purchases by crypto whales can have a significant impact on the price of a cryptocurrency. A whale can artificially inflate the value of a cryptocurrency by placing huge orders, forcing bidders to raise their bid price. The sudden price increase creates fear of missing out among smaller investors and helps stimulate interest in a cryptocurrency.

Final Thoughts on the Most Undervalued Crypto

No one can say with absolute certainty what direction the market will trend in 2022, but investing in crypto is always a worthwhile venture. The seven cryptocurrencies discussed in this guide are among the best to buy at their current bargain prices. They have the potential to gain momentum thanks to their underlying technology and noteworthy endorsements, which may translate to great profits beyond 2022.

Smart crypto investing is largely a waiting game. The bearish conditions the crypto market experienced during the first quarter of 2022 is nothing compared to the bloodbath investors weathered in 2018. It may even be a boon for newbies looking for new investment options and veterans who want to add to their existing portfolio.

As seasoned investors like to say—buy the dips!