Compared with high-flying cryptocurrencies, investors appear to think that stocks couldn’t get any more boring.
Price action in the S&P 500 has been remarkably unremarkable lately, as trading volume has been under its three-month average in every session since August 11, according to Yahoo Finance data reviewed by Insider. The index has changed little since then, up about 0.1%.
Meanwhile, bitcoin (BTC) has been much more fun to watch than stocks because of its volatility. According to Yahoo Finance, since August 11, bitcoin’s price has surged from a low of $43,861.45 all the way up to $52,700.94 on September 5 — a 20% increase — before plummeting once more to $43,591.32 on September 13.
But even the biggest crypto’s price swings pale in comparison to those of smaller altcoins, which commonly experience double- or even triple-digit price jumps or crashes. For instance, the price of the hot new altcoin solana is up over 255% in the past month.
This casinolike action scares away many conservative investors who see investing in cryptocurrencies as nothing more than gambling. Others, like Nikolaos Panigirtzoglou, a global-market strategist at JPMorgan, say the recent run-up in altcoin prices is part of a hype cycle that precedes a dramatic decline.
But William Noble, the chief technical analyst at the crypto-data and -research firm Token Metrics, takes a different view.
“Everyone thinks that crypto is about speculation,” Noble said in a recent interview with Insider. “The hype around NFTs gets all the headlines. Meanwhile, we tell people that altcoins are about investing in the future of tech.”
Risk-averse money managers who avoid cryptos may be taking a bigger risk than those who have embraced the space, Noble said. JP Lee, the exchange-traded-fund product manager at VanEck, agreed — he told Insider that when it came to cryptocurrencies, both individuals and institutions must either “get on board or be left behind.”
“The next Nasdaq 100 is being built inside the altcoin universe,” Noble said. “And a lot of it is going to be built inside ethereum and probably other platforms like solana. So the conclusion is, bitcoin and crypto is the future of money; altcoins are the future of technology and also Web 3 — the next generation and evolution of the internet.”
Cryptos are the backbone of this “Web 3,” or the next iteration of the internet. Some, like Noble, say that Web 3 can change the world by removing central authorities like governments and intermediaries like banks from business and finance — an idea commonly referred to as decentralized finance, or DeFi.
“It’s the internet and banking without Silicon Valley and Wall Street,” Noble said.
Wall Street is unlikely to go the way of the dinosaur and can maintain some relevance by helping its clients access the DeFi universe, which is a challenge for investors who aren’t tech-savvy, and by trading bitcoin, Noble said.
Crypto bulls like Noble see the coming revolution as a means of empowering individuals and protecting them against powers like central banks, which continue to increase the global money supply. Bitcoin, in particular, which has a fixed supply, is viewed by many as an inflation hedge.
“If you own crypto and use DeFi, that’s how the common man protects themselves,” Noble said, referring to inflation. “Web 3 is power to the people. And given the environment, people are going to need that power.”
Opportunities in the crypto market
September has proved a lackluster month for stocks so far, and Noble said he expected cryptos to follow a similar path. The two are correlated, Noble said, adding that he expected cryptos to mirror seasonal stock trends by rising in October and then in December on a “Santa rally.”
Noble is bullish on bitcoin and said investors should not underestimate it. He said he expected the token to hit $100,000 by year-end. There’s no reason it should fall below $40,000, he added.
But Noble is an even bigger believer in ethereum and its native ether token (ETH), given that its network is the backbone for many smaller altcoins. Ether can rise to $6,000 or $12,000, depending on how low the dollar falls and how bitcoin trades, Noble said.
“Right now, it’s all the rage to literally ‘moon’ anything that’s perceived as an ethereum alternative,” Noble said, borrowing the lexicon of small-time traders. “After everyone gets done buying the ‘ethereum killers,’ there are several facts that are going to come to light.”
The facts about ethereum that make up Noble’s bull case are as follows: First, the token “is being drained off of exchanges at an accelerated pace” that he called “almost breathtaking.” Second, the supply of ethereum is being “drained every day” by a deflationary protocol called EIP 1559 that lowers the number of ether tokens in circulation. Simple supply and demand suggests that with fewer ethereum tokens on the market, those that remain are worth more — and their worth is enhanced by the sheer number of apps being built on the ethereum network.
But there are opportunities in the crypto market besides ethereum and bitcoin.
Below are three little-known altcoins that Noble said had big upside potential, along with their ticker, market capitalization, and Noble’s thesis for each.
Market cap: $48.8 million
Thesis: “This is an exchange that differentiates itself in that they’ve developed a mechanism for very low slippage,” Noble said. “When you put an order into a decentralized exchange, it’s sort of nebulous as to the price you get. It’s very reminiscent of agricultural futures back in the ’70s and ’80s.”
Noble added: “AirSwap does an incredibly sophisticated job of solving the problem of trade execution, and it actually manages to do it on the ethereum network.”
Market cap: $74.7 million
Thesis: “It’s very complicated, but it’s backed by some of the big venture capitalists out there. It offers a fair and transparent set of rules for ordering transactions within each block on ethereum,” Noble said. “Lately, we’re seeing more and more malicious users taking advantage of the way ethereum works, so eden network protects ethereum traders from what they call ‘miner extractable value’ and ‘arbitrary reordering.'”
Noble added that some think “that this could be the next big thing. It’s tough to understand, but it scores very high with us.”
3. Immutable x
Market cap: N/A
Thesis: “Immutable x gets you into the NFT space. It’s an ethereum-based Layer 2 solution,” Noble said. “That means this allows you to do things with NFTs on the ethereum network, but it’s sort of what they call a Layer 2, which means it runs under the ethereum network without the gas fees.”
Noble added: “The bottom line is, it allows for NFT transactions on ethereum with lower gas fees, and it has impressive backers like Coinbase and Galaxy Digital.”