Five Crypto Assets I’m Betting Big on in 2022

And five others I invested in for my 72-year old mother

Image: PixTeller

Our reasons are not prophets, when oft our fancies are — William Shakespeare

Hey Mom, you want to buy some crypto?

Over the holidays, I got my 72-year-old mother interested in crypto investing. The experience was illuminating to say the least. My mom is very money savvy, and very tech stupid (love you Mom!). With money, she is a prudent, careful investor. She favors real estate, and has done great in that space. In terms of fin-tech, she writes checks. She goes in-person to the bank. She needs written notes to check her email on a computer. And, now she also has a respectable bag of: Ethereum (ETH), Polkadot (DOT), Chainlink (LINK), Cardano (ADA), and Avalanche (AVAX).

As for me, I’m going on a slightly different path. Heading out of 2021, I was holding around a dozen different crypto assets. Outside my core investments, I had a few decently sized positions along with a few relatively small ones. I did alright with them, but for 2022, I decided to dump the lot. This year my investment focus is solely on my core assets: Sonar (PING), Near Protocol (NEAR), Terra (LUNA), Polygon (MATIC), and Binance Coin (BNB).

The future’s so bright, I gotta wear shades

Before I cover how I chose the assets for me (and my mom), let me first explain why I’m so bullish for 2022. I’ll start with a quote I love from Forbes in 2020:

“Two years from now, zcash is worth zero,” says Kyle Samani of the three-year-old privacy-focused cryptocurrency. Currently, zcash trades for $66

For those who don’t know, Kyle Samani is a managing partner with Multicoin Capital. I absolutely agree with Multicoin’s core thesis. However, Samani’s prediction in Forbes was also flat wrong. zCash is currently trading around $150 as of this writing. Point is, crypto predictions are worth about as much as the breath that birthed them.

Nevertheless, I still think there are huge reasons to be optimistic. First, there has been an enormous increase in mainstream crypto awareness. Starting in early 2021, there has been an explosion of information about crypto. And yet, only 16% of the U.S. population had bought, sold, or traded a crypto asset by the end of 2021.

The internet, is that thing still around?

For comparison, that is roughly the same household adoption rate the internet had in 1996. The early days of the commercial internet looked pretty silly. For instance, mainstream internet adoption still looked like this. Now, for those who don’t remember, in 1996 it also felt like everyone was talking about this crazy new thing called the internet.

But, much like crypto today, there was a fairly high technical barrier to getting connected. Companies like America Online (AOL) and Compuserve simplified the process. Refinements to user experience followed pretty quickly. Now almost 30 years on, getting online is no harder than setting up a TV. The increasing ease of use helped drive the explosive global adoption of internet connectivity. I think the same thing is going to happen with crypto. Of course, I could be wrong, but I (and Chainalysis) don’t think so.

The thing I think makes crypto adoption distinct from the way the internet developed is how quickly crypto is going global. It took almost 15 years for most of the world to catch up to the US in internet connectivity. Chainalysis’ methodolgy is a little wonky, but it makes the very important point that global crypto adoption is growing exponentially. If you look at Chainalysis’ data, it shows very different use cases for emerging markets. I’ll quote the report:

Many emerging markets face significant currency devaluation, driving residents to buy cryptocurrency on P2P platforms in order to preserve their savings. Others in these areas use cryptocurrency to carry out international transactions, either for individual remittances or for commercial use cases, such as purchasing goods to import and sell. Many emerging markets represented here limit the amount of the national currency that residents can move out of the country. Cryptocurrency gives those residents a way to circumvent those limits so that they can meet their financial needs.

Any of those use cases sound beneficial if the US economy tanks? Or if inflation keeps going through the roof? Or if the US imposes capital controls, or trade restrictions? Or the banks fail (again)? If the legacy financial system really does start to meltdown (again), how many people will just sit and watch their money go up in smoke when a global, decentralized, and largely autonomous monetary system is a few clicks away? Likewise, if there isn’t a financial calamity, and everything keeps humming along all hunky-dory, then what would stop crypto from growing?

That is generally why I am bullish on crypto. Massive upswing in awareness. Exponential global adoption, both institutionally, and in the global south. Very clear use cases in undeveloped and corrupt economies. And, those uses also translate well to conditions that might arise during a severe market crash in developed economies. And, if there’s not a crash, then there’s literally nothing standing in the way of growth. This is not even mentioning the surprisingly warm and fuzzy Congressional hearings just a few weeks back.

It’s all in the approach. Or, was that execution?

For 2022, I decided to change my investment approach a bit. About 60% of my investment portfolio is in a Blackrock ETF. The rest is in crypto. I generally use a kind of pseudo technical/fundamental analysis to guide my crypto investing. This year, I narrowed the focus to a small handful of projects. I realized over the holidays that betting on ‘use-case’ type projects was too finicky for me.

But, it also occurred to me that taking strong, confident positions in crypto ecosystems was better aligned with my investing style. The best crypto ecosystem analogy I can make is to operating systems and software. In this analogy, projects like Ethereum, Polkadot, or Near are like operating systems. All the projects that live on those chains are like software.

There are tons of different PC and mobile operating systems (OS). There isn’t just one ‘main’ operating system to choose from. Likewise, I believe there is plenty of room for the various crypto ecosystems to develop and thrive. I can envision a future where Ethereum has a market share like Windows, and Solana has a market share like Linux, and Near has a market share like Apple…or something like that.

Of course, some of these chains might end up like Blackberry OS, or Palm OS did. Nevertheless, people that invested early in Blackberry and Palm also made truck-tons of money. We’re still a few years away from figuring out which of the various crypto ecosystems will become foundational. Much like operating systems, I think the various blockchains will favor certain types of uses, and users over others.

Think of it like this, if you’re a PC gamer, about 98% use Windows. But if you’re a software developer? Windows has about 45%, Mac OS 27%, and Linux is right behind at 26%. Mobile user? Android and Apple iOS at roughly 75% to 25% respectively. I think you get the picture. Point I’m making is, if you had invested in Blackberry, Palm, Microsoft, Apple and Nokia in 1996 you’d probably be reading this on your private jet.

Now, think how well you might be doing if you had tried to pick which software, games, and/or apps would be winners or losers. That’s a tougher proposition. I know the analogy isn’t perfect, but I hope it gets the idea across. The point is, much like the various blockchains being developed today, most of the operating systems I’ve discussed all worked just fine.

And, much like blockchains today, each of these operating systems had strengths and weaknesses. It took a decade or so to really start figuring out the best solutions. But you probably would have done quite well if you had invested in any of them along the way. I think the same thing will be true for the various blockchain projects, whether it’s Solana, Ethereum, Cardano, or something else.

Boomers, crypto, and puppies

That’s why I recommended my mom invest in Ethereum, Polkadot, Chainlink, Cardano, and Avalanche. I basically chose those projects like someone might pick puppies out of a litter. Right now, these projects are among the biggest, healthiest looking ones out there. They each have their quirks and idiosyncrasies, but for the most part, they look pretty healthy. Of course, like a healthy looking puppy, Cardano or Ethereum (or whatever) might get sick and die anyway.

I still think they’re relatively safe bets. I did very much warn my mom these projects could absolutely tank to zero. I don’t think they will, but I also haven’t figured out how to predict the future. I don’t hold them because I think they have a lower growth potential than the projects I’m focusing on. But, I also think they carry lower risk.

As for my bag in 2022, I’m going with Sonar, NEAR, Polygon, Luna, and BNB. To be fair, Sonar is more like ‘software’ rather than a blockchain ecosystem. It’s just a project I strongly believe in. NEAR and Polygon feel kind of like the iOS and Android of blockchains. The on-boarding process for NEAR developers is clean, simple, and straightforward. The network is fast, and there are solid staking rewards to be had.

Polygon is bigger, a little clunkier, and a little more ‘Wild West’. But it generally works, and it’s getting bigger everyday. I could easily see Polygon grabbing as much market share as Solana in the next year. As for Luna, I think their Terra stable coin solution is going to absolutely blow up. It already is really. There are also some solid staking opportunities there as well.

Lastly with BNB, I’ve bought a lot of Binance Smart Chain projects. As such, I’ve used the chain pretty extensively. It’s not the cheapest or the fastest, but it’s definitely reasonable in both regards. The space is extensively developed, albeit with a bunch of garbage in the mix. I still think it’s a legitimate competitor to Ethereum though and I’m bullish on it’s future.

One of the neat things about this whole exercise is this time next year, I’ll get to see how well my investment advice played out. Which gave a better return, the ‘conservative’ crypto investing advice I gave my mom, or my ‘gut-instinct’ investment for myself? I hope we’re both up a lot! We might also both be down a bunch as well. Either way, I think it’s going to be an exciting year. Plus, now I can talk with my mom about crypto and her eyes won’t immediately glaze over.

I know there’s a ton of FUD out there right now. Is the Fed going to raise rates? Will the stock market crash? Will Bitcoin collapse? There are warning signs for sure. There are also tons of reasons to be optimistic. This year I am uncharacteristically bullish. There’s just something in the air that makes me think 2022 is going to be great for crypto. I’m looking forward to revisiting this investing experiment next year and seeing if I was right. Fingers crossed!

What do you think about my selections? Feel free to leave a comment, I’m interested to hear what you think.

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