When it comes to near-term cryptocurrencies, forecasts remain murky. Further monetary tightening by the Federal Reserve could put more pressure on this “risky” asset class. But if you think the crypto will survive today’s challenges and continue to grow, a more speculative token you might want to consider buying is Loop (LRC-USD).
What is Loopring? It is the native token of the Ethereum (ETH-USD) Layer 2 scalability solution of the same name. This network allows low-cost, noncustodial decentralized exchanges (DEXs) to operate on Ethereum. Yes, it’s a bit long, but it’s important to note all of this. The network of this token is one with a lot of utility.
It’s easy to make the mistake that this is a “flavor of the month” crypto with its links to GameStop (NYSE:EMG). In March, the video game retailer announced plans to create a non-fungible token (NFT) marketplace, using Loopring’s technology to run it. This led to a short-lived increase in the price of LRC tokens.
Granted, with the current challenges in the NFT space, GameStop’s NFT business looks less like a sure thing. However, the future of Loopring does not entirely depend on GameStop. Like my InvestorPlace colleague Omor Ibne Ehsan discussed in April he could see increased adoption by Web 3.0 developers. This is due to the Ethereum connection. Developers want to run their apps on it, but aren’t too fond of its high fees.
This scalability solution helps keep costs low. Even once Ethereum’s scalability increases after its 2.0 upgrades, solutions like Loopring won’t go away. That said, when I talk about the bullish case for this token, I mean the long term, not the short term.
In the short term, the crypto is likely to remain volatile. LRC is no exception. As a less liquid crypto, it will see even wilder fluctuations than ETH and Bitcoin (BTC-USD). It is also far from certain that Ethereum, and in turn Loopring, will continue to see strong increases in usage in the future. The Web 3.0 revolution may turn out to be more hype than substance. Other platforms could take market share from Ethereum, limiting future growth.
Yet its high utility provides a more substantial reason to buy/hold it. Compare that to memecoins like shiba inus (SHIB-USD), where the hype is the only thing that can really move it higher. If you are optimistic about the future of crypto and looking for high risk/high potential comeback games, Loopring belongs at the top of your watch list.
At the date of publication, Thomas Niel held long positions in BTC-USD and ETH-USD. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.