This crypto gained nearly 7,000% in 2021. Should you buy?
The Fantom smart contract cryptocurrency (FTM) has gained nearly 7,000% since the start of this year – even more than the popular crypto Dogecoin (DOGE). Fantom hit an all-time high of $ 1.93 on September 9, according to data from CoinMarketCap. At this point, if you had bought $ 1,000 from Fantom on January 1, it would have been worth almost $ 100,000.
Even after this week’s drop, Fantom’s price is still up over 350% since the start of August alone, as investors crowd into various Ethereum (ETH) alternatives.
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What is behind Fantom’s earnings
Here are two key drivers of Fantom’s spectacular growth.
1. Smart contracts
Fantom is one of several cryptocurrencies with smart contract capabilities. Smart contracts are tiny pieces of self-executing code that live on the blockchain and allow it to run programs and applications.
Smart contracts are crucial for the burgeoning decentralized finance (DeFi) industry. DeFi is an umbrella term for a number of applications that eliminate intermediaries (banks) from financial transactions. And smart contracts are the not-so-secret sauce in DeFi.
They can be programmed to run automatically when certain conditions are met – for example, an insurance policy can pay off without anyone needing to make a claim. Or a loan can repay the collateral automatically as soon as the loan balance is paid off.
Another booming trend fueled by smart contracts is non-fungible tokens (NFTs). Authorship, ownership, and copyright information is built into these digital collectibles. From cute CryptoKitties and Degenerate Apes to million dollar artwork and sports trading cards, NFTs are taking the world by storm.
First come Ethereum is still by far the biggest smart contract crypto. But it’s relatively slow and struggles with network congestion and high fees. As a result, a number of newer, faster, and cheaper cryptos like Fantom are competing for market share.
2. Fireblocks and other partnerships
Fantom made several important announcements this year – most recently a partnership with the international digital asset platform Fireblocks. Fireblocks serves over 200 financial institutions and secures over $ 400 billion in digital assets.
The Coinbase wallet listed as FTM this month, although the token is not available on the Coinbase exchange. FTM is available from several major cryptocurrency exchanges.
It also partners with several large crypto projects like Chainlink (LINK) and The Graph (GRT). Additionally, he has real world projects underway in Pakistan, Tajikistan, and Afghanistan.
Should we buy?
Cryptocurrency prices are notoriously volatile and difficult to predict, and it’s always risky to buy a coin right after hitting an all-time high, like Fantom did last week.
There are different trading strategies you can use to balance this risk – for example, buying a small amount at a set time each week or month rather than a large amount all at once.
Ultimately, the best way to protect yourself against volatility is to invest only the money that you can afford to lose and buy over the long term. Base your investment decision on how you think the coin will perform over the next five to 10 years. This way, if its value suddenly drops, you can wait for the drop to end.
Research the fundamentals of the coin, from its management team to its roadmap for the future. Read Fantom’s white paper and compare it to other digital currencies in the same space. Our recent article on Fantom would be a good place to start.
There are a lot of things in the crypto world that we can’t predict, which makes it all the more important to be diligent with the things we can control.
Threats to Fantom’s Price
As you can see above, Fantom is a solid cryptocurrency project with a lot of potential. However, here are a few factors that could tip FTM:
- DeFi regulation: We are seeing an increase in the regulation of crypto around the world, and the US authorities are particularly concerned about DeFi. The concern is that these products offer banking-like services without the protections that a bank would offer. As a result, we will almost certainly see some sort of crackdown on DeFri in the future. This could have a ripple effect on smart contract platforms.
- His projects in Afghanistan: Several of Fantom’s actual projects are based in Afghanistan, which is now back under Taliban control. It’s unclear what impact the disruption will have on Fantom’s work there, but it’s fair to assume there will be some changes.
- Technical snags: Fantom’s technology is different from other blockchains in that its model allows simultaneous processing of transactions. As the project grows and attracts new users, we will have a better idea of its scalability.
- Wider crypto market: The crypto industry as a whole has taken big leaps this month, leading some analysts to warn of a looming drop similar to the one we saw in May. As the largest and oldest cryptocurrency, Bitcoin (BTC) tends to have a disproportionate influence on the rest of the market, which could also affect a smaller coin like Fantom.
Overall, there are solid reasons for Fantom’s growth this year, but it’s still an incredible price jump. The token can still grow in the long run, but if you buy with the expectation of another 7,000% increase, you will likely be disappointed.