May’s crypto crash has wiped away trillions in market value from the industry. BitTorrent (CCC:BTT-USD), the native crypto to the eponymous peer-to-peer file sharing platform, has dropped roughly 50.6% of its value this month.
Moreover, prior to this month, its year-to-date gains were in excess of 2,400%. With the bulls expecting BTT to break past the penny barrier within the next couple of years, it would be prudent to open up a small portfolio in the asset.
For years, BitTorrent had failed to monetize its incredibly popular service. However, its acquisition by the Tron Foundation pushed it in a new direction which introduced crypto of the same name to incentivize the participants.
The coin is essentially for users who need premium services from the platform, including faster upload and download speeds.
BTT’s price performance has been spectacular in the past year, but it remains a highly volatile investment. Hence, it would be wise to treat the dip in its price as an opportunity to open up a small position to rake in some short-term gains.
Long Term Growth Runway
With a meteoric rise in crypto prices and multiple flash crashes in the past year, cryptocurrencies have lived up to their billing as highly volatile investments. However, the sector has come of age during the pandemic, and it is now being treated as a viable investment option by the who’s who of the investment world.
One of the core reasons for this step-change has been a marked increase in institutional investment.
Several big names in the investment world have gobbled up Bitcoin (CCC:BTC-USD), which includes investment banks, billionaires, prominent tech figures, and other entities. Major corporations are developing tools to manage their actions in space.
Former critics such as JP Morgan (NYSE:JPM) believe that Bitcoin has a bright future ahead. It also is being accepted by mainstream payment platforms such as PayPal (NASDAQ:PYPL).
Several other cryptocurrencies apart from Bitcoin have caught the attention of mainstream investors. While it’s tough to see how altcoins such as BitTorrent could ever be a hit with institutional investors, the platform gained a lot of notoriety by moving the needle for the piracy industry.
Its makers didn’t intend for the platform to become a pirate ship when they built it in 2003. However, BitTorrent has always been known for exchanging pirated content with its users, which perhaps will not change anytime soon. Hence, it’s tough for mainstream investors to think about investing in BTT, considering its questionable reputation.
What to Do With BitTorrent
BitTorrent’s shady past and its volatility are two reasons that should probably dissuade any trader from investing in BTT. However, as my colleague David Moadel wrote in his article, “none of this will matter if there’s a broad-based cryptocurrency rally.”
BitTorrent’s price skyrocketed earlier this year in the absence of any company-specific news.
It’s not a coincidence that the more famous coins all rallied at the same time. All it would probably take is a tweet from Elon Musk or support from Reddit’s forums to kickstart another rally.
Therefore, the bulls are right to assume that BTT could potentially break the $1 barrier soon. However, does that make a BitTorrent a long-term crypto-play? So far, it has shown nothing to suggest that it has real-world utility apart from facilitating its users. Hence, allocating a tiny portion of your portfolio to BTT should be the best approach at this time.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
View more information: https://investorplace.com/2021/06/bittorrent-is-a-great-short-term-play-regardless-of-its-reputation/