Zilliqa, Ethereum and Solana - poised to SOAR in H2 2021. Investment Outlook.

By BBAMarketPerspectives | The Brave New After-World of Bitcoin | 8 Jul 2021

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2021 has been an interesting year thus far.

On the investment front, I would personally use the phrase “roti prata” to describe it. For Asians who are used to this colloquial term, it is basically employed to describe the situation where things get flipped around constantly. Some use it to describe how people back out on their word and change their position several times pertaining to an issue.

I’d like to venture out and use this on what we currently see in the markets right now.

In March 2021, we saw the sharp rise in bond yields, signifying that the economy was picking up that juncture, the risks were coming going off (hence people jumped out of bonds, leading to bond price drops and yields consequentially going up), and the rotation into cyclicals and value stocks take place. The market watched the Fed closely for dovish or hawkish leanings and for weeks, took alignment to whatever signal they felt the Fed was emitting. Those who took the signal early in October 2020 and took profits off the table probably felt justified when they saw sharp declines, because it would mean they will have the opportunity at buying in tech again when a low is realised.

But something else happened about two months later in May 2021. The bond yields started falling. The Fed made its announcement to only consider dealing with the interest rates a year or two later. The investors took that as an important signal and started buying back into tech slowly.

Coming into Tokyo Olympics and with the announcement of a barring of spectators, the narrative has now shifted again, with fear coming into the markets on whether or not the growth experienced can really be sustained or will uncertainty cause another setback and a sell-off.

Here is how I see things play out in the coming weeks.

Remember the key narrative lies with some important “truths” that belie the US stock market. One of which is the Fed’s role in ensuring that the market continues to function well. In the US, the market is seen as the reflection of the state of the economy. To a certain extent this has some truth in it. But this narrative has now become that if the markets are doing well, then the economy must be doing well.

We know that this is certainly NOT true. With jobs lost, the markets are still roaring. A sizeable percentage of unemployment is still present, albeit not a bad state to a point where the real economy is paralysed. It is just not ideal levels of employment. You will also see a lot of zombie companies that have been propped up because debt has been bought up and written off.

To cut the long story short, if something happens to the market, the Fed will intervene. And it has made it clear that is has unlimited power and means to do so (keeping interest rates low, continue bond buying, quantitative easing, you name it). If you hold the reserve currency of the world and there is value in other economies holding your dollars, there is a privilege that can be wielded up to a certain extent.

China cannot perform this and not risk its renminbi (yuan) being devalued. Japan, which is the world’s second largest bond market, cannot do this to the extent that the US is doing this, or the Japanese yen will crash.

What we will be seeing is that with bond yields now going low and possibly, entering into negative territory, those who are entering retirement and/or are shifting their assets into safe havens like bonds, will not like what they are getting. Their money will be eroded faster, because the interest rates will go up at some point and inflation will already be present. Remember, the Fed will only continue to "print" more US dollars, creating the debasement of the fiat currency. This is why asset prices will continue to climb upwards only and your purchasing power will keep going down. The millennial generation in its early 30s already has 30% lesser purchasing power than a Baby Boomer in his early 30s. Think about it.

The market will anticipate this and move into high growth stocks that include the tech ones. These are the ones that give you a 30% growth in stock price year-on-year, where the frontiers and future are exciting.

There will be a vacillating and minor oscillations back and forth to be expected. What I mean by this is that the situation of bond yields going back up and then coming down again a few times in a row should not come as a surprise. However, the main narrative will remain unchanged and you too, must remain steadfast with your decision to stick in the ones that give you the biggest growth.

I have shared some of the EXCITING frontiers and businesses that you need to look at in my previous articles and the research that I have done. So do take a look at those.

Don’t forget during the dot-com bubble burst, Amazon had a 90% correction for a short while. Today, it boasts a 212,482% (that’s right, a 6 figure percentage) rise from its inception!

What about crypto?

This is where the fun begins. Crypto began with Bitcoin’s narrative as an SOV or store of value. While critics disagree, the maxis will tell you otherwise. I am not here to defend this view. What I am going to do however, is to point out to you that if you are fixated on Bitcoin alone, you are going to miss out on MASSIVE OPPORTUNITIES in the crypto world.

Yes, institutional support has come into the Bitcoin space. Tesla, Square, we see banks taking it up. Sovereign Wealth Funds like Temasek have bought into it (https://vulcanpost.com/739613/temasek-holdings-said-to-be-buying-bitcoin/).

But I am bullish on several other cryptocurrencies because of their utility and I will list them here quickly and why I have picked these are winners in the world where everything seems to have a cult following and screaming “to the moon!”. Do note that it is an either (Bitcoin) / or (others). I am not a Bitcoin maxi. It is an "and". Both Bitcoin and other crypto need to flourish hand-in-hand.

Let's dive in.

Ethereum.

This is digital oil. The majority of other crypto and tokens are built on it. You have DeFi (decentralized finance), DApps (decentralized apps), you name it. Yes, its gas fees have become exhorbitant but its upcoming upgrade should resolve this. There is a reason why Goldman Sachs is bullish on it, you know?;) so follow the smart money.

Solana.

This seems to be the go-to for developers to build an ecosystem for decentralized finance DeFi. You already have exchanges on it and they are eating the banks for lunch, disintermediating processes. It will be a few years where we will really see how this takes off. Some prominent names behind Solana includes Sam Bankman-Fried. If you have not read up on him yet, please do so. He became a billionaire at 28 arbitraging Bitcoin between US and Japan. He founded FTX which is now 4th largest in crypto volume worldwide, after Binance, OKEx, and Huobi Global. It processes $8.5b worth of crypto.

Zilliqa.

This is the golden boy for Asia. Perhaps one of the most undervalued cryptocurrencies we have come across. It uses its own Scilla programme language, which is unique to it and solves the problems that Ethereum face with Solidity. On the utility front, YouTubers want in on its XCADEMY platform that is built on it. @KSI, @MrBeast and other prominent YouTubers are personally invested in it. Mintable which is also built on it, deals with NFTs. The Singapore Government has approved the XSGD stablecoin to be built on it. And you know when the Singapore Government is involved in something like this, it looks at the entire system thoroughly. DeFi is already in the works and it will take the unbanked in Asia by storm because of its penetration into the Asian markets at this juncture. Particularly, the Indonesians themselves are paying a high premium to hold Zilliqa!

Its Poly Network bridge is about to be completed and the tests have indicated that it is good to go. This will allow assets to be switched seamlessly with the Ethereum platform. Why would Ethereum folks want to port over? Simple. Gas fees and speed issues. Zilliqa does sharding and is 250 times faster than Ethereum. Gas fees? If you have been on Ethereum, you will feel the pain of it. But with Zilliqa, the costs are so minimal it makes perfect sense.

Remember, the crypto universe is meant to smoothen and create less friction and reduce pain points, not impose or create more. Zilliqa is the perfect bound version of what crypto users want from Ethereum but a version on steroids (literally) with the security of Bitcoin. You get the best of both worlds in Zilliqa.

At the moment, the crypto world is moving in a somewhat correlated fashion with Bitcoin, so attempting to diversify too much within it may not make much sense. But there are some that are outliers, like Solana, for its potential and its price that is rising faster than the rest of the useful tokens, and Zilliqa which has built a massive ecosystem and is aiming to come in as the best alternative to Ethereum. Crypto is still being traded like an equity and will still be treated that way until greater adoption leading to stability and less fluctuation comes into the system.

Remember we are still in its nascent stages and the rapid developments behooves us keeping a close watch on it, along with our skin in the game. Stay invested!

Yours,

Chief Editor

BBA Market Perspectives

*Not investment advice. Do your own due diligence before you invest!