Scott Melker, “The Wolf of All Streets”
- Scott Melker has been investing in crypto since 2016, focusing on long-term projects.
- He’s optimistic about Layer 1 blockchains that can compete with Ethereum and enable smart contracts.
- He believes that each platform will specialize in a niche while working with other blockchains.
- Check out Insider’s business page for more stories.
Altcoin season seems to be in play as some cryptocurrencies like Ether (ETH) hit their all-time highs while others like Cardano (ADA) hit new highs.
Price peaks create enthusiasm and often attract new people to the crypto space. The frenzy creates a rush of excitement as first time investors try to figure out where to toss their money and take positions.
But those who have lived through a few crypto cycles know they don’t need to get caught up in the FOMO. Scott Melker has been investing in crypto since 2016 and now has a podcast called “The Wolf of All Streets,” a nickname he bears. He is also the author of The Wolf Den newsletter. Melker plays the cycles, but knows how to reduce risks.
“I believe that investors in cryptocurrencies should generally have 70% of their portfolios and investments that they rarely touch in the long term [investments], 15% in cash and 15% for trading and investing in smaller capitalizations and riskier projects, ”said Melker. “Even if they all explode at the same time, you really only risk 15%.”
For Melker, that 70% consists of Bitcoin and Ethereum, while the rest of his portfolio contains a mix of other digital assets. But Melker is also a long-term holder of new projects. That’s why he’s optimistic about cryptos tied to blockchains with a strong use case. So he takes his winnings and invests them in riskier bets.
“I believe if you are patient and willing to endure the volatility, investing in these assets is now the biggest upside opportunity we will see in our generation,” said Melker.
The widespread term for investors who buy and hold their positions for the long term and regardless of price is Hodler. It is an acronym that refers to clinging to dear life.
In an interview with Insider, Melker shared six altcoins that he is optimistic about and explained why he believes they have the ability to stay long-term.
Melker says once you’ve bought bitcoin, the next crypto should be Ethereum, especially after the recent EIP-1559 update, which turns the blockchain into a hybrid system of basic fees and tips, and burns ether with every transaction.
The update means roughly 200 ETH, or $ 643,000, will be burned every hour. The process means that ETH is now a deflationary digital asset.
Melker adds that most of the NFT and DeFi projects will also be built on Ethereum’s blockchain. In 2021 alone, the NFT art market has made rapid strides. Revenue increased to $ 1.23 billion in the first quarter and to $ 1.24 billion in the second quarter, compared to the fourth quarter of 2020, which was just $ 52.92 million, according to data provider DappRadar. Creators and buyers of NFTs use ETH to trade the projects.
From there, Melker says he’s very interested in all of the other Layer-One solutions that are theoretically Ethereum competitors. This means that all blockchains that DeFi and NFT projects can build in their networks are on his radar.
“If you take a step back, look at the Ethereum, which is a layer 1 and is effectively like an internet investment in the 1990s. It is the platform on which everything is built. Well, there are competitors to Ethereum, ”said Melker.
Each of them has their own value proposition and is faster and cheaper than Ethereum, says Melker. But he notes that they won’t replace Ethereum just because they can run similar protocols.
According to their website, this blockchain is called the fastest in the world and the fastest growing ecosystem in the field of crypto. Solana also supports smart contracts for NFTs and DeFi.
“A lot of the Metaverse and gaming ecosystems will be built on top of Solana, which I believe is one of the most important future use cases for blockchain and crypto,” said Melker. “The fact that so many of these projects choose Solana is proof of how fast, cheap and efficient it is as a blockchain.”
SOL has had an amazing year of growth, up an astonishing 6.473% since the start of the year. It started at just $ 1.78 in January, but it trades at around $ 117 on August 31st.
Avalanche is an open, programmable smart contracts platform for decentralized applications that can process thousands of transactions per second. The project describes itself as inexpensive and environmentally friendly.
A bridging mechanism recently developed by developers allows DeFi users to transfer their assets between Avalanche and Ethereum’s blockchains.
“The interesting thing about Avalanche is that it offers all of the things we talk about with Ethereum and Solana, but it also offers the opportunity for individuals and companies to build their own blockchains, which can be either private or public,” Melker said .
The price of AVAX has not increased steadily. So far, the cryptocurrency has been extremely volatile, hitting highs of $ 59 in February and then only hitting lows of around $ 9.36 in July before falling back to its previous highs this month.
Elrond is itself referred to as blockchain, which was developed to provide a “scalable, fast and secure blockchain platform for distributed apps” and businesses.
“You see the mainstream acceptance as a payment solution for music festivals in Europe [and] they are moving into the NFT room, ”said Melker.
EGLD also saw price volatility throughout 2021. It started the year trading at around $ 26. It peaked in April as high as $ 243 before falling to $ 62 two months later. On August 31, EGLD last traded at around $ 159, according to CoinMarketCap.
Both Ethereum and Polkadot have similar transaction logs that automatically execute, control and document legally relevant events on their blockchains.
But Polkadot has a one-up on Ethereum because it can bridge other blockchains and interact with them. This means that no additional applications such as Ethereum have to be integrated into the platform, but can instead be connected via a bridge.
Keith Bliss, President of Capital2Market, a company that provides technology solutions to the financial sector, understands the impact these technologies are having on the DeFi sector and is also very optimistic about Polkadot. He recently predicted that the price of DOT would soar up to $ 100 within the next three years.
The price of DOT has increased 245% since the beginning of the year. The crypto last traded at around $ 31 on August 31, according to CoinMarketCap.
Cosmos’ blockchain is a decentralized exchange that can exchange digital assets from across the interchain with minimal fees and quick confirmation.
It connects to platforms via the inter-blockchain communication protocol, a continuous, connection-oriented, state-oriented protocol for reliable, orderly and authenticated communication between sovereign blockchains.
Melker is a big fan of Cosmos because it creates easy interoperability between the different blockchains so that each platform can find a niche when working together.
In May, ATOM peaked at nearly $ 30 before falling as much as 73% by June. On August 31, the crypto was trading at around $ 24, according to CoinMarketCap.