This under-the-radar cryptocurrency stock could outpace Bitcoin in 2022

Is “crypto-winter” here? Consider this stock as a sneaky long-term play on the cryptocurrency space.

| More on:
A young male Bitcoin investor sits as his desk in front of a monitor with the bitcoin logo on it and a laptop next to him showing a graph of cryptocurrency stocks

Image source: Getty Images

This article was originally published on All figures quoted in US dollars unless otherwise stated.

Cryptocurrency Bitcoin (CRYPTO: BTC) has been one of the best investments you could have made over the past several years. It's up roughly sixfold over the past 24 months, and many times more over its lifetime.

Bitcoin's market cap has ballooned to roughly $820 billion, more than a third of all value among cryptocurrencies. Bitcoin's rate of appreciation may slow down at this large size, making a bear market possible for Bitcoin in 2022 if investors cool off toward it.

Meanwhile, technology is creating value in the broader cryptocurrency space, including data analytics company Palantir Technologies (NYSE: PLTR) launching Foundry for Crypto. While Bitcoin's track record of gains is impressive, Palantir's stock could outpace Bitcoin in 2022. Here's why.

Is Bitcoin due for a soft year?

Bitcoin is up more than 29,800% over its lifetime, showing just how ridiculously good of an investment it's been for early investors. The price has continued multiplying, up by roughly six times over the past two years, but just 20% over the past 12 months.

Bitcoin Price Chart

Bitcoin Price data by YCharts

Bitcoin is currently down after setting an all-time high in late 2021. To be sure, nobody can predict the price action of cryptocurrencies. But Bitcoin doesn't have earnings or free cash flow like stocks do, which can be a compass of sorts for valuing them. Bitcoin and other cryptocurrencies are mainly a function of supply and demand.

Suppose investors begin shying away from "buying the dip" because of Bitcoin's negative price momentum. In that case, investors could see a soft 2022 for it and other cryptos, especially after the massive price action seen from 2020 and 2021.

Foundry for Crypto can help the industry

Cryptocurrencies have become popular for several reasons; they operate on blockchain technology, a type of ledger that publicly tracks each transaction as an ongoing chain so that people can't change it.

Blockchain technology means that cryptocurrencies are decentralized; they aren't managed by a single party, like how the government controls the U.S. dollar. The unregulated nature of cryptocurrency is a plus for many crypto investors, but there could be hurdles that slow down how decentralized currencies are adopted by society.

For example, the cryptocurrency space has become a Wild West of sorts, where scams are rampant, and coin "pump and dump" schemes typically leave investors with losses after the founders abandon the project once they make money.

Palantir's Foundry is a software-as-a-service data platform that interacts with data to help users make actionable decisions. It can integrate data, perform analytics, build models, map, and track decision-making. It's almost like Iron Man's power armor; it doesn't function by itself, but it makes a superhero when combined with the user.

Palantir launched Foundry for Crypto to gain exposure to the growth of cryptocurrencies and decentralized applications. Foundry for Crypto lists offerings including anti-money laundering, fraud detection, intelligence for decentralized applications, and analytics across blockchains. It's still very early, and Palantir will need to elaborate on the program's progress over the coming quarters and years. Still, Foundry could prove a valuable tool in a space where security and regulation are lacking. Cryptocurrency is still speculative, but some estimate that it could grow into an enormous field, which could be a massive opportunity for Palantir over the long term.

Why Palantir could soar in 2022

Bitcoin isn't the only asset coming down from a big run; Palantir's stock has struggled, too, amid a marketwide sell-off of tech stocks. Shares are currently near 52-week lows, falling from $45 per share to under $17.

PLTR PS Ratio (Forward) Chart

PLTR PS Ratio (Forward) data by YCharts

Palantir's price-to-sales ratio has declined on a forward basis from nearly 48 to under 17 because the company's revenue keeps growing while the share price drops. Meanwhile, free cash flow has turned positive over the past year, a great sign that the business is on a path to profitability. Adjusted free cash flow was $119 million in Palantir's most recent reporting period, the third quarter of 2021, up from a negative $53 million in 2020.

The stock's reduced valuation could be a great buying opportunity as the business is turning a corner producing free cash flow. Management has maintained a long-term revenue growth projection of at least 30% per year over the next four years.

If the market begins favoring fast-growing companies again, Palantir's improving financials and signs of continued growth in future quarters could make it a big winner in 2022. 

This article was originally published on All figures quoted in US dollars unless otherwise stated.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of January 12th 2022

Justin Pope has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and recommends Bitcoin and Palantir Technologies Inc. The Motley Fool Australia owns and recommends Bitcoin. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on International Stock News

man looks up at apple on his head
International Stock News

Why Apple stock slipped on Thursday

Don't worry. This looks less like a disaster and more like a buying opportunity.

Read more »

Family of four enjoying the pool at airbnb holiday
International Stock News

Nasdaq bear market: Should you buy the dip on these 2 growth stocks?

These businesses are backed by compelling investment theses.

Read more »

Rede arrow on a stock market chart going down.
International Stock News

Why Bitcoin, Ethereum, and Dogecoin are falling today

Investors are trying to predict how the economy will fare in the coming months, and how fast the Federal Reserve…

Read more »

amazon prime truck on a road
International Stock News

2 reasons Amazon stock is slumping today

Inflation fears and recent quarterly results from its peers are driving the stock lower.

Read more »

Red arrow going down, symbolising a falling share price.
International Stock News

Why Apple Stock is falling today

The market as a whole is down, but the tech sector is doing worse.

Read more »

A stockmarket chart on a red background with an arrow going down, indicating falling share price
International Stock News

Why Tesla stock fell again today

A French bank just said Tesla isn't the best EV stock. Should you worry about that?

Read more »

a group of five people lie on the floor with their heads touching, each wearing hi tech goggles over their eyes as if in a metaverse workplace collaboration.
International Stock News

2 top metaverse stocks I think are ready for a bull run

The metaverse could give these fast-growing tech giants a big shot in the arm.

Read more »

A blue utility truck takes pride of place in an auto factory setting with hundreds of workers gathered around admiring it.
International Stock News

Why Rivian is helping drive electric vehicle stocks higher today

Rivian's CEO just made a million-dollar bet on his company.

Read more »