Amid the recent market turmoil, some investors are questioning whether Loopring (LRC-USD) should be on their radar today. Let’s take a closer look at what’s going on with Loopring both on and off the charts. From there we can determine whether it’s buy-worthy.
Source: Vladimir Kazakov / Shutterstock.com
Believe it or not, the conversation regarding Loopring’s viability starts with GameStop (NYSE:GME).
Without the involvement of infamous Redditors in GME stock starting last January, which allowed the brick-and-mortar videogame retailer a second chance on life and business pivot, we wouldn’t be talking about Loopring today.
Evidently those same stewards of fast financial calculus got wind of information on Loopring’s open source GitHub community linking the two together. And with buzzworthy crypto jargon of non-fungible tokens (NFTs) and Web 3.0’s metaverse teasing investors, alongside GME’s popular influence, the chatroom gossip turned Loopring into a late-to-the-party hit for some investors.
A Closer Look At Loopring
From November’s penny stock low of about 65 cents, LRC-USD soared to nearly $4 for a return in excess of 500% in less than a month. And unlike a lot of penny stocks fetching a handful of Benjamins, Loopring’s market cap soared to almost $4.5 billion.
But today, following the misfortunes of most cryptos, LRC’s valuation has found a new fair value at precipitously lower token levels. Right now, Loopring is clinging to a much smaller, but still significant $1 billion valuation that puts it at No. 77 among crypto market caps.
To be fair though, while Reddit’s “apes” aren’t known for reading or math, they may have actually stumbled onto something with Loopring’s Layer 2 Rollups. After all, Loopring’s Layer 2 (L2) Rollups are about speeding up and reducing cost associated with Ethereum (ETH-USD) decentralized app solutions. It can do so all while keeping Ethereum’s security features.
This technology is a big plus for LRC-USD moving forward.
It also turns out Loopring’s moonshot wasn’t all monkey business. Reddit’s ape base were also sort of right on the money with GameStop. Loopring’s L2 network is being used in GameStop’s NFT trading platform. But it’s going to have to share those duties with crypto Immutable X (IMX-USD).
But while the meme stock crowd brought plenty of attention to LRC-USD, there’s more to Loopring than just GameStop.
There’s also the Loopring DEX to consider. According to InvestorPlace’s Brian Paradza, since the decentralized exchange’s launch two years ago, it has gained significant traction with users totaling 79,000 and trades worth $4.36 billion.
That’s not only a big deal, but it’s also taken us full circle in Loopring. Loopring’s DEX success is built on radically lower fees and increased speed courtesy of, you guessed it, L2.
That sounds promising; however, Loopring’s monthly chart shouldn’t be overlooked and it’s suggesting a more bearish outlook.
Loopring’s Monthly Price Chart
Source: Charts by TradingView
First, I’ll start with an apology. Loopring’s rally this past November may not have been a “late-to-the-party reaction.” Cryptocurrencies could still be in the first or second inning of a much larger market disruption.
As such, the party in LRC could just be getting started. And it may simply had the misfortune of getting noticed at the wrong time in the short term with the market working against it. Ultimately, time will tell.
At the moment though, based on the information gleaned from Loopring’s monthly price chart, now is not the time to step up to the plate as a buyer.
Technically, the token has broken 76% Fibonacci support backed by November’s breakout from a near year-long basing pattern. Its stochastics is also out of position and still pointing lower.
Overall, it’s a troubling chart to buy into. Though to be fair, most growth narratives have had a tough few months recently. Although Loopring does make some sense as a speculative buy, I’d suggest waiting for at a modest bit of confirmation before diving in — something like a trade-through above 95 cents and flattening stochastics should give you more confidence.
On the date of publication, Chris Tyler holds (either directly or indirectly) positions in Grayscale Bitcoin (GBTC) and Grayscale Ethereum Classic Trust (ETHE) securities. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.