Cryptocurrency Bitcoin (CRYPTO:BTC) has been probably the greatest investments you might have remodeled the previous a number of years. It is up roughly sixfold over the previous 24 months, and plenty of occasions extra over its lifetime.

Bitcoin’s market cap has ballooned to roughly $820 billion, greater than a 3rd of all worth amongst cryptocurrencies. Bitcoin’s fee of appreciation might decelerate at this massive dimension, making a bear market potential for Bitcoin in 2022 if traders cool off towards it.

In the meantime, know-how is creating worth within the broader cryptocurrency house, together with knowledge analytics firm Palantir Applied sciences (NYSE:PLTR) launching Foundry for Crypto. Whereas Bitcoin’s observe document of positive aspects is spectacular, Palantir’s inventory might outpace Bitcoin in 2022. Here is why.

Digital interface with Bitcoin logo.

Picture supply: Getty Pictures.

Is Bitcoin due for a gentle yr?

Bitcoin is up greater than 29,800% over its lifetime, displaying simply how ridiculously good of an funding it has been for early traders. The worth has continued multiplying, up by roughly six occasions over the previous two years, however simply 20% over the previous 12 months.

Bitcoin Price Chart

Bitcoin Value knowledge by YCharts

Bitcoin is at present down after setting an all-time excessive in late 2021. To make sure, no person can predict the value motion of cryptocurrencies. However Bitcoin would not have earnings or free money stream like shares do, which generally is a compass of types for valuing them. Bitcoin and different cryptocurrencies are primarily a perform of provide and demand.

Suppose traders start shying away from “shopping for the dip” due to Bitcoin’s detrimental worth momentum. In that case, traders might see a gentle 2022 for it and different cryptos, particularly after the huge worth motion seen from 2020 and 2021.

Foundry for Crypto will help the business

Cryptocurrencies have turn into standard for a number of causes; they function on blockchain know-how, a sort of ledger that publicly tracks every transaction as an ongoing chain so that folks cannot change it.

Blockchain know-how signifies that cryptocurrencies are decentralized; they are not managed by a single social gathering, like how the federal government controls the U.S. greenback. The unregulated nature of cryptocurrency is a plus for a lot of crypto traders, however there might be hurdles that decelerate how decentralized currencies are adopted by society.

For instance, the cryptocurrency house has turn into a Wild West of types, the place scams are rampant, and coin “pump and dump” schemes sometimes go away traders with losses after the founders abandon the undertaking as soon as they make cash.

Palantir’s Foundry is a software-as-a-service knowledge platform that interacts with knowledge to assist customers make actionable choices. It will possibly combine knowledge, carry out analytics, construct fashions, map, and observe decision-making. It is nearly like Iron Man’s energy armor; it would not perform by itself, nevertheless it makes a superhero when mixed with the person.

Palantir launched Foundry for Crypto to achieve publicity to the expansion of cryptocurrencies and decentralized purposes. Foundry for Crypto lists choices together with anti-money laundering, fraud detection, intelligence for decentralized purposes, and analytics throughout blockchains. It is nonetheless very early, and Palantir might want to elaborate on this system’s progress over the approaching quarters and years. Nonetheless, Foundry might show a precious software in an area the place safety and regulation are missing. Cryptocurrency remains to be speculative, however some estimate that it might develop into an infinite subject, which might be a large alternative for Palantir over the long run.

Why Palantir might soar in 2022

Bitcoin is not the one asset coming down from an enormous run; Palantir’s inventory has struggled, too, amid a marketwide sell-off of tech shares. Shares are at present close to 52-week lows, falling from $45 per share to underneath $17.

PLTR PS Ratio (Forward) Chart

PLTR PS Ratio (Ahead) knowledge by YCharts

Palantir’s price-to-sales ratio has declined on a ahead foundation from practically 48 to underneath 17 as a result of the corporate’s income retains rising whereas the share worth drops. In the meantime, free money stream has turned constructive over the previous yr, an amazing signal that the enterprise is on a path to profitability. Adjusted free money stream was $119 million in Palantir’s most up-to-date reporting interval, the third quarter of 2021, up from a detrimental $53 million in 2020.

The inventory’s diminished valuation might be an amazing shopping for alternative because the enterprise is popping a nook producing free money stream. Administration has maintained a long-term income development projection of at the very least 30% per yr over the subsequent 4 years.

If the market begins favoring fast-growing corporations once more, Palantir’s bettering financials and indicators of continued development in future quarters might make it an enormous winner in 2022.

This text represents the opinion of the author, who might disagree with the “official” advice place of a Motley Idiot premium advisory service. We’re motley! Questioning an investing thesis — even one in every of our personal — helps us all suppose critically about investing and make choices that assist us turn into smarter, happier, and richer.