Vechain has done phenomenally well in 2020-2021 with a more than 5000% increase in value. This poses some questions: Are you late for the party? Is Vechain a good investment in 2022 and on?
Vechain is a good investment in 2022. According to technical analysis, it’s likely to outperform Bitcoin and Ethereum. The fundamentals are also solid, with good tech, a good team, and many real-world use cases.
Let’s get into the what, why and how to analyze Vechain, both technically and fundamentally, as a potential investment in 2022:
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Technical Analysis Of Vechain As An Investment In 2022:
To be fully transparent; I’m actively swing trading Vechain. I buy Vechain when it’s cheap, hold for a few months, then gradually sell it.
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Let’s look at what the charts tell us about the future of Vechain, both in terms of USD, BTC and ETH.
(If you can’t read price charts, check out this article first: How to read price charts like a pro)
Vechain / USD
This chart shows the USD price of Vechain:
In April of 2021, Vechain saw a brutal correction of 85%. Counterintuitive as it may be, this is actually a major bullish sign!
A correction like that acts as a cleansing both of weak hands and of leverage.
Vechain also seems to have stabilized in the $0.6 – $0.9 range, which seems healthy (roughly 70% down from the ATH in 2021).
The sideways consolidation, or slow bleeding from May of 2021 to the time of writing this (Q1 2022), is actually bullish, and is an argument for concluding that Vechain is a good investment in 2022!
Vechain / BTC
This chart shows the BTC price of Vechain. If this chart moves up it means that Vechain is doing better than Bitcoin. If it moves down, it means that Vechain is doing worse than Bitcoin.
The red horizontal line is a long-term trend line we’re closing in on, which will likely hold as support.
The yellow line is where we’ll likely fall to if the red line doesn’t hold.
The yellow dashed lines indicate a “falling wedge” – a bullish reversal pattern.
The combination of closing in on a major support line and the bullish falling wedge pattern is a great technical indication of a bright future for Vechain!
Let’s look at one more chart, the VET / ETH:
Vechain / ETH
This chart shows the ETH price of Vechain. If this chart moves up it means that Vechain is doing better than Ethereum. If it moves down, it means that Vechain is doing worse than Ethereum.
The green line marks the general resistance line Vechain is facing against ETH. The red horizontal line is general support.
The yellow line in the middle is really interesting – every time we’ve gone above it, Vechain has exploded.
At the moment of writing this (January 2022), we’re below the yellow line. Is this an opportunity to get in BEFORE the explosion when/if Vechain breaks above it?
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In conclusion, technical analysis on Vechain against all relevant pairs (USD, BTC and ETH) are bullish and indicate a good year for Vechain.
Let’s move on from the charts, and look at the fundamentals and the functions of Vechain:
The Fundamentals of Vechain in 2022
When analyzing an investment opportunity in the cryptocurrency market, it’s important to understand what it is, how it works, and if it has potential for future growth.
From the technical analysis, we’ve seen that Vechain has great potential, but to understand why and how likely it is that it fulfills this potential, we have to look at the fundamentals of Vechain.
What Does Vechain do?
Vechain started in 2015 and focuses primarily on helping businesses in the logistics field. They do this through supply chain management; tracking, quality control, inventory management, and much more.
In other words, Vechain makes it easier for businesses to count their inventory, track goods all the way back to the producer, and stay on top of all the logistics.
Other traditional companies are trying to develop their own blockchain-powered products in competition with Vechain. These include giants like IBM, SAP, and BMW. However, Vechain has a clear lead.
Does Vechain Have a Future?
Think about it, how many “brand-focused” businesses would love to have the ability to provide proof of authenticity?
Vechain has established itself as the supply chain cryptocurrency project. This is one of the best use cases for blockchain technology in my opinion, and will definitely see huge growth in the future.
Vechain Uses Proof of Authority (POA) to Achieve Consensus
This will be kind of technical. To learn the basics of blockchain tech, read this article: What is Blockchain technology?
Let’s get into it:
To achieve consensus, and verify transactions, Vechain uses “Proof of Authority” (POA).
The most popular consensus mechanisms are proof of work (POW) and proof of stake (POS), let’s compare them:
The drawback with these two, that POA solves, is that POW and POS lead to competition between nodes, as the nodes with more resources control the majority of the network and receive more rewards as a consequence.
POA prevents centralization and monopoly.
Vechains unique proof of authority does not favor the nodes with more resources, but weighs them all equally.
For a node to join the network and verify transactions, it has to be authorized by the Vechain Foundation first.
This leads to a network of authorized nodes with (theoretically) good intentions, who use fewer resources – saving the environment from unnecessary harm.
For Vechain to add new blocks to the chain through POA, an algorithm chooses a random node to do it. This is why, contrary to POW and POS, more resources do NOT equal more network control. No matter how much money you throw at your node, it doesn’t increase your chances of being chosen to add new blocks (adding new blocks pays rewards).
The downsides of POA:
1) There’s no way of preventing a node from behaving badly after the algorithm picks it to add a new block.
However, there are ways of proving this in the aftermath of the bad behavior, which incentivizes nodes to behave good, but if a node actually chooses to mess things up it might be too late.
2) The fact that all nodes must be authorized by the Vechain foundation makes it “meta centralized”. The blockchain itself runs in a decentralized manner, which is of the highest importance, but the fact that you have to get authorized to run a node makes it sort of centralized on a meta-level.
This is probably not a big deal, as the blockchain itself is decentralized, but it may raise concerns in the future if some of the node operators disagree with the Vechain foundation, and start threatening them with bad behavior.
This has never happened, and will probably never happen, but it’s a hypothetical possibility worth considering when analyzing Vechain as an investment opportunity.
The upsides of POA are that transactions are quick, the resources used are low, and the scalability is good.
When it comes to transactions per second, I didn’t find any hard numbers. However, I did find the “record of number of transactions in 24 hours“.
The number of transactions per second for Vechain is unknown. The highest number in 24 hours on the mainnet of Vechain is 115 893 transactions. This amounts to roughly 80 transactions per second, showing that Vechain beats Bitcoin with a factor of at least 15-20.
It’s safe to say that Vechain has great fundamentals and that its industry will grow in the future. This is a great sign for the value of VET, the cryptocurrency that we’re analyzing as a possible investment in 2022
Let’s take a closer look at the on-chain metrics of Vechain:
On-chain Metrics of Vechain
Below you see the number of wallets holding different amounts of Vechain. Notice that the vast majority of wallets hold between 100 – 50 00 range.
That’s a good thing, as a well-distributed token indicates more decentralization, and prevents “dumps” by large token holders to manipulate the price.
Another interesting statistic is the number of non-negative VET addresses. The chart below shows you the growth of this metric in the last 30 days:
Almost exactly one year ago, the number of non-zero wallets (wallets with one or more VET) was 250K.
Today, it’s 570K, well over 100% more than last year – bullish!
This is a sign of the adoption of Vechain, which is great for the price.
Vechain has a lot of strong partnerships with big companies. This gives them an edge against the competition.
Below you see some of their partnerships:
These partnerships ingrain Vechain deep into the industry and give them a good reputation among other businesses, which is key to success as a blockchain tech organization.
This is, without a doubt, a good reason to be bullish on Vechain in 2022.
All things considered, Vechain has great fundamentals, and lots of room to grow. This increases the likelihood of Vechain reaching the higher ends of its potential.
Conclusion: Yes, Vechain is a good investment in 2022
Vechain has great fundamentals and is bullish on all the major charts. All things considered, Vechain is a good investment in 2022.
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