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The top crypto of 2023 is up a stratospheric 227% year to date and an eye-popping 96% over the past 30 days. Yet, before November, nobody was talking about it. It was only after the FTX (FTT -1.33%) market meltdown that Trust Wallet Token (TWT -3.61%) exploded into prominence.
The reason is simple: In the wake of FTX, people are skittish about holding crypto on exchanges, and Trust Wallet Token solves this problem. Trust Wallet Token is the utility and governance token of Trust Wallet, one of the most popular self-custody crypto wallets for investors. Instead of storing crypto on a major exchange, you can simply store it on your mobile phone. Given all the drama surrounding FTX and discussions about the future of crypto, Trust Wallet Token needs to be on your investment radar.
Of course, Trust Wallet is hardly the only self-custody crypto wallet solution on the market today. For example, if you are an active Coinbase (COIN 3.88%) user, you probably have downloaded Coinbase Wallet to your mobile phone. So it’s not like Trust Wallet Token is some kind of exotic crypto — it’s just one you might not have heard of as a casual investor if you don’t use Trust Wallet. Right now, Trust Wallet Token is actually one of the top 50 cryptos in the world by market capitalization.
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In terms of overall features and performance, Trust Wallet grades out very high. Many blockchain wallets only allow you to send and receive cryptos. Trust Wallet does this one better by allowing you to trade cryptos via an in-built exchange. It has an expansive collection of 160,000 cryptos that you can choose from across 40 different blockchains. Moreover, Trust Wallet does a good job of abstracting away all the layers that make crypto complex for people to understand. Overall, Trust Wallet is secure, free to use, and able to support many blockchains and cryptos. Trust Wallet is a true “do-it-all” wallet.
In order to understand why Trust Wallet Token has really taken off, though, you need to know that it has a direct relationship with Binance (BNB -3.05%), which has been playing an important and controversial role in the ongoing FTX drama. In short, Trust Wallet is the official crypto wallet of Binance. Just as you would likely use Coinbase Wallet if you are a Coinbase customer, you would likely use Trust Wallet if you are a Binance customer.
That would explain why Trust Wallet Token has absolutely exploded onto the scene since early November. Amidst all the negative news about FTX, Binance has been actively encouraging the idea of self-custody crypto solutions (i.e., users hold their own crypto, not the exchange), and that has brought even more prominence to Trust Wallet Token. By buying Trust Wallet Token, you are aligning yourself with the idea of self-custody. And, at least indirectly, you are also aligning yourself with Binance.
Most likely, Trust Wallet Token will continue to benefit in the short term from volatility in the marketplace. Investors will likely continue to move their money off troubled cryptocurrency exchanges and into self-custody crypto wallets like Trust Wallet. This will likely put continued upward pressure on the price of Trust Wallet Token.
Long-term, though, the story is more complex. For one, the “FTX effect” is going to wear off at some point, so there may be a limited window to profit from Trust Wallet Token. Secondly, there is currently a lot of fear, uncertainty, and doubt circulating around Binance. Since Trust Wallet is the official crypto wallet of Binance, this is troublesome. If, at any point, people perceive that Binance could become the “next FTX,” what is going to happen to Trust Wallet Token?
Finally, there’s the question of potential competitors. For example, one of the most popular crypto wallets is MetaMask, which has 30 million users worldwide. It doesn’t have a crypto token yet, but there are constant rumors that this token is coming soon. In that case, investors would have a choice between two competing crypto tokens: the Trust Wallet Token and the MetaMask token. Given the immense popularity of MetaMask, this would negatively impact the relative attractiveness of Trust Wallet Token.
For now, then, I am out on Trust Wallet Token as a long-term play. That being said, I am bullish on the concept of self-custody crypto wallets. If you are concerned about holding your crypto on exchanges in the wake of FTX, then investigating which self-custody crypto wallet is right for you is certainly a smart option.
Dominic Basulto has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Coinbase Global. The Motley Fool has a disclosure policy.
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