In just 15 years, cryptocurrencies have transformed from obscurity into a vital component of financial markets. However, their evolution has not eradicated the extreme volatility that characterizes the industry. The crypto market, reaching a peak of $2.9 trillion in November 2021, experienced a significant dip to less than $900 billion in mid-2022 due to rising inflation and an aggressive rate-hiking cycle by the Federal Reserve. Fast forward to January 22 of the following year, and the collective value of cryptocurrencies surged back to $1.5 trillion, highlighting the market’s roller-coaster nature.
For investors not willing to endure such violent swings, owning cryptocurrencies may not be suitable. With thousands of coins to choose from, each with different dynamics, the decision can be daunting. Here are six of the best cryptocurrencies to consider:
Bitcoin (BTC)
Cryptocurrency’s oldest player, Bitcoin, remains a stalwart in the market. With a valuation of about $757 billion, it comprises over 50% of the overall market. Bitcoin’s mainstream acceptance is evident with the recent debut of 11 new Bitcoin exchange-traded funds (ETFs). This development allows mainstream investors to track Bitcoin’s performance without directly owning the digital gold itself. After a dip below $17,000 at the beginning of 2023, Bitcoin has rebounded to trade at over $39,000.
Ether (ETH)
Ether, the native token on the Ethereum blockchain, holds the second-largest market capitalization at around $263 billion, constituting over 17% of the total cryptocurrency market. Unlike Bitcoin, Ether’s utility extends beyond peer-to-peer payments. Ethereum’s switch to the energy-efficient proof-of-stake system enhances its appeal in an environmentally conscious world. Market watchers speculate that Ethereum ETFs may be the next step in crypto’s mainstream adoption.
Avalanche (AVAX)
Avalanche’s AVAX token, while more speculative, earns its place due to the ambitious goals of the Avalanche blockchain. The network’s subnets feature enables users to deploy their mini-blockchains, offering a solution for mainstream entities and individuals seeking their blockchains. Despite a 90% plunge in 2022, AVAX has surged over the last year, jumping 55% from $18 to $28, with a market capitalization exceeding $10 billion.
Polygon (MATIC)
As the 13th-largest cryptocurrency by market cap at approximately $6.8 billion, Polygon has room for growth. It is a scaling platform aiming to enhance Ethereum’s capabilities, allowing for a potentially limitless number of decentralized applications (dApps). While MATIC suffered a 70% loss in 2022, it presents a turnaround candidate since the beginning of 2023.
Cardano (ADA)
Founded in 2017 by Ethereum co-founder Charles Hoskinson, Cardano is a proof-of-stake blockchain with a hard cap on the number of coins at 45 billion. Despite an 81% loss in 2022, Cardano has almost doubled since the beginning of 2023, currently trading at around 47 cents with a market cap of $16.5 billion.
Cosmos (ATOM)
ATOM, the native token of the Cosmos Hub blockchain, serves as both a means for securing the network and a governance token. Cosmos aims to make inter-blockchain communication more accessible, faster, and less expensive. With a current valuation of approximately $3.5 billion, ATOM has yet to recover from its 71% loss in the 2022 bear market.
Navigating the cryptocurrency landscape requires understanding the risks involved and considering the unique dynamics of each coin. These top picks represent opportunities in a market characterized by both challenges and potential rewards.
