Key takeaways:
Cryptocurrencies exhibit high volatility and may not be suitable for all investors. Determine if they align with your risk tolerance before proceeding.
Bitcoin and Ether stand out as the top two cryptocurrencies to purchase.
Four other speculative cryptocurrencies are worth considering, each with unique qualities.
Cryptocurrencies rose from obscurity to prominence in financial markets over a just 15 years. However, one aspect that the industry’s development has not eliminated is excessive volatility.
In November 2021, the cryptocurrency market reached a value above $2.9 trillion at its highest point. By mid-2022, due to increasing inflation and an assertive series of interest rate hikes by the Federal Reserve, the total market value had dropped to below $900 billion. By February 29 of this year, the total value of cryptocurrencies exceeded $2.3 trillion.
That is quite a roller coaster. If you are not prepared to tolerate such extreme fluctuations, then you should not invest in cryptocurrencies. If you decide to invest in cryptocurrency, you will have a wide selection of currencies to pick from, each with unique characteristics. It’s intimidating. Here are six top cryptocurrencies to purchase at this time:
Bitcoin (BTC)
Ethereum (ETH)
Avalanche (AVAX)
MATIC Polygon
Cardano (ADA) and Cosmos (ATOM)
Bitcoin (BTC) Bitcoin (BTC) is a relatively new asset class known as cryptocurrency, originating in 2009. Investors should opt for more recognised brands to protect themselves against the risk of a complete collapse of their assets, as extreme volatility is common. Bitcoin is the oldest and most prominent cryptocurrency, holding the greatest market capitalization of over $1.2 trillion, which accounts for almost 53% of the total market value. Bitcoin (BTC) has the highest level of general acceptability among the biggest cryptocurrencies, demonstrated by the introduction of 11 new Bitcoin exchange-traded funds (ETFs) in January. The process of obtaining clearance from the Securities and Exchange Commission for spot Bitcoin ETFs was lengthy, but it was eventually granted. Bitcoin ETFs have introduced a new era for the top cryptocurrency, allowing traditional investors to monitor its performance without needing to possess the "digital gold" directly. Bitcoin, which was valued at less than $17,000 in early 2023, had surged to nearly $62,000 by early 2024 after a strong rally. As of February 28, Bitcoin prices have increased by 47.9% year to date, mostly due to the establishment of spot Bitcoin ETFs, leading to a rapid influx of billions of dollars in assets under management. Ether (ETH) Ether is the second-largest cryptocurrency by market capitalization and serves as the native token on the popular Ethereum network. Ethereum, often known as ETH, has a market capitalization of over $417 billion, representing close to 18% of the overall cryptocurrency market. Ether's network, unlike Bitcoin, is designed for more than simply peer-to-peer payments. The Ethereum blockchain is specifically tailored for smart contracts, decentralised finance tools, web3 apps, and the trading of non-fungible tokens (NFTs). Bitcoin serves primarily as a speculative asset and store of wealth, but Ether has intrinsic worth as the native token of a very popular network. Ethereum's transition from the energy-inefficient proof-of-work protocol to the more efficient proof-of-stake system in recent years has positioned it ahead of BTC in a world that is becoming more ecologically sensitive. ETH has had a significant increase in value in 2024, rising by 48.4% till the end of February. These two cryptocurrencies are unquestionably the top performers in their respective asset categories. Ethereum ETFs are predicted by some analysts to be the next advancement in the widespread acceptance of cryptocurrencies, with Ether being the most likely candidate. Explore: The Origins of Bitcoin, the Pioneering Cryptocurrency Avalanche (AVAX) Investors should recognise that Bitcoin and Ether occupy a distinct tier in the cryptocurrency market, with all other cryptocurrencies falling into a separate category. AVAX and the other cryptocurrencies listed have more risk, which investors should consider before making decisions. Regard them as strictly speculative bets. Despite some reservations, the AVAX token is included on this list because to the lofty objectives of the Avalanche blockchain. Users may utilise Avalanche's subnets functionality to create their own little blockchains within the network. Ava Labs, the developer, foresees a future where the majority of mainstream businesses and even many people would desire their own blockchains. Avalanche subnets provide an easy solution to this issue. If that scenario comes to fruition, AVAX, which saw a 90% decline during the bear market of 2022, may establish itself as a successful option in the long run. AVAX has had a significant increase over the last year, rising over 136% from $17 to $40. AVAX has seen a 4.5% increase year-to-date until February 28, 2024, with its momentum being less noticeable in the early part of the year. The current market capitalization exceeds $16 billion. MATIC Polygon MATIC, excluding stablecoins, now ranks as the 12th biggest cryptocurrency by market valuation, totaling almost $10 billion. Polygon now makes up less than 0.5% of the total market size, indicating significant potential for expansion. The future success of the project depends significantly on the adoption and continuous utilisation of the Ethereum network. The Polygon network is a scaling platform designed to enhance Ethereum's capabilities, enabling it to support a vast number of decentralised applications, or dApps, in the future. MATIC's price declined by 70% in 2022, similar to most other coins. MATIC, a traditional cryptocurrency by market standards, is far from its peak in late 2021 but shows potential for a recovery. The value has increased by 4.1% year-to-date as of February 28th. The project's Polygon 2.0 strategy involves upgrading its native token from MATIC to a new token named POL. The tokens are expected to have the same value and be interchangeable at a 1-for-1 ratio. Cardano (ADA) Cardano, established in 2017 by Ethereum co-founder Charles Hoskinson, is a proof-of-stake blockchain that efficiently operates on a massive scale. Cardano's goal is to cultivate a developer-friendly environment for decentralised applications (dApps). Cardano has a maximum limit of 45 billion coins, unlike Ethereum which does not have a ceiling on the amount of coins that may be created. Fortunately for investors, around 36.7 billion, which is over 81% of the supply, has already been issued. This means that the remaining amount of dilution is predictable and reasonably restricted. Cardano, a top cryptocurrency, saw an 81% decrease in value in 2022 but has since almost tripled in price since the start of 2023 when it was priced at 25 cents. ADA is now trading at about $0.69 with a market capitalization above $24 billion. Cardano has increased by 6.2% year-to-date as of February 28th. Cosmos (ATOM) is the least valued cryptocurrency by market capitalization, serving as the native token for the Cosmos Hub network. ATOM serves a purpose beyond network security. The token also serves as a governance tool, allowing holders to influence the direction of the Cosmos ecosystem. An difficulty in the emerging cryptocurrency sector is the presence of several distinct and autonomous blockchains. Cosmos intends to address this difficulty by simplifying, accelerating, and reducing the cost of inter-blockchain communication. Cosmos aims to enhance the accessibility of blockchain technology for developers and consumers, perhaps benefiting from widespread adoption if blockchain technology reaches the level of ubiquity anticipated by certain enthusiasts. ATOM, currently valued at around $4.6 billion, saw a 71% decline during the 2022 bear market. Similar to many other cryptocurrencies, it has not yet regained the value it lost. ATOM has increased by 7.7% year-to-date as of February 28th.
