Six of the top cryptocurrencies to watch in 2023.
2022 was not kind to most mainstream asset classes. Stocks and bonds both slumped in unison, causing the worst year on record for the conservative “60/40” portfolio of stocks and bonds since 2008. Real estate, which had momentum in the early part of the year, quickly sputtered and began to lose some ground in the wake of rapidly rising interest rates. But cryptocurrencies were easily the most wounded asset class of all, with total market capitalization plunging more than 63% over the year, from about $2.2 trillion to less than $800 billion. From the implosion of a major stablecoin and several crypto lending institutions to the fraud-laced collapse of the popular crypto exchange FTX, digital assets enter 2023 on uncertain footing. In this environment, what are the best cryptocurrencies to invest in? For risk-tolerant investors, here are the best cryptocurrencies to buy now.
Cryptocurrency is an incredibly nascent asset class, with origins only dating back to 2009. As 2022 showed, extreme volatility is par for the course, so investors looking to insulate themselves from the total collapse of their holdings (see: Terra’s 2022 collapse) will want to go with more established names. And none is more established than Bitcoin — the first cryptocurrency and largest by market cap, with a valuation of about $323 billion, or roughly 40% of the overall market. BTC boasts the most mainstream acceptance of any of the top cryptocurrencies, with a number of publicly traded instruments tracking its performance, alongside publicly traded stocks such as MicroStrategy Inc. (ticker: MSTR) and Tesla Inc. (TSLA), among others, that hold Bitcoin on their balance sheets. Despite these buffers and its growing acceptance as a form of “digital gold,” BTC fell 64% in 2022, declining from $46,306 to $16,547. This sort of extreme volatility has been pervasive throughout Bitcoin’s 14-year history.
The No. 2 cryptocurrency by market cap is Ether, which is the native token on the widely used Ethereum blockchain. Often colloquially referred to as Ethereum, the coin’s market cap exceeds $150 billion and accounts for about 19% of the total cryptocurrency market. Unlike Bitcoin, Ether’s underlying network is far more than just a tool for peer-to-peer payments; the Ethereum blockchain is custom-made for smart contracts and decentralized finance tools, as well as for so-called Web 3.0, or Web3, applications and the trading of non-fungible tokens, or NFTs. While Ether’s price was hammered alongside the rest of the market in 2022 — ETH lost more than 67% of its value last year — the crypto nonetheless still has high utility as the native token of a wildly popular network. Plus, Ethereum’s switch from the energy-inefficient, proof-of-work protocol to the much more efficient proof-of-stake system gives it a leg up on BTC in an increasingly environmentally conscious world.
When investing in cryptocurrency, it’s important to understand that there are perceived tiers to the quality of digital assets, and that Bitcoin and Ether are widely considered the two safest and most-established cryptos available. While the altcoins that follow likely offer more potential upside, they also come with higher risk and should be considered highly speculative. Caveats aside, the Avalanche network’s AVAX token earns its place on the list by virtue of the ambitious goals of its blockchain. Avalanche’s subnets feature allows users to deploy their own mini-blockchains on top of its network. Developer Ava Labs envisions a future in which most mainstream commercial entities and even many individuals will want their own blockchains, with Avalanche subnets offering a convenient solution to that problem. If that reality materializes, then AVAX, which plunged 90% in 2022’s bear market, could emerge as a long-term winner.
When excluding stablecoins, MATIC is now the seventh-largest cryptocurrency by market cap, with a capitalization of about $7 billion. Still constituting less than 1% of the overall market size, Polygon has plenty of room to grow, although curiously, its future success is tied to the acceptance and ongoing usage of the Ethereum network. That’s because the Polygon network is a scaling platform that aims to increase the capabilities of Ethereum, allowing it to eventually run a potentially limitless number of decentralized applications, or dApps. Like practically all other tokens, MATIC’s price suffered in 2022, losing 70% of its value last year. Polygon enjoys funding from industry giants Binance and Coinbase Global Inc. (COIN), showing that crypto heavyweights have been willing to back up their belief in Polygon’s efforts with cold, hard cash.
Founded in 2017 by Ethereum co-founder Charles Hoskinson, Cardano is a proof-of-stake blockchain and one of the largest blockchains to successfully run the more energy-efficient proof-of-stake protocol. Cardano aims to foster a developer-friendly ecosystem for dApps. Unlike Ethereum, Cardano has a hard cap on the number of coins that can ever exist, topping out at 45 billion. Thankfully for investors, more than 34.5 billion, or about 77%, of that supply is already in circulation, meaning the amount of overall dilution remaining is both known and relatively limited. One of the best cryptocurrencies to buy now, Cardano shed 81% in 2022, but it trades roughly even with its price just two short years ago. Excluding stablecoins, Cardano is the sixth-most-valuable cryptocurrency around, with a valuation of more than $9 billion.
Last and least valuable by market cap among the best cryptocurrencies to buy is ATOM, the native token of the Cosmos Hub blockchain. ATOM is more than just a means for securing the network; it’s also a governance token, giving holders a say in how the Cosmos ecosystem should evolve. One issue with the incipient cryptocurrency space is that there are so many different, independent blockchains — a challenge that Cosmos hopes to alleviate by making inter-blockchain communication easier, faster and less expensive. Cosmos’s ultimate aspiration is to make blockchain technology more accessible for both coders and end-users, which could pay off if blockchain tech becomes as widespread and ubiquitous as some optimists in the space expect. With a valuation of less than $3 billion, ATOM lost 71% of its value in 2022, but nonetheless trades at an 80% premium to its June lows.
6 of the best cryptocurrencies to buy now:
— Bitcoin (BTC)
— Ether (ETH)
— Avalanche (AVAX)
— Polygon (MATIC)
— Cardano (ADA)
— Cosmos (ATOM)
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What’s the Best Cryptocurrency to Invest in Now? 6 Contenders originally appeared on usnews.com