A bear market is roiling cryptocurrencies right now. It’s been a rough run for them since Coinbase (NASDAQ:COIN) went public in April. Over the past couple of months, all sorts of Coinbase cryptos have gotten hammered down from their highs.
Of course, it’s not Coinbase’s fault. The company simply acts as an intermediary between buyers and sellers. However, when it went public, it might have come close to “peak optimism” in the crypto space — in the short term, at least.
However, it’s not as if all cryptocurrencies took a plunge when Coinbase made its debut in public markets. Bitcoin (CCC:BTC-USD) did top out on the day of the initial public offering (IPO). A peak for the biggest of the bunch didn’t set a good tone for other cryptos, even if many continued to move higher into May. Ever since, the market has been painfully reminded of what happens when senseless speculation takes over.
But after the carnage, investors may want to get into the crypto market. If you want to build or add to a portfolio, these seven Coinbase cryptos have the best potential for gains:
- Bitcoin Cash (CCC:BCH-USD)
- Ethereum (CCC:ETH-USD)
- Polkadot (CCC:DOT-USD)
- Dogecoin (CCC:DOGE-USD)
- Tether (CCC:USDT-USD)
- Litecoin (CCC:LTC-USD)
Coinbase Cryptos: Bitcoin (BTC)
If we’re creating a portfolio of Coinbase crypto, how can we not include Bitcoin? It’s the top dog when it comes to cryptocurrencies despite being caught in a painful bear market. Bitcoin’s price is down over 40% from its April high. The headlines just keep piling on for this one, but it doesn’t matter. When they come after Bitcoin, 99 out of 100 times, it’s going to hit the entire cryptocurrency market.
While it has been volatile, I can’t imagine constructing a crypto portfolio without including Bitcoin. It would be like not including Apple (NASDAQ:AAPL) in a large-cap technology fund five or 10 years ago.
No matter what happens with crypto, Bitcoin has the best chance at surviving — and hopefully thriving. It has the largest market cap among cryptos and strong name recognition around the world. Tesla (NASDAQ:TSLA) CEO Elon Musk has repeatedly backed Bitcoin, while El Salvador just made Bitcoin legal tender. In fact, the country may offer citizenship to those who own enough Bitcoin.
The more headlines we see like this, the more Bitcoin’s acceptance — and staying power — will increase.
Bitcoin Cash (BCH)
That brings us to the next name on our list: Bitcoin Cash. Whenever we talk about cryptocurrency, this inevitable question comes up: Wait, what’s the difference between Bitcoin and Bitcoin Cash?
Bitcoin is an incredible development within the digital currency world that uses blockchain technology as a digital ledger. It has clearly proven itself as a viable — although volatile — store of value.
However, it’s not exactly convenient for transactions. It can take several minutes just to process or verify a payment. In fact, Bitcoin can only process a few transactions per second. Compared to the thousands of transactions credit card companies can process per second, this is incredibly archaic. It might be okay for sending money, but you won’t easily check out at a store with Bitcoin anytime soon.
Bitcoin Cash is the result of a hard fork that occurred in 2017. While Bitcoin Cash has faster processing potential, users worry that it’s less liquid and less secure than Bitcoin. Both concerns are legitimate. However, should Bitcoin forge its way higher, its “little brother” Bitcoin Cash will likely go along for the ride, too.
Coinbase Cryptos: Ethereum (ETH)
Ethereum is yet another major Coinbase crypto. It, along with Bitcoin, is one of the main horses to watch in the cryptocurrency race.
Despite both cryptocurrencies suffering a major correction, they are easily the most popular in the sector — at least, in terms of market capitalization. While Bitcoin once had a valuation north of $1 trillion, it has dwindled down to $679 billion as of this writing. Ethereum is the second-largest crypto on the list at $258 billion. No other crypto has a market cap above $100 billion.
In 2015, Ethereum was launched to complement Bitcoin; it was not intended to be a direct competitor. While both act as a store of value now, Ethereum’s design works much better than Bitcoin’s in certain real-world applications.
For instance, smart contracts work well with Ethereum, allowing payments to automatically unlock when certain milestones or credentials are hit. Ethereum can also verify its transactions in seconds, unlike Bitcoin. Finally, the non-fungible token (NFT) movement is also powered by Ethereum.
While its price has been hit hard lately — down 49% from its May high — Ethereum has been a solid performer. When Bitcoin was topping out in April, Ethereum was surging.
Year to date, Bitcoin is up a little over 20%, while Ethereum is up about 195%.
Polkadot is an interesting asset that has popped up on the Coinbase cryptos list. While its market cap is rather small at just $16.1 billion, its founders and creators make it worth monitoring.
Not everyone has heard of Polkadot’s co-founder, Dr. Gavin Wood, and that’s okay. However, he’s worth knowing about if you plan to invest in Polkadot.
According to the crypto’s website, Wood “began originating blockchain technology as co-founder and CTO of Ethereum. He invented fundamental components of the blockchain industry, including Solidity, Proof-of-Authority consensus, and Whisper.”
Co-founder and CTO of Ethereum is a pretty big title to hold. As for the currency itself, according to Polkadot, here’s what makes it stand out:
Polkadot makes blockchain experimentation possible in the same way Ethereum made decentralised application (DApp) experimentation possible. Polkadot is designed to facilitate faster innovation cycles, particularly when experimenting with new state transition functions.
At a time when cryptos are under intense pressure, it may be hard to bet on a speculative name like Polkadot. However, with Dr. Wood on the team, it has a big sector name behind it. If and when cryptos go back into a bull market, Polkadot could be a winner.
Coinbase Cryptos: Dogecoin (DOGE)
Dogecoin has been absolutely crushed by the bear market. After seeing a 1,100% rally from early April to its May high, this crypto is down about 63% since the mid-May crash. At its one-month low of 16 cents, those losses swelled to roughly 78%.
On the plus side, Dogecoin is still up 350% from its early April price. But why would someone add such a volatile crypto to their portfolio? Dogecoin is not for everyone — trust me, I get it. The fundamentals may make it tough to own this one, given that it wasn’t created with the same intentions as Ethereum or Bitcoin.
However, Dogecoin has considerable backing. Musk is a big fan of the altcoin. With his army of loyal followers — including more than 57 million on Twitter (NYSE:TWTR) — Musk’s bullish tweets about Doge can really move the needle.
It’s not the best reason to bet on Dogecoin. But for a speculative play in a small crypto portfolio, the altcoin is worth considering.
After Bitcoin and Ethereum, do you know which crypto has the highest market cap? It’s Tether, which has a $62.5 billion market cap. But outside of that fact, this crypto doesn’t generate much chatter. Instead, investors focus on big names — like Bitcoin and Ethereum — or hot names like Dogecoin.
Tether is quite different from its peers, though. It is a type of stablecoin that is “pegged to the value of a U.S. dollar…Tether’s issuer claims that USDT is backed by bank reserves and loans which match or exceed the value of USDT in circulation.”
Investopedia describes Tether another way: “…it [can] be used as a medium of exchange and a mode of storage of value, instead of being used as a medium of speculative investments.”
In other words, Tether is backed by fiat currencies and brings stability to crypto portfolios. For some, that detracts from the point of investing in cryptocurrencies. But Tether may be attractive for investors who are wary of crypto volatility.
Coinbase Cryptos: Litecoin (LTC)
Litecoin is on most popular trading apps and even available on PayPal (NASDAQ:PYPL). After it topped out in mid-May, Litecoin tumbled roughly 75% to this month’s low of $105.
It actually dipped below the 200-day moving average — not that many people seem to care about the technical aspects at this point. Litecoin topped out near $400 and is now trading near $146, which could set it up for a big bounce. That’s true even if it’s a dead-cat bounce after an oversold decline.
With its $3.8 billion market cap, Litecoin is not going to lead the charge. However, with such a small market cap, it should see big moves if buyers step back into LTC trading with force.
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On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.