Recent headlines suggest that factors such as the delta variant of Covid-19 could mean further volatility for cryptocurrencies. But if the digital asset market can get through these issues, it may indicate that the bear market is coming to an end. At that point, it will be high time to figure out which cryptos are a worthwhile buy.
Sure, there is a risk that cryptocurrencies will deliver middling performance for a year or two. That’s what happened following the last crypto crash in 2018. Factors like looming regulatory threats from China and the U.S and waning institutional demand could lead to this.
These factors might add downward pressure or lead to a challenging recovery for the market. Yet cryptos continue to be a potential “disruptor” of traditional finance and DeFi, or decentralized finance, is gaining popularity.
Admittedly, only in hindsight will we know whether DeFi is a short-term fad or a revolutionary change on par with the advent of the internet. However, the chance for gains from cryptos with staying power still outweighs the risk that this fairly young asset class will end up as more of a pet rock.
So with that uncertain future in mind, these seven cryptos are established names and up-and-coming altcoins worth buying:
- Bitcoin (CCC:BTC-USD)
- Cardano (CCC:ADA-USD)
- Ethereum (CCC:ETH-USD)
- Litecoin (CCC:LTC-USD)
- Polygon (CCC:MATIC-USD)
- Solana (CCC:SOL-USD)
- Ripple (CCC:XRP-USD)
Cryptos: Bitcoin (BTC-USD)
Bitcoin may have been the original crypto, and it is still the most valuable one by market capitalization. But with the rise of Ethereum and “Ethereum killers,” BTC looks more and more at risk of losing its “top of the heap” status.
This is because several altcoins offer many advantages over Bitcoin. Faster transaction speeds is a key one. So are their greater capabilities when it comes to DeFi transactions.
That being said, Bitcoin still has many positives on its side. El Salvador’s decision to adoption it as legal tender shows it can maintain its status as a store of value. Also, Bitcoin’s developers are working on some upgrades to help it stay relevant and avoid becoming the “AOL of the crypto age.”
These factors may enable Bitcoin to continue rising in value over the long-term. But its near-term volatility may not be over. We saw this play out recently when it briefly moved below $30,000 on July 19. Crypto market expert David Grider attributed the sell off to Bitcoin’s high counterparty risk that forced overleveraged holders to close out positions.
Bitcoin prices may move lower — perhaps down to $15,000, as Guggenheim chief investment officer Scott Minerd has theorized. But another decline in the short-term could be an opportunity in the long-term. The negativity around Bitcoin is likely overblown, so keep the coin that started it all on your radar.
Among the scores of “Ethereum killers,” Cardano appears to be the top contender. Sure, names like Polygon and Solana have gotten similar — if not greater — amounts of buzz in recent weeks. But Ethereum’s forthcoming 2.0 upgrades could help Cardano maintain its lead over these rival altcoins.
Growing uncertainty over its ability to outpace Ethereum and a bearish crypto market have taken their toll on Cardano. The crypto is still down considerably from its highs at its current price of $1.17. However, it could still fall back further in the near-term — possibly to sub-$1 prices.
Even so, the long-term bull case for Cardano is still in play. Once its Alonzo upgrades go live over the next few months, its blockchain will have smart contract capabilities. If it can turn greater utility into greater usage of its network by DeFi and decentralized application (dApp) developers, its native coin ADA could become more valuable.
The caveat, however, is that this may take some time. The vast majority of those who own ADA today have owned it for less than a year. Traders looking for short-term gains could become impatient and continue to cash out their positions. But another pullback could be an opportunity for investors who view Cardano as a long-term bet on the rise of DeFi.
Cryptos: Ethereum (ETH-USD)
Crypto speculators may be eager to get in early with front-running “Ethereum killers.” But instead of buying its rival coins, going long on the current DeFi leader could be just as profitable of a move.
Ether has been hammered down since May’s crypto selloff. As of this writing, at around $1,991 per coin, it’s down more than 54% from its all-time highs. As uncertainty continues, it may pull back further to levels not seen since earlier this year.
On the other hand, we could see Ethereum’s fortunes start to turn around. Perhaps not immediately; a full move back to $4,000 per coin (and beyond) may take some time. But the 2.0 upgrades could put this hard-hit altcoin into recovery mode.
Some may be skeptical that the upgrades will be a game-changer for Ethereum. Only time will tell whether the move from proof-of-work protocols to proof-of-stake will solve the scalability problems that have plagued the platform. But if the improvements are sufficient, they may be enough to help Ethereum stay at the top in the world of DeFi.
This, in turn, could help the price of its Ether coin recover. The crypto could then get back on track with supplanting Bitcoin — an event referred to as “the flippening.”
Compared to other altcoins, Litecoin is a bit of an “also-ran.” One of the oldest Bitcoin alternatives out there, its utility has been eclipsed by Ethereum, Cardano and the other DeFi-centric altcoins. But its high correlation with Bitcoin may also tie it to the more established coin’s fortunes.
Like the other major cryptocurrencies, Litecoin has seen a considerable decline from its highs — more than 70%, in its case. So with little to differentiate itself, what’s the appeal of buying it? As InvestorPlace’s Mark Hake discussed June 16, its high correlation to Bitcoin could be a positive.
How so? Bitcoin may be gaining a reputation as a crypto dinosaur. But what if the upgrades mentioned above improve its utility? If it prevents rising stars from supplanting it, Bitcoin could maintain its lead as the most valuable crypto by market capitalization.
If BTC rebounds in value, Litecoin will likely follow. And while LTC is relatively weak compared to the rest of the altcoin pack, the crypto could start to outperform if Ethereum and its peers flounder.
With this factor in Litecoin’s corner, it’s a buy once the fear, uncertainty and doubt around cryptos begins to fade.
Cryptos: Polygon (MATIC-USD)
Recently, I made the case that this “Ethereum killer” is at risk of losing its front-runner status. With Cardano’s smart contracts, Solana’s transaction speeds and Ethereum’s upgrades, even Mark Cuban’s support may not keep Polygon a top contender.
On the other hand, the factors that made it appealing to Cuban aren’t off the table just yet. DeFi and dApp developers are still flocking to Polygon. Its unique side chain functionality may counter the risk of other altcoins’ improvements stalling its rise.
Also, there’s a lot of talk that a single altcoin will end up dominating the DeFi space and the rest will fizzle out in terms of usage and price. But even if Ethereum maintains its lead and Cardano is in second place, that doesn’t mean Polygon’s token will stop increasing in value.
As this sector grows in popularity, there may be room for multiple blockchains and cryptocurrencies to thrive. If it remains near the top, Polygon can still rally back towards its high of $2.68. That’s well above the 89 cents it changes hands for today.
As the market recovers, Solana belongs at the top of your list of cryptos to buy. It’s the dark horse contender to swipe the crown from Ethereum thanks to its incredibly fast transaction speeds.
Ethereum can process 30 transactions per second. Bitcoin can only process a handful of transactions per second. But Solana can do 50,000 transactions per second, and that’s only the start. Eventually, it could complete transactions faster than traditional payment processors such as Visa (NYSE:V).
With this strong advantage, it’s easy to see why Silicon Valley heavyweights like Andreessen Horowitz took part in last month’s $314.2 million token offering. The proceeds from this funding round will help further Solana’s development. With upgrades in speed and other areas, this crypto could be the biggest winner in the future.
Right now, the token trades around $27.60. It could avoid further declines, as investors expect it will start to make a dent in the lead other altcoins enjoy.
If Solana becomes one of the most widely used cryptos for DeFi, its price could soar back to its high of $58.30. With a market cap of only $7.5 billion today, it will have an enormous runway if it can move up the ranks.
Cryptos: Ripple (XRP-USD)
What’s the play with XRP? This token, designed by Ripple to facilitate cross-border remittance payments, isn’t in the running to become a top coin in DeFi — at least not yet. But it does have a factor that could result in big gains for its investors.
As you may know, Ripple Labs is in a courtroom battle with the U.S. Securities and Exchange Commission (SEC). The SEC claims the sale of XRP tokens was an unregistered securities offering. This happened because Ripple is centralized, unlike most other cryptocurrencies which are decentralized.
At first, crypto investors wrote off Ripple’s chances of beating the case. But so far, the SEC has been playing defense. For example, the agency recently failed to avoid a deposition of a former SEC director being entered in the case.
Yet while its chances of prevailing remain high, I still believe this binary bet isn’t worth it at today’s price of 59 cents. So at what price should you consider buying XRP? As the case is months away from wrapping up, wait for near-term traders to grow impatient. When they bid it down, the risk-to-return ratio will be more in your favor.
On the date of publication, Thomas Niel held long positions in Bitcoin and Ethereum. He did not have (either directly or indirectly) any positions in any other securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.