Cryptocurrencies delivered huge gains for investors during the previous bull market. Yet, more than a few got wiped out as they plunged from their late-2021 peaks. But with 2023 looking like it could be the start of the thaw following crypto winter, let’s look at the best cryptos for day trading.
When it comes to ultra-short-term trading, nothing trumps liquidity. In that sense, the best cryptos for day trading are highly liquid and generally well-known. The smaller, low-volume cryptos can work during trending markets over a longer holding period. However, for in-and-out scalps, we need liquid cryptos.
So, you’re likely to recognize all of the best cryptos for day trading below.
In the sense of size and liquidity, how can we not kick off the list with Bitcoin (BTC-USD)? Bitcoin is the largest crypto in the world, with a market cap of around $540 billion. It’s the most well-known cryptocurrency out there, garnering the bulk of the industry’s attention. Over the past three months, its trading volume has averaged $25.8 billion a day.
Day traders focused on cryptos must keep Bitcoin on their watchlist, even if they’re not trading it. That’s because the movement in Bitcoin impacts other cryptocurrencies, similar to the way the movement in stocks like Apple (NASDAQ:AAPL) or Microsoft (NASDAQ:MSFT) can impact the rest of the tech sector.
Bitcoin had a stellar first quarter. According to Finbold, “Bitcoin’s return on investment (ROI) was 170.32% more compared to the average of five major stock indexes. During the quarter, Bitcoin’s returns stood at 69.4%, while average returns for the indexes stood at 5.5%.”
The bulls are certainly in charge at the moment, buying the dips and sending the crypto soaring higher. The next important level to watch is $30,000, which is just 7% above where BTC currently trades.
Ethereum (ETH-USD) also had a great Q1, rallying about 50% in the first three months of the year and more than doubling off of its 2022 low. It is the second-largest cryptocurrency after Bitcoin, with a market cap of about $224.5 billion.
Ethereum is also one of the most widely traded cryptocurrencies, with an average daily trading volume of $8.6 billion. That makes the token one of the best cryptos for day trading.
For what it’s worth, Ethereum deserves every bit as much attention as Bitcoin gets given that it has such a wide range of applications. It’s faster when it comes to transactions, and its smart contracts offer real-world solutions as technology continues to evolve.
As silly as Dogecoin (DOGE-USD) is, it’s on the list of the best cryptos for day trading due to its large following and ample liquidity. After the tethered crypto holdings, Bitcoin and Ethereum, Dogecoin is next on the list for daily trading volume.
It has traded an average of $604.6 million a day over the past three months and commands a market cap of $11.9 billion. It may have started off as a joke, but its large following isn’t.
It certainly doesn’t hurt that Tesla (NASDAQ:TSLA) and Twitter CEO Elon Musk has a fascination with the cryptocurrency. In fact, he recently integrated the logo into the Twitter platform, adding a quick $4 billion to the token’s market value.
Day traders thrive on volatility and massive moves like this. While I don’t personally believe in the long-term viability of Dogecoin, this one puts together enough moves for day traders to take advantage of.
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.