Are you an investor struggling to pick between Bitcoin (BTC-USD), Ethereum (ETH-USD), or XRP (XRP-USD)? If so, then you ought to know there’s no clear answer to that question. It all depends on what sort of upside you’re targeting and the risks you’re willing to take. Cryptos are much harder to predict than stocks due to the lack of an underlying business. Plus, the possibility of outsized returns is the only reason people invest in these assets.
Indeed, you should consider the risks too. The crypto market is notoriously volatile and unpredictable. The broader economy currently faces some headwinds, and Bitcoin has failed to break the $30,000 resistance level several times. Additionally, investors are increasingly questioning the Federal Reserve’s interest rate hikes amid still-high inflation readings. These factors could dampen the demand for crypto assets and trigger a sell-off. Notably, the cryptos that are more cyclical in nature will see the worst of it.
But there are still some cryptos that are trading at relatively attractive entry points for long-term investors. Potential rate cuts, combined with a Bitcoin halving event in 2024, could cause the crypto market to rally again.
With all that in mind, let’s consider the best crypto to buy now for each of three types of investors.
Bitcoin started the year on a tear, up more than 62% year-to-date. Many believe BTC could lead a new crypto rally, despite recent pullbacks from the $30,000 range.
Furthermore, the recent banking crisis and recession fears strengthened the rally, while many other traditional assets fell. Bitcoin is the largest cryptocurrency and is by far the best crypto to buy regarding safety. Unlike banks, no centralized authority stops you from withdrawing and transferring BTC. Thus, Bitcoin becomes very compelling when people lose trust in banks.
Bitcoin is the best bet for those who believe a recession is coming. Many other cryptos have ties to the traditional banking system or rely on third parties to support the network. For example, it is widely known that Ethereum uses AWS. In fact, most ETH nodes are controlled by centralized entities like AWS.
Speaking of Ethereum, I believe it is the best crypto to buy for investors who prefer a combination of upside potential and safety. While not as secure as Bitcoin, and reliant on centralized partners, it remains relatively decentralized. Not all nodes are validators, and centralized entities won’t have much control over the Ethereum network unless they hold the majority of staked ETH. Thus, if AWS runs into any problems, it will likely cause the blockchain some performance issues at most.
With the safety part covered, let’s cover Ethereum’s price action. The banking crisis fueled this year’s crypto rally, with ETH slightly underperforming its safer peer, gaining 51.3% year-to-date. If these bank failures linger on, I don’t see ETH continuing to outperform BTC as it did throughout its history. However, if looser monetary policy triggers the next crypto rally, Ethereum is poised to outperform Bitcoin.
XRP is not for the faint-hearted investor. It is the third-largest cryptocurrency by popularity (according to Google Trends) if you exclude the stablecoin Tether (USDT-USD).
Investing in XRP is risky due to Ripple’s ongoing legal battle with the Securities and Exchange Commission regarding its classification as a security. In brief, the case has mostly gone back and forth, with the most recent development causing a spike in XRP’s price. Crypto experts suggest the case has shifted in Ripple’s favor following a tweet by Ripple’s chief legal officer about the Supreme Court’s adaptability to the modern world.
But I would warn that this case is not under the purview of the Supreme Court. Rather, it is being held in a New York court. Ripple’s chief legal officer’s attempt to connect an unrelated case is misleading in my opinion.
Of course, no one can predict the judge’s decision. There’s no end in sight regarding the case, and it has kept the price of XRP depressed despite its vast utility. Ripple is a leader in developing blockchain technology that could be integrated with central bank digital currencies (CBDCs) as well as traditional financial institutions. To date, XRP and its parent company Ripple already boasts some compelling partnerships with multiple big-name banks. However, many are limiting their usage of Ripple’s technology due to the case.
However, what I can predict is substantial gains if Ripple wins the case, and substantial losses if it does not. It’s easily the best crypto to buy for investors that prefer more risk.
On the date of publication, Omor Ibne Ehsan 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.