On Aug. 8, cryptocurrencies caught a bit of a lift as volatility ticked higher around the world. It hasn’t ignited a full-blown breakout in cryptocurrencies — yet — but it certainly was a reminder for investors to look at the best cryptos to buy in August.
There are worries about a global recession, as import and export data out of China flashed some warning signs. Further, signs of stress in the financial sector (caused by a recent credit downgrade by Moody’s) and a downgrade of US debt by Fitch have investors thinking that their money may be safer in crypto.
While crypto can be volatile, let’s not pretend that other asset classes are exempt from volatility. The US stock market suffered a large correction in 2022, only to catch many investors off guard and rebound dramatically in 2023. The commercial real estate market continues to show some red flags, while US Treasuries have been under pressure this year too.
Volatility aside, some crypto investors may simply be looking at this situation in terms of diversification, making the case that this is simply another asset class that they should have exposure to.
So what are some of the best cryptos to buy in August? Let’s look.
Bitcoin (BTC)
As the leading cryptocurrency from a market capitalization perspective, Bitcoin (BTC-USD) is hard to ignore. While Bitcoin prices have been volatile over the last few years, the crypto world lives and dies with this one.
That may seem a bit extreme, but if Bitcoin were to be eviscerated, so too would other cryptocurrencies. Bitcoin’s market cap of roughly $575 billion encompasses roughly half of the cryptocurrency market.
After a painful 2022, Bitcoin got off to a stellar start in 2023. It rallied almost 30% while climbing in 12 out of 16 sessions. The biggest daily loss in that stretch weighs in at just 0.36%. Ultimately, it’s up almost 80% so far for this year, with many investors hoping more gains are on the way.
If Bitcoin can clear and hold above the $30,000 mark, it could kickstart a move back to the 2023 highs. While I personally don’t see this happening, Fundstrat recently made the case that Bitcoin could climb to $180,000 by April 2024.
Ethereum (ETH)
As the No. 2 cryptocurrency by market cap, Ethereum (ETH-USD) is also worth mentioning here. Ethereum weighs in with a $220 billion market cap or almost 18% market share. Combined with Bitcoin, the two make up almost 70% of the crypto market.
Unlike many other cryptocurrencies — and despite not being No. 1 in terms of market share — Ethereum has a number of excellent use cases.
It can process payments faster and can also be used in smart contracts. In the latter case, that would be something like a contract that contains certain contractual milestones that unlock payment as they are completed.
Or put another way: “Ethereum has its own built-in currency Ether, which can also help execute commands for programmable action and smart contracts on the Ethereum blockchain. A self-executing contract written into lines of code and existing across a blockchain is called a smart contract.”
Many investors view Ethereum vs. Bitcoin when in reality they were meant to complement each other. In one instance, “Bitcoin was created as an alternative to national currencies and thus aspires to be a medium of exchange and a store of value. Ethereum was intended as a platform to facilitate immutable, programmatic contracts and applications via a global virtual machine.”
Solana (SOL)
Solana (SOL-USD) has had a pretty good run this year. While Bitcoin is up almost 80% and Ethereum is up more than 50%, Solana is up a whopping 150%. Bitcoin and Ethereum are the face of the cryptocurrency market, but that doesn’t mean investors should ignore some of these other cryptos.
In fact, it’s these other ones that could become the best cryptos to buy in August.
Solana is in the top 10 when it comes to cryptocurrency market cap. On the flip side, it has less than 1% market share (despite how well it has done so far in 2023).
When we look at the technicals, that’s when Solana gets attractive.
The $27 zone has been resistance all year for Solana. If it can clear this level and close above this mark, it could open up a significant upside. Specifically, it will have bulls looking at a 2023 high up at $32.40. From there, $40-plus could be in play, followed by potentially much larger gains.
Remember, Solana topped out at $260. Even regaining half of those losses puts $130-plus in play.
On the date of publication, Bret Kenwell held a long position in ETH-USD. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
