With thousands of coins to choose from, investing in the volatile world of cryptocurrencies isn't for the faint of heart.
Key Takeaways:
- Cryptocurrencies are incredibly volatile and not for all investors. Decide if they fit your risk tolerance before diving in.
- Bitcoin (BTC) and Ether (ETH) are in a league of their own as the two best cryptocurrencies to buy.
- Four more speculative cryptos are worth a look, each with their own defining characteristics.
In a span of just 16 years, cryptocurrencies emerged from obscurity to become an important part of financial markets. But there's one thing the industry's evolution hasn't eradicated: extreme volatility.
At its peak in November 2021, the crypto market was worth upwards of $2.9 trillion. By mid-2022, hit by rising inflation and an aggressive rate-hiking cycle by the Federal Reserve, the entire market was worth less than $900 billion. Fast forward to June 4 of this year, and cryptocurrencies collectively are worth upwards of $3.3 trillion.
That's quite a roller coaster. If you're not willing to endure such violent swings, you simply shouldn't own cryptocurrencies. And if you do get into crypto, there are thousands of coins to choose from, each one with different dynamics. It's daunting. Here are six of the best cryptocurrencies to buy now:
- Bitcoin (BTC)
- Ether (ETH)
- Solana (SOL)
- Avalanche (AVAX)
- Pepe (PEPE)
- Cardano (ADA)
Cryptocurrency is an incredibly nascent asset class, with origins only dating back to 2009. Extreme volatility is par for the course, so investors looking to insulate themselves from the potential total collapse of their holdings will want to go with more established names. None is more established than Bitcoin, the first cryptocurrency and largest by market capitalization with a valuation of $2.09 trillion, or more than 63% of the overall market.
Second by market capitalization is Ether, which is the native token on the widely used Ethereum blockchain. Often colloquially referred to as Ethereum, ETH's market cap is around $314 billion and accounts for about 9.6% of the total cryptocurrency market. Unlike Bitcoin, Ether's underlying network is far more than just a tool for peer-to-peer payments; the Ethereum blockchain is custom-made for smart contracts and decentralized finance tools, as well as for so-called Web3 applications and the trading of non-fungible tokens, or NFTs.
Like Ethereum, Solana is a blockchain that was built with utility in mind. In Solana's case, it's become known for facilitating the easy creation of decentralized applications, or dApps, but the network is actually even faster than Ethereum, has far lower fees and is intended to be more easily scalable than rivals. The native token of this blockchain is the eponymous Solana, also known as SOL.
When investing in cryptocurrency, investors should understand that Bitcoin and Ether are in their own tier. Solana has arguably earned its spot as a second-tier coin due to the strong meme coin ecosystem, ease of use and low fees. AVAX and the other altcoins on this list, however, all have more risk, and investors should factor that into their decisions. Consider them purely speculative wagers.
Caveats aside, the Avalanche network's AVAX token earns its place on this list by virtue of the ambitious goals of the Avalanche blockchain.
If you're new to the world of cryptocurrency, there's something you need to know: Sometimes the coins that take off are just plain stupid. Pepe, a meme coin with no inherent value other than its name – a reference to an old internet meme of a frog – is just such an example.If you do decide to gamble on PEPE, be sure you're buying the correct one, the Ethereum-based coin with a high market cap, as there are several different PEPE coins across the cryptoverse.
Founded in 2017 by Ethereum co-founder Charles Hoskinson, Cardano is a proof-of-stake blockchain and one of the largest blockchains to successfully run that more energy-efficient protocol. Cardano aims to foster a developer-friendly ecosystem for dApps. Unlike Ethereum, Cardano has a hard cap on the number of coins that can ever exist, topping out at 45 billion. Thankfully for investors, around 35.3 billion, or more than 78%, of that supply has already been issued, meaning the amount of overall dilution remaining is both known and relatively limited.
When times are good, they're great, but in down markets, you can quickly lose your shirt. Volatility, especially in crypto, goes both ways.
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