3 Top Cryptocurrencies That Can Rise Higher Than Bitcoin
In the crypto market, all eyes are on you Bitcoin (BTC -0.16%), the world’s largest cryptocurrency by market capitalization. At one point, Bitcoin was up more than 80% for the year as it rose to a price of $30,000. However, Bitcoin has started to pull back in recent days and is now only up 3% in the last 30 days.
At the same time, a number of cryptos are keeping pace with Bitcoin’s overall performance. For example, Ethereum (ETH -0.01%) is up more than 63% for the year and 10% over the past 30 days. And both parts Avalanche (AVAX 0.24%) and Cardano (ADA 1.33%) is up more than 64% for the year. Here’s a closer look at why these three cryptos may be poised to soar higher than Bitcoin.
The Layer 1 blockchain task
All three of these cryptos are first class Layer 1 blockchains. You can think of these blockchains as the “building blocks” of the crypto industry. Once you have a Layer 1 blockchain like Ethereum, you can start building on top of it. That means enjoying things like non-fungible tokens (NFT), smart contracts, decentralized finance (DeFi), blockchain gaming and web3 decentralized applications.
Importantly, these are all innovations that the Bitcoin blockchain was not designed to offer. Bitcoin is primarily a potential store of value, similar to gold. Satoshi Nakamoto, the anonymous creator of Bitcoin, also designed it to be a peer-to-peer electronic cash system. But beyond that, Bitcoin does not offer anywhere near the functionality and diversification that you find with the large Layer 1 blockchain networks. If you want to get involved in the world of decentralized finance (DeFi), for example, you go to a blockchain like Ethereum.
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As a result, a powerful investment task right now involves Layer 1 blockchains. All three of these Layer 1 blockchains – Ethereum, Cardano and Avalanche – are highly diversified, and all rank as Top 15 cryptocurrencies by market cap. In terms of market capitalization, Ethereum trails only Bitcoin. Launched back in 2017, Cardano now ranks as the #7 crypto in terms of market cap.
Of these three, Avalanche (No. 15 in terms of market capitalization) may be the least known among casual investors. However, Avalanche was routinely discussed as a potential “Ethereum killer” during the recent crypto bull market rally and comes with a solid pedigree. And in January 2023, the Avalanche signed an important partnership agreement with Amazon Web Services to offer blockchain services to large corporate customers and government customers.
The flight to quality
However, not all Layer 1 blockchains see the same kind of performance as Ethereum, Cardano, and Avalanche. For example, if you look at the next layer of smaller Layer 1 blockchains, many of them are actually struggling right now. For example, Aptos (CRYPTO: APT) is down 9% in the last 30 days, and Algorand (CRYPTO: ALGO) is down 11%.
The big factor here seems to be a collective flight to quality by investors. While sentiment has turned markedly positive for crypto in 2023, there is still a recognition that we are not out of the woods yet. Case in point: Bitcoin seemed unstoppable in the first three months of the year, but is now struggling to rise past $30,000.
As a result, investors continue to search for high-quality names. This generally means focusing on cryptos with huge market caps and the largest blockchain ecosystems. This explains why some Layer 1 blockchains do so well while others do not.
Which Layer 1 blockchain is the best investment?
When choosing between top tier 1 blockchains, the obvious choice would be Ethereum. This crypto, just like Bitcoin, is a favorite among institutional investors. It has a huge market cap, a well-diversified ecosystem and a huge developer base. Ethereum also ranks #1 in NFT trading volume and #1 in Total Value Locked (TVL), which is a key metric for determining how much activity is actually taking place on a blockchain. Moreover, at the end of 2022, Ethereum completed a highly successful technological transformation – known as The Merge – which sets the stage for strong long-term growth.
But if you’re looking for a dark horse candidate that could end up outperforming Ethereum in the long run, it’s Cardano. This crypto, which has never traded higher than $3.10, is a fuego this year. That’s up 64% for the year, keeping pace with both Ethereum and Bitcoin. And it has a new strategy based on DeFi that is taking off. The latest figures for the first quarter of 2023 for Cardano are now in, and all signals are flashing green.
Now is the time to invest in high-quality Layer 1 blockchains that have diverse blockchain ecosystems and solid long-term growth prospects. The three names on my list right now are Ethereum, Cardano and Avalanche.
