Cryptocurrencies have exploded in popularity in recent years and financial analysts expect them to continue growing. Estimates show that by 2025 there could be about one billion Bitcoin wallets around the world, with some investment professionals expecting prices to rise to as much as $1 million by 2024.
Many people have already invested in cryptocurrency, but for those who haven’t, there can be some confusion about how to get involved, what kind of cryptocurrencies to buy and how to enter a market that has such high prices.
First, it’s critical to understand that Bitcoin is far from being the only cryptocurrency out there. It’s the best-known and the most expensive, but there are hundreds more, many of which are available at lower, more attainable prices that take advantage of the same technology and are poised for growth.
Ethereum has the second-largest market capitalization after Bitcoin at about $500 billion, making it an important rival to the well-known coin. Because of its position in second place and widespread use with decentralized apps, Ethereum is the only serious contender that could surpass Bitcoin in price in the future. Trading at $4,700, the barrier to entry for this cryptocurrency is still high, but the growth potential is considerable.
Branded as a more sustainable cryptocurrency, Cardano builds on the technology popularized by Bitcoin and Ethereum to produce cryptocurrency with less energy and faster transactions. Cardano uses a measured approach that means it has evolved more slowly than its competitors. However, The Motley Fool still considers it a cryptocurrency to watch thanks to the rollout of its smart contracts technology that began in fall 2021.
With an approach that makes it a significant rival to Ethereum, financial analysts also expect Solana to boom in the next year after experiencing a tremendous surge in 2021. From August to September, the coin’s value jumped from $30 to more than $200, an increase of more than 560%. Like Cardano, Solana recently introduced its smart contracts technology, fueling the growth. Plus, it has an efficient blockchain that processes transactions quickly.
Polkadot is considered an alternative coin that seeks to integrate different blockchains by creating a network that connects them all. This is an ambitious and useful goal that has caught the eye of many investors, but Polkadot’s ultimate goal is to power the next stage of the Internet, called Web 3.0. If it is able to harness these capabilities, Polkadot will provide the security and privacy-enhancing features of the next phase of the web, making it indispensable.
If you can afford it, the old standby Bitcoin is still a worthy addition to any portfolio. Often regarded as volatile because of its many precipitous price drops, Bitcoin consistently rises again to levels much higher than its previous peaks, including reaching a record high of $69,000 in November. Although Bitcoin comes with a higher price point that dents profitability in the short-term, experts still consider the oldest cryptocurrency an intelligent bet for long-term holding. Some investors expect incredible price surges in 2022, including one prediction that Bitcoin will reach $250,000 by the end of 2022.
As with any investment, you should do your research and perhaps speak to an experienced financial professional to guide your decision-making. But with more than a decade of growth and maturation, the cryptocurrency market is a serious contender that you should consider for portfolio diversification. Many different cryptocurrency options can provide varying benefits, offer different strategies, and come with differing price points. Determine what your investment goals are for 2022 and see how cryptocurrency could fit into them.