Looking for exposure to the booming potential of the crypto market? Look no further than these three assets.
With thousands of cryptocurrencies on the market and a bull run lifting everything up, it can be challenging to cut through the noise and identify the cryptocurrencies most deserving of an investment.
Yet, as complicated as crypto can appear to be, it is often best to keep it simple. With a brief exploration, it won't take much to see why these three assets are currently the top candidates to give your portfolio comprehensive exposure to the best the crypto market has to offer.
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1. Bitcoin
Bitcoin (BTC 0.27%), the world's first and most well-known cryptocurrency, continues to lead the pack. Recent developments have bolstered its short-term prospects, making it a compelling investment. One significant event is the halving that occurred in April. Occurring approximately every four years, the halving reduces the reward miners receive for mining new blocks by half and effectively reduces Bitcoin's inflation rate. This built-in scarcity mechanism has historically led to substantial price increases post-halving due to reduced supply.
Additionally, the approval of spot Bitcoin ETFs in January is shaping up to be a complete game changer. These ETFs allow investors to gain exposure to Bitcoin through traditional brokerage accounts, bypassing the complexities of crypto exchanges that may have hindered adoption. This ease of access is likely to attract a broader range of investors, including institutional players who have previously been hesitant due to regulatory uncertainties and the technical barriers of buying Bitcoin directly.
We are already seeing the first institutional participants enter the market, adding significant pressure to Bitcoin's finite supply. Institutions have extensive capital at their disposal and if even a small amount of this money makes its way to Bitcoin, it could drive substantial price appreciation. This institutional interest, combined with Bitcoin's fundamental strengths, such as its decentralization, security, and fixed supply, give Bitcoin the clearest and safest prospects for future growth.
2. Ethereum
The second crypto I recommend is Ethereum (ETH -0.06%). In the short term, Ethereum is poised to benefit from the pending launch of its own spot ETFs. The Securities and Exchange Commission recently gave the green light to eight applicants looking to sponsor Ethereum ETFs, with trading expected to begin sometime this summer.
These ETFs will open the doors for more retail and institutional investors to enter the Ethereum market, driving demand and potentially boosting its price.
Beyond short-term catalysts, Ethereum's long-term fundamentals are incredibly strong, especially in the decentralized finance (DeFi) space. As one of the most prominent use cases of blockchain technology, DeFi represents a revolutionary shift in how financial services are delivered. By utilizing smart contracts, common financial practices like lending, borrowing, trading, and more can be done without intermediaries. To put it simply, DeFi is transforming finance and Ethereum is at the forefront of this innovation.
Currently, over 60% of all DeFi value is locked on the Ethereum blockchain. As the DeFi economy continues to grow, so will the demand for blockspace on Ethereum, further solidifying its long-term value proposition.
3. Coinbase
Obviously, Coinbase Global (COIN 0.10%) is not a cryptocurrency, but it might be the ultimate play to gain broad, maximum exposure to the entire crypto market. As the largest cryptocurrency exchange in the U.S., Coinbase offers a vast range of crypto-related products. So, as the cryptocurrency market grows, so should Coinbase's potential for profit.
Best of all, Coinbase has made significant strides in transforming its business model over the years and now boasts several institutional and retail products capable of producing revenue in any market condition. This includes its international expansion, custodial services, staking rewards, stablecoin interest, and even launching its own blockchain, Base.
These moves are not only a testament to Coinbase's resilience and knack for innovation, but also position the company for long-term growth. As far as crypto has come, it has more room to grow, and as it does, Coinbase will be right by its side.
RJ Fulton has positions in Bitcoin, Coinbase Global, and Ethereum. The Motley Fool has positions in and recommends Bitcoin, Coinbase Global, and Ethereum. The Motley Fool has a disclosure policy.
