While the crypto market has cooled off from a torrid start to the year, plenty of cryptos are still poised to go higher in the second half of 2023. Two of my top picks are Bitcoin (CRYPTO: BTC) and Cardano (CRYPTO: ADA).
Of course, there are always risks and plenty of volatility when investing in cryptocurrencies, so Bitcoin and Cardano are far from being slam-dunk investments. The good news is that both of these cryptos also offer some downside protection in case the market heads south later this year. Let's take a closer look at both.
Bitcoin
Ever since it hit the $30,000 price level, Bitcoin has struggled. While Bitcoin is still up 60% for the year, it is down 8% over the past 30 days and trades at under $27,000. But enough buy signals are flashing green to make Bitcoin a no-brainer investment in June.
First and most importantly, Bitcoin has emerged as a "safe-haven" investment for some investors in the wake of this year's banking crisis. While the June debt crisis for the U.S. government has been averted, there are plenty of concerns ahead. One of these is the process of de-dollarization, as nations around the world begin to turn their backs on the U.S. dollar. With that in mind, Bitcoin -- as a crypto outside of the traditional banking and finance system -- offers a potential hedge against a broader U.S. economic downturn.
Image source: Getty Images.
But what about Bitcoin's upside potential in 2023? That's where things get really interesting, because the Bitcoin ecosystem has been growing at a surprising clip this year. The introduction of Bitcoin non-fungible tokens (NFTs) at the start of the year has transformed Bitcoin into the second-leading platform for NFTs, as measured by 24-hour NFT sales volume. And the continued buildout of new Layer 2 scaling solutions -- such as the Lightning Network for faster transactions -- is setting the stage for future Bitcoin growth as an online payment option.
Best of all, Bitcoin is now less than a year away from its next halving event, scheduled to take place in April 2024. A halving event -- in which the reward for mining a new block on the Bitcoin blockchain falls by one-half -- occurs only once every four years. This technical event increases the relative scarcity of Bitcoin, making it more attractive to investors.
In three prior halving events, Bitcoin has seen explosive growth in price both leading up to and after the halving. Thus, June could be a profitable entry point to participate in the next Bitcoin halving rally. Just keep in mind that past performance is no guarantee of future performance, so don't make this halving event your only reason for loading up on Bitcoin.
Cardano
Cardano is the seventh-largest blockchain project in the world, with a total market cap of $13 billion and a strong track record of success. While Cardano might not get as much acclaim as Bitcoin, it's still up 50% for the year, making it a top market performer among large-cap cryptos.
Thus far in 2023, Cardano has managed to keep pace with Bitcoin largely based on its spectacular growth in decentralized finance (DeFi). Cardano was once a non-player in DeFi but is now moving up the charts for total value locked (TVL), arguably the single most important metric for measuring DeFi strength. While Cardano still only ranks No. 15 among all blockchains, its TVL reached a new peak in 2023 and is at the highest level it has been at since May 2022. This is more than just smoke and mirrors. Cardano has already launched a new stablecoin project this year, and is seeing surprising traction with new decentralized exchanges. Both of these are fantastic building blocks for future DeFi growth.
And the best may be yet to come. Cardano continues to make new technological upgrades to its blockchain. Last year saw the rollout of a major blockchain upgrade, and this year saw the release of the Hydra scaling solution, which could result in super-fast transaction speeds for the blockchain. Cardano also recently launched Voltaire, the last major stage in its roadmap for future growth. Voltaire is all about blockchain governance, so it sets the stage for stable, long-term growth.
Bitcoin or Cardano?
There are good reasons to be bullish on both Bitcoin and Cardano. But if forced to choose between the two, it's Bitcoin, and it's not even close. With Bitcoin, you get the best of both worlds. You get the downside protection of Bitcoin being a safe-haven asset, and you also get the spectacular upside protection of Bitcoin's next halving event. Add in the fact that Bitcoin is becoming a favorite of large institutional investors looking to get crypto exposure, and it's clear why I'm bullish on Bitcoin in the short term and long term.
