The centerpiece of nearly every crypto investor's attention in 2023 has been Bitcoin (BTC 3.43%), which is up a staggering 77% year to date. But did you know that there are a handful of cryptos, all ranked within the top 20 by market capitalization, that are turning in even more impressive, triple-digit returns this year?
XRP (XRP 2.24%) is up 108% year to date, Solana (SOL 4.08%) is up 145%, and Bitcoin Cash (BCH 3.75%) is up 160%. But are any of these cryptocurrencies worth buying?
CRYPTO: SOL
Key Data Points
Buy Solana
Of these three cryptos, I'm most bullish on the prospects of Solana, which is a layer 1 blockchain most similar to Ethereum (ETH 4.01%). Just two years ago, Solana was talked about as a potential "Ethereum killer," and the future upside looked unstoppable. But then came last year's crypto market collapse. The FTX meltdown at the end of 2022 hit Solana much harder than it did other cryptos due to the extensive relationships that Solana previously had with Sam Bankman-Fried.
Image source: Getty Images.
But Solana is well on the path to recovery this year. Solana has shored up some of the problems that caused blockchain outages last year and actually posted 100% uptime in the second quarter of 2023. Moreover, momentum is returning to the non-fungible token (NFT) market, where Solana had been gaining market share from Ethereum. And most notably, Solana officially launched its mobile crypto strategy this spring. In April, Solana introduced the $1,000 Saga mobile phone, which is optimized for crypto. Solana views its mobile strategy as a primary way to onboard new users. If Solana is right, it could lead to long-term price gains.
The one drawback, of course, is that Solana does face a significant amount of regulatory risk. In early June, the SEC named Solana as a "security" in its lawsuits against cryptocurrency exchanges Binance and Coinbase Global. The growing consensus is that fears of this regulatory risk could be overblown, which is why Solana is up 30% over the past 30 days. But buyer beware.
CRYPTO: XRP
Key Data Points
Hold XRP
Next up is XRP, a former crypto darling that had been mired in a nasty, protracted court battle with the SEC since December 2020. But then, in July, came a legal victory for XRP, and the crypto token immediately blasted off into outer space. On the basis of this new optimism, XRP surged nearly 70%.
But guess what? That initial momentum seems to have cooled off, and XRP is still trading for less than $1. Yes, there are plenty of crypto analysts who think that XRP is going to hit the $5 mark (and perhaps even higher), but I'm not so convinced.
My "hold" call for XRP has a lot to do with what has happened over the past two years when this crypto was locked up in legal battles. Long story short, XRP powers the Ripple payment network. At one time, this Ripple payment network was very unique since it enabled nearly zero-cost cross-border transfers. Back in 2019, this Ripple payment network seemed to be the future of sending money around the world.
But that was before the emergence of blockchain networks such as Solana and Avalanche (AVAX 3.35%). Both rose to prominence in 2020, just about the time that XRP was going into the legal deep freezer. So that's why I'm not convinced that XRP is a winning lottery ticket for crypto investors -- there's just too much competition these days.
CRYPTO: BCH
Key Data Points
Sell Bitcoin Cash
Finally, there's Bitcoin Cash, which has turned in head-spinning performance this year. But the important point to keep in mind is that Bitcoin Cash is a hard fork of the Bitcoin blockchain, meaning that the two cryptos share the same fundamental blockchain DNA. The two cryptocurrencies parted ways in August 2017. The whole premise of Bitcoin Cash back then was that Bitcoin should be, first and foremost, a form of peer-to-peer electronic cash.
From my perspective, it's much better simply to invest in Bitcoin, not Bitcoin Cash. While Bitcoin Cash has admittedly trounced the performance of Bitcoin this year, I don't think this performance is sustainable over the long haul. If you're a long-term investor, then invest in the real thing, not a "light" version that targets just a small subset of what Bitcoin can offer.
Buy, sell, hold
Based on the above, my investment strategy is as follows: Buy Solana, hold XRP, and sell Bitcoin Cash. Solana has a real chance to challenge Ethereum as the premier layer 1 blockchain with its mobile crypto strategy. XRP got a big bounce from the SEC court ruling, but the jury is still out on whether it's a good investment. And sell Bitcoin Cash -- Bitcoin is a much better investment over the long haul.
