Led by Bitcoin (BTC -2.22%), which was up by more than 150%, a number of top cryptos posted eye-popping triple-digit percentage gains last year. So which cryptocurrencies have the potential to soar in price by 100% or more again this year?
In addition to Bitcoin, another top crypto on my shortlist is XRP (XRP -1.98%). Let's take a closer look at the cases for each.
Bitcoin
While Bitcoin is down by nearly 10% over the past 30 days, and enthusiasm around the newly approved spot Bitcoin exchange-traded funds (ETFs) appears to have cooled, there's still plenty to like about Bitcoin's prospects.
Most importantly, the Securities and Exchange Commission's (SEC) approval of spot Bitcoin ETFs has essentially given the green light to both retail and institutional investors to allocate at least a tiny part of their overall portfolios to Bitcoin. The current consensus appears to be that 1% will be the starting point for many large institutional investors, many of which will be dipping their toes into the crypto waters for the first time.
But that figure should grow over time. According to Cathie Wood of Ark Invest, for example, institutional investors could ultimately decide to allocate anywhere from 2.5% to 6.5% of their portfolios to crypto. That could lead to a tsunami of new money flowing into Bitcoin. In just the first few days of trading, for example, two of the new Bitcoin ETFs amassed $1 billion each in new investor money.
But the real catalyst that could enable Bitcoin to double in value by year's end is the halving event coming up in April. In a halving, the rewards paid out to Bitcoin miners for validating blocks of transactions on the blockchain are cut in half. That decreases the growth rate in the supply of Bitcoin.
These fundamental changes to the Bitcoin ecosystem, which happen about every four years, tend to be followed by spectacular rallies. Wall Street investment firm Morgan Stanley (MS 0.29%), for example, has modeled the prior halving events (which occurred in 2012, 2016, and 2020) and found that the bullish cycles after each one lasted about 12 to 18 months. During those periods, Bitcoin's price has the potential to go stratospheric.
According to a growing consensus on Wall Street, that could mean Bitcoin breaking through the $100,000 level by the end of 2024 from its current price of about $40,000.
XRP
Another crypto token that is capable of doubling in value in the near term is XRP. In fact, XRP did exactly that this past summer, when it surged from $0.48 to $0.95 in just a 24-hour period. XRP is once again trading near the $0.50 level, and that leads me to think that a rise to the $1 mark is well within the realm of possibility.
Image source: Getty Images.
However, this crypto comes with all kinds of disclaimers, footnotes, and asterisks. That's because Ripple, the company behind the XRP token, is facing an unusual situation that may or may not be resolved in 2024. For more than three years, Ripple has been fighting a legal case with the SEC, which is determined to have XRP designated as a security for regulatory purposes, rather than simply a digital asset.
As a result, the price of XRP tends to move in reaction to news about the twists and turns of this legal case. That time XRP doubled this past summer? It came immediately after a court ruling that was positive for Ripple. Some traders took the news as a clear sign of an impending victory for Ripple. But after the SEC said it would continue to fight, the price of XRP dipped sharply, and within a month, it had retraced its way back to the $0.50 level.
The good news is that the overall regulatory playing field appears to be shifting in XRP's favor. The SEC has finally agreed to approve the new spot Bitcoin ETFs. That would seem to indicate that crypto has the potential to gain mainstream acceptance in the eyes of the SEC.
And secondly, it's election season. The hope in the crypto community is that we will get a more crypto-friendly regulatory environment after the election.
Bitcoin or XRP?
If forced to choose between Bitcoin and XRP, I would definitely choose Bitcoin. In my view, it simply has superior long-term growth prospects. It is the type of crypto that I would buy and hold forever. In contrast, an investment in XRP feels like much more of a lottery ticket to me.
That said, both cryptos have the potential to soar by 100% or more in 2024. If you are looking for a way to boost your overall portfolio returns, an investment in either could be worth a closer look.
