It's getting harder and harder to ignore the obvious: A bull market rally has finally arrived for crypto investors. Bitcoin (BTC 0.30%) is leading the way with 53% gains year to date, but plenty of other cryptocurrencies are up anywhere from 30% to 50% for the year. And some speculative meme coins are posting triple-digit gains for the year.
So which cryptocurrencies are the best buys in March? Bitcoin is the obvious choice. But if you are looking for more diversification in your portfolio, then Ethereum (ETH 0.65%) and Cardano (ADA 1.91%) could be nice additions as well. Let's take a closer look.
Bitcoin
All eyes are now on Bitcoin, and for good reason. The enthusiasm around the new spot Bitcoin ETFs, which officially launched in January, continues unabated. Both retail and institutional investors are now looking to boost their Bitcoin allocations, and that has led to a huge rally to start the year. Bitcoin is now up 27% over the past 7 days, 50% over the past month, and 53% for the year.
CRYPTO: BTC
Key Data Points
But there's more to Bitcoin than just the narrative around exchange-traded funds (ETFs) based on the cryptocurrency's spot price. There's also the upcoming halving, scheduled for late April, in which the rewards for new Bitcoin creation will drop by one-half. This supply-side shock, combined with the ongoing influx of new demand, is almost certain to send Bitcoin even higher.
This has been the case with three previous Bitcoin halving events, and many investors think the same thing will happen again in the 2024-2025 cycle. In fact, some investors are now predicting that Bitcoin could blast through the $100,000 mark by the end of the year. Just be careful, though, because past performance is no guarantee of future results.
Ethereum
Ethereum is now up by roughly 60% for the year, just like Bitcoin. Much of this is based on investor speculation that Ethereum could be getting a spot ETF of its own sometime in May. The same investment giants that filed for spot Bitcoin ETFs in 2023 have also filed for spot Ethereum ETFs, and that includes well-respected names like BlackRock and Fidelity Investments. If you buy into the spot ETF narrative for crypto, then any approval of a spot Ethereum ETF in the coming months could send Ethereum soaring in the long run.
Image source: Getty Images.
Ethereum also continues to make the types of updates and adjustments to its blockchain that will help it maintain its competitive lead in the Layer 1 blockchain space. The upgrade everyone is talking about now is Dencun (a combination of the code names "Deneb" and "Cancun"), which will improve the speed, scalability, and efficiency of the core Ethereum blockchain. At the end of last year, JPMorgan Chase predicted that the type of performance breakthroughs made possible by Dencun could be significant enough for Ethereum to outperform Bitcoin in 2024.
As an investor, it's up to you to decide how Dencun fits into the long-term outlook for Ethereum. If you look at Ethereum's roadmap for future development, then Dencun looks like the next stage in a multi-year plan filled with future speed and performance enhancements.
Cardano
Finally, there's Cardano, which has suddenly awakened from a long slumber. Over the past 30 days, Cardano is up more than 50%, and has now gained 25% in the new year. Still trading for less than $1, Cardano could be a low-budget crypto to pick up on the cheap as the bull market rally gains steam.
The primary factor driving interest in Cardano has been the noticeable uptick in activity on the blockchain, as measured both by the number of daily active wallets (a proxy for how many people are using the blockchain) and the number of transactions taking place on the Cardano network. There also seems to be an uptick in the number of very large transactions (defined as transactions of $100,000 or more) happening on Cardano -- a possible sign that large financial institutions are now exploring this cryptocurrency. If so, that could be a very bullish indicator.
And the winner is...
If you're forced to choose between these three cryptos, the obvious winner is Bitcoin, and it's not even close. Even with Bitcoin nearing its all-time-high of $69,000, it still looks like this crypto is significantly undervalued based on simple analysis of supply and demand. If there's just one crypto to add to your portfolio in March, it's Bitcoin. But diversification is always a good idea. Cardano and Ethereum look good in a supporting role.
