The price of Bitcoin (BTC +0.71%) is on the rise again -- although, as always, it depends on what time frame you're talking about. Over the past 12 months, its price has surged more than 125%. Yet during the past six months, the price has pulled back by roughly 15%.
Looking for the best cryptocurrencies to buy at a discount? These crypto billionaires have some ideas for you.
CRYPTO: BTC
Key Data Points
Follow the Facebook twins into this major cryptocurrency
You're familiar with the Winklevoss twins if you followed their stories in the award-winning film The Social Network. In a nutshell, they rose to fame with their claim as the true co-founders of Facebook -- a claim that eventually netted them a $65 million settlement.
What did the Winklevoss twins do with their acquired wealth? Invest it in a variety of start-ups. But their most exciting venture was the most classic cryptocurrency of all time: Bitcoin.
The pair grew excited about the new digital currency very early, and even tried to launch the first Bitcoin exchange-traded fund (ETF). Reports suggest that they have accumulated about 1% of the total supply, buying at prices as low as $10 per coin. Today, the twins are certified billionaires, and they're not pulling back on any of their Bitcoin investments.
The twins are bullish on its ecosystem and have invested heavily into start-ups intending to scale it up further. But years ago, they explained an even simpler reason to invest in the digital coin: It's a bona fide store of value worth at least as much as gold.
"Bitcoin is better at being gold than gold -- and not just incrementally, but by an order of magnitude or 10X better," one of the twins tweeted in 2020.
The market cap of gold is about $17 trillion. The market cap for Bitcoin? Only around $1.1 trillion. Yes, it has plenty of long-term potential when it comes to sitting at the core of the crypto ecosystem. But its potential as a store of value is still real.
With multiple ways to win, there's no reason your portfolio should not include a heavy Bitcoin allocation, especially if you're bullish on cryptocurrencies in general.
Bitcoin market cap; data by YCharts.
These billionaires know what they're doing
Sometimes, it's best not to monitor what individual billionaires are buying, but what groups of billionaires are buying. For that, you simply need to track the portfolio of one of the top venture capital (VC) firms of all time: Andreessen Horowitz. Some of the wealthiest people in the world are invested in the firm's funds, giving us a clue into which cryptocurrencies billionaires are betting on.
One of Andreessen's earliest crypto investments was in Ripple (XRP +0.72%). It's not alone. More than a dozen major VC firms have backed the project. Even Alphabet, the owner of Google, has participated in its financing rounds.
What's so attractive about Ripple? If you believe that institutions will eventually be using crypto to streamline operations and lower costs, this is the cryptocurrency for you.
At its core, Ripple is built to facilitate cross-border payments more efficiently than the current system. Using blockchain technology, it essentially bridges various fiat currencies. Transactions settle in seconds and cost almost nothing. Suddenly, bank transfers can occur globally without the pricey and time-intensive infrastructure now required.
More than $800 billion is transferred globally for remittances each year. But that doesn't include the trillions of dollars that banks transfer internationally among themselves, or simply through larger transactions. In a nutshell, Ripple's addressable potential is likely several trillion dollars: more than the total current market cap of Bitcoin.
Of course, there are plenty of challenges. Some claim that Ripple doesn't operate in the true spirit of crypto because it helps large existing institutions. But that's also where the opportunity lies: getting these huge capital pools to participate in cryptocurrencies at scale, even if there are limitations.
But there are also regulatory concerns. The operator of Ripple, for instance, was recently forced to pay $250 million in a settlement with the Securities and Exchange Commission. And there's stiff competition, both from other decentralized projects and from centralized leaders like Oracle and IBM.
Ripple is certainly a more complicated story than Bitcoin, but it also trades at less than 3% of the latter's market cap. Those looking to bet on billionaire-backed cryptocurrencies with more upside than Bitcoin itself should take a close look.
