With an ongoing crypto bull market and widespread interest in the asset class among everyone from retirement investors to the government, now's a great time to think about starting a position in some of the sector's leaders.
If you're looking to make a medium-size cryptocurrency investment on the order of $3,000, many options are out there, but two in particular stand out for the balance between risk and reward they offer. Let's analyze each and appreciate why they could be worthy of your investment.
CRYPTO: SOL
Key Data Points
This chain is taking the spotlight, and it won't stop anytime soon
Many investors are familiar with the Solana platform, which is becoming widely known as the place for meme coin investing.
But rather than merely trying to find the meme coins that will take off, most investors would probably be better off holding the chain's main Solana (SOL +1.52%) coin. It's been a lucrative holding recently: The coin's value is up 176% in the last three years, dramatically outperforming most of the other top cryptocurrencies.
More importantly, several catalysts in the coming year or so could send its price soaring, including the potential approval of exchange-traded funds (ETFs) that hold the Solana coin. The potential inclusion of the coin in a U.S. cryptocurrency reserve is another juicy possibility.
Even if those catalysts don't come to be, there's still a strong investment thesis for holding Solana. Investors need to buy the chain's main coin to speculate on meme coins or decentralized finance projects on it, both of which are highly popular and likely to become even more so as more people enter the ecosystem. They also need to hold it to pay for non-fungible token (NFT) minting fees and transactions on the chain, not to mention any smart contracts or programs they want to implement. And the volume on the chain, worth around $5.4 billion as of Jan. 25, makes it clear that a lot is happening there, even during weekends and other periods when volume is traditionally lower.
Then there's the fact that Donald and Melania Trump recently launched meme coins on Solana, drawing many thousands of new users and their dollars to the platform. If that's not an endorsement of the chain's merits, particularly its approachability and ease of use, not much is.
It's true that the Solana coin's price can be volatile. But if you're willing to hold for a handful of years to get the boost from these potential catalysts and the adoption of the chain, the day-to-day volatility shouldn't bother you much.
There's no substitute for the best
If you don't already hold Bitcoin, (BTC +0.73%), there's no time like the present to get involved, even if you're only going to allocate half of your $3,000.
In addition to being exposed to many of the same catalysts as Solana, Bitcoin is likely to be included in any government cryptocurrency stash because it's the oldest, largest, and most widely distributed crypto asset. The idea of a strategic Bitcoin reserve was floated before the wider idea of a national cryptocurrency repository took hold.
CRYPTO: BTC
Key Data Points
The biggest reason to invest in Bitcoin is that it's a currency that should retain its purchasing power regardless of inflation, as there's a hard cap on the number of coins that can be created. Its value may also withstand financial disruptions, though that idea hasn't been tested.
Furthermore, given that its price has exhibited a cyclical pattern of downs followed by ups due to regular halvings of the mining reward, it's highly likely that it will continue to gain in value over the long term. While investing in Bitcoin right now makes sense, if you're a bit leery, it's also a perfect candidate for dollar-cost averaging, which would grant you the full benefit of long-term price appreciation while mitigating the risk of weekly price fluctuations.
In other words, you don't have to invest your full Bitcoin allotment today. You could invest a little bit every week or every month until you've reached your target position size, then sit back and hold it for years and years.
