Bitcoin (BTC +2.51%) is down by 24% during the past 12 months, whereas Ethereum (ETH +3.62%) fell by 10% and Cardano (ADA +4.01%) declined by 71% in the same period.
But a steep markdown only matters if the fundamentals suggest a recovery, and on that front, these three are not created equal. Let's take a look at which two are worth buying with $1,000 while they're on the inexpensive side, and which one is worth avoiding.
Image source: Getty Images.
1. Bitcoin is chugging along as always
Nothing about Bitcoin's fundamentals has changed recently, despite its brutal 46% tumble from its all-time high last October.
The biggest new driver of the coin's scarcity and thus its price, spot Bitcoin exchange-traded funds (ETFs), have attracted more than $1 billion in capital inflows since Feb. 17 alone. Furthermore, another new scarcity driver, accumulation in corporate treasuries, is still going strong; more than 190 public companies now hold the coin on their balance sheets. Those buyers are likely building semi-permanent allocations, and so their capital doesn't come back onto the open market easily.
CRYPTO: BTC
Key Data Points
As usual, the coin's supply keeps tightening due to its built-in mechanisms. About 95% of all Bitcoin that will ever exist has already been mined, and the next halving in 2028 will cut its newly mined issuance in half.
None of this guarantees a quick recovery to its past heights. Still, Bitcoin's ownership base has broadened so dramatically that the structural floor for its price is higher than in any previous decline, and that argues for it being a good purchase with $1,000 right now.
2. Ethereum is beaten down, but its future is bright
Ethereum's battered price makes it easy to forget the chain holds $53 billion in total value locked (TVL), a metric that tracks the capital deposited in its decentralized finance (DeFi) applications. The entire DeFi segment is only worth $93 billion, so Ethereum's lead is gargantuan. No rival is close, and it's already making serious inroads into the next big domain for on-chain capital management.
CRYPTO: ETH
Key Data Points
Real-world asset (RWA) tokenization, which is the process of putting ownership records for bonds or stocks or other assets onto the blockchain, is flourishing on Ethereum; there are already more than $15 billion in RWAs that are tradable on the chain. Again, its lead is commanding; the entire tradable tokenized asset segment is worth about $26 billion.
Being home to all that capital in different forms means that the coin is likely to remain relevant for the long haul. And if you already own Bitcoin and you're looking to invest $1,000, Ethereum is a great pick to build out your crypto portfolio.
One to avoid: Cardano is cheap for a reason
Cardano is worth avoiding rather than buying. In short, across all of the dimensions where Ethereum is succeeding, Cardano isn't measuring up, which is a problem because it was originally made to address Ethereum's speed and cost problems.
CRYPTO: ADA
Key Data Points
Cardano's DeFi TVL is just just $138 million. Worse still, the chain collected merely $2,038 in total fees on March 3 -- practically nothing, which indicates there isn't much activity happening on its blockchain. Given that its transaction fees are slightly cheaper than Ethereum's, that means there simply isn't a critical mass of users or capital on the network, to the point where a clear economic incentive isn't enticing them. They might also be looking for features that the chain doesn't have, which is a separate problem.
Of course, there are plenty of upgrades planned for Cardano in the future, which may or may not generate the demand the coin needs. There isn't much point in buying it and then waiting for it to continue to try find a use case where it excels, though, so avoid this coin for now.
