Is Bitcoin the best cryptocurrency to invest in now?
You may think that Bitcoin is the best cryptocurrency to invest in now, but some coins with smaller market caps have delivered greater gains so far this year
It seems everyone wants to know the best cryptocurrency to invest in now. Even Harry Potter author JK Rowling, who’s worth £795m according to the latest Sunday Times Rich List, has been asking her countless millions of followers for information on what Bitcoin is.
And when it comes to the best cryptocurrency to invest in, it seems inevitable that we’ll need to start with BTC. The renowned digital asset is fresh from its third block reward halving – and despite fears that a dramatic sell-off was imminent, none has been forthcoming so far.
The reason why proponents argue Bitcoin is the best cryptocurrency to invest in today lies in how it could provide a hedge against inflation at a time when investors badly, badly need it.
The S&P 500 may be 28 per cent above the lows of 2,240 we saw on 23 March, but many believe this surge simply isn’t sustainable. Just look at this poll by Evercore ISI, where participants were asked whether the next 10 per cent jump in this index will be upwards or downwards. In an incredibly bearish sign, three-quarters of those surveyed said they believe the next big market move will be a sell-off.
So… bad news for value investors. And that’s before we’ve even contemplated the trillions of pounds of new money being printed by treasuries the world over. Savers are likely to see the value of their assets depreciate before their very eyes, spurring interest in the best cryptocurrency to invest in now.
Even some of the world’s most resilient economies, such as Germany, are now deep in a recession. This has prompted investors to search for a safe haven – somewhere to store their capital until the storm blows over. Gold is a traditionally popular choice, but the stats show that even this precious metal isn’t 2020’s best-performing asset… Bitcoin is.
As Morgan Creek Digital partner Anthony Pompliano tweeted:
What’s the best cryptocurrency to invest in now?
Bitcoin’s surge year to date is all the more impressive given how the cryptocurrency, and hundreds of others, tanked in the middle of March. There are countless pundits who bloviate on Twitter and elsewhere about how BTC is the best cryptocurrency to invest in because of how it’s going to hit $500,000 in just a few short years – even overtaking gold in terms of market cap. (BTC’s market cap currently stands at about £148bn compared with gold’s £7.4tn.) Meanwhile, a stock-to-flow forecast that has been largely accurate so far indicates Bitcoin’s average price will be $288,000 by 2024.
While these projections will undoubtedly put pound signs in the eyes of the most hardcore Bitcoin evangelists, this doesn’t necessarily mean it is the best cryptocurrency to invest in now. Many of the people making these estimates have been wrong before, or they’ve had to push back their timeframes repeatedly.
A better reflection of which digital assets are showing the most promise is to track how they’ve performed year to date, and the factors that have driven these price movements.
As you can see, Bitcoin has made some sizeable progress in just four-and-a-half months, but among the other top 10 cryptocurrencies in terms of market cap (excluding the US stablecoin Tether), there have been some even more impressive gains. Ethereum is up 59.8 per cent on the year so far, bettered only by Tezos on 97 per cent and Bitcoin SV on 97.5 per cent.
Not a single one of these top 10 cryptocurrencies is in negative territory compared with 1 January – although some, namely EOS and XRP, have come perilously close, eking out lacklustre gains of 2.3 and 5.3 per cent, respectively.
It’s particularly interesting to see how Ethereum has been strengthening against Bitcoin, as it's cryptocurrency that’s long played second fiddle in terms of market cap. At the start of the year, 1 BTC would fetch you 55 ETH, but at the time of writing, you’d only get 47 ETH in return for your crypto.
Best cryptocurrency to invest in 2020
Of course, there are plenty of opportunities to be found outside the top 10 coins based on their market capitalisation, as long as you remember the mantra that cheap doesn’t always mean good.
Indeed, market trends do appear to show that there is a healthy appetite for altcoins out there. Coinbase, one of the world’s bigger crypto exchanges, recently revealed that just 60 per cent of investors who opened a new account in 2019/20 made Bitcoin their first purchase. The trading platform said that, among accounts that had completed at least five transactions, just 24 per cent had a portfolio containing only BTC, with 76 per cent also diversifying into other digital assets.
This isn’t to say that investors are leaving Bitcoin in their droves, but it does show that many consumers feel emboldened to find out what altcoins have to offer, with BTC’s strength “paving the way for a thousand flowers to bloom”.
As our infographic shows, Tezos has been one of the bigger winners so far this year. Its ascension to the top 10 cryptocurrencies in terms of market cap has been sudden to say the least, buoyed by how it has become a go-to platform for developers who are hoping to build blockchain-based projects. This, in part, lies in how it uses the Proof-of-Stake consensus model, meaning that it cannot be mined.
The brainchild of a former Morgan Stanley analyst, it’s won round the confidence of many crypto investors because of how it has an official website and a business address, something BTC doesn’t. The Tezos ledger is self-amending, and token owners are incentivised to help make the platform secure. The elimination of mining might also mean it’s much more scalable than Bitcoin if demand grows in future.
No one knows who the big winners will be in the crypto space this year, but those who offer the most utility have the greatest chance of success.
FURTHER READING: Bitcoin explained simply: everything you need to know
FURTHER READING: Seven ways to make money with Bitcoin