As the crypto market shows signs of warming up again, it is time to look for cryptocurrencies with high upside potential and the potential to rise even higher. The focus here should be on cryptos with solid, long-term growth prospects that can be added to a diversified buy-and-hold portfolio.
With this in mind, I have selected three straightforward cryptos to buy before the end of the year: Bitcoin (BTC -0.19%), Solana (SOL -3.20%)And XRP (XRP -2.84%). Let's take a closer look at each one.
Bitcoin
Bitcoin has been on a steady upward trend all year, but it wasn't until recently that a real uptrend occurred. Bitcoin is now up more than 160% over the year. Additionally, Bitcoin is currently trading near an 18-month high of $44,000, and almost everyone now expects Bitcoin to rise even further in 2024.
What's most attractive about Bitcoin is that it has a very important catalyst for next year, and that is the launch of the first-ever spot Bitcoin exchange-traded fund (ETF) for the US market. The current consensus is that final SEC approval will occur in early 2024. Once the first ETF is approved, it could open the floodgates for institutional investors to move their money into Bitcoin, and that is likely to have a huge impact on the Bitcoin price.
Image source: Getty Images.
The long-term picture for Bitcoin is even better. Due to Bitcoin's increasingly important role in the global financial system, Bitcoin adoption is now at an all-time high. Ark Invest's Cathie Wood has calculated that there are at least eight different areas where Bitcoin is gaining traction around the world. For example, Bitcoin is increasingly seen as an alternative to gold as a secure store of value. As global adoption of Bitcoin increases over time, investors can expect the price of Bitcoin to rise as well.
Solana
Solana is one of the best performing cryptocurrencies in 2023 with an annual gain of 545%. Solana also just reached an 18-month high and analysts continue to increase their price predictions for Solana. Solana is currently trading at around $64 and has the potential to return to its all-time high of $260 from November 2021.
To understand Solana's long-term appeal, all you need to know is that Solana is Solana's biggest competitor ether (ETH -0.10%). Both Solana and Ethereum are Layer 1 blockchain networks. In practice, this means that they are the building blocks of everything that happens in the blockchain world, from non-fungible tokens (NFTs) to decentralized finance (DeFi). That's what makes them so valuable.
By estimating Solana's future market share in several key blockchain niches, it is possible to obtain an estimate of Solana's future valuation. According to investment firm VanEck, Solana only needs to reach 30% market share in three key blockchain niches to be worth more than $3,200 by 2030.
XRP
Finally, there's XRP, which is up 87% for the year. While XRP's performance this year may not be as stellar as that of Bitcoin or Solana, it could still be a bigger winner in the long run.
XRP is currently trading below $1 for one main reason: an ongoing court battle with the SEC that has been going on for three years now. The case has placed a heavy financial burden on XRP. It has also significantly slowed the pace of development of the XRP blockchain ecosystem, which is based on the Ripple payment network. Ripple Labs (the company behind the XRP token and the Ripple payment network) now estimates that the total cost of fighting the SEC could end up being more than $200 million.
So the reason to buy XRP before the end of the year is simple: if XRP emerges victorious from its SEC court battle in 2024, its value could skyrocket. We got a taste of that this summer when the value of XRP nearly doubled overnight following a key court victory. Some analysts are now predicting that XRP could rise to $10. As soon as all regulatory uncertainties surrounding XRP have been resolved, the construction of the Ripple payment network can begin again.
Keep your expectations in check
While all three of these cryptos have potentially explosive upside potential, remember to keep your expectations in check. At the beginning of the year, almost everyone expected the crypto winter to continue and a steady decline in value in the crypto market. Instead, the exact opposite happened. So what if the same thing happens in 2024? The market could zigzag when you expect it to.
For this reason, I would not go all-in on any of these cryptos. You should always try to diversify as much as possible. As long as you focus on the long-term prospects, getting into these three cryptos early could prove to be a very profitable investment strategy.
Dominic Basulto has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin, Ethereum, Solana, and XRP. The Motley Fool has a disclosure policy.
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