Over the past year, cryptocurrencies faced significant price declines and experienced notable incidents, such as the failure of Terra and the bankruptcy of FTX. These events seemed to validate concerns about the high volatility and risks of the cryptocurrency market’s early stage and lack of regulation.
However, Bitcoin (BTC-USD) has seen a resurgence in volatility since March, with its price increasing over 20% for the month and achieving a year-to-date gain over 70%. Its correlation with stocks has also broken, signaling a shift from previous trading patterns. Nevertheless, macroeconomic factors remain the primary influencers of Bitcoin’s price.
The good news is there are other digital assets that could benefit from the demand for Bitcoin since it has a fixed supply. Here are three cryptos that could get a boost from the Bitcoin crunch that you might not want to miss out on.
Ethereum (ETH-USD)
Ethereum (ETH-USD), the second-largest cryptocurrency, has the potential to join the trillion-dollar club. With its involvement in various sectors such as NFTs, gaming, DeFi, and the metaverse, Ethereum is poised for a positive future. As the pioneer of smart contracts and decentralized applications (dApp) development, Ethereum holds a significant advantage over its competitors.
The cryptocurrency’s transition to a proof-of-stake system and the implementation of the Merge have further enhanced its energy efficiency and competitive position. Ethereum is the preferred choice for developers, with the largest developer community and the most dApps. It is also a leader in non-fungible token (NFT) sales.
Ethereum is implementing Layer-2 solutions, specifically rollups, to enhance scalability and reduce transaction fees. Rollups have already demonstrated cost savings of up to eight times compared to the mainnet. This has the potential for future reductions of at least 40 times. Ethereum is also focusing on strengthening security and preparing for potential future risks such as quantum computing by exploring quantum-safe cryptography options.
Solana (SOL-USD)
Solana (SOL-USD) is a strong competitor among alternative Web 3.0 blockchains, often called an “Ethereum killer.” While stability concerns have been a primary focus, Solana’s efforts to address these issues position it as a potential cryptocurrency that could experience significant growth by 2025. With its low fees, scalability, and interoperability, Solana has the potential to become a leader in the DeFi space. It is already gaining traction in the NFT market, and as stability improves, more developers may consider migrating to the platform.
Solana’s latest venture, Solana Mobile, demonstrates its commitment to innovation and ambitious strategies. By targeting the mobile crypto market and leveraging its network of retail stores, Solana aims to capture a vast user base and capitalize on the opportunities presented by retail investors.
Equipped with cutting-edge Seed Vault technology, Solana Mobile enables seamless management of cryptocurrencies on the go. These bold strategies position Solana as a long-term player with the potential for significant growth, reminiscent of its success in 2021.
Avalanche (AVAX-USD)
Avalanche (AVAX-USD), a blockchain platform prioritizing scalability and fast transactions, has seen a significant increase in value, with a 5% rise in the past few hours. Currently trading at $21.91, Avalanche has experienced a 44% surge in 24-hour trading volume, reaching $229 million. The coin’s value has been steadily climbing, showing a 10% gain in recent days.
Moreover, in January, Avalanche’s partnership with Amazon Web Services increased demand for Avalanche tokens, reflected in higher staking rewards. Recent metrics indicate a surge in transaction activity and user growth on the Avalanche blockchain, suggesting the potential payoff of the Amazon partnership.
Avalanche offers superior security compared to Bitcoin and Ethereum, and its unique subnets feature allows for the creation of private or public blockchains. Despite a setback in the 2022 bear market, Avalanche has made a strong comeback in 2023 and is considered one of the top cryptocurrencies to invest in. It presents an intriguing opportunity for decentralized finance enthusiasts.
On the date of publication, Chris MacDonald has a position in ETH, SOL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
