The cryptocurrency market is gaining significant attention, with terms like “Best Cryptos” and “Cryptocurrencies to Buy” becoming popular.
In the first quarter of this year, cryptocurrencies, led by Bitcoin, outperformed traditional assets, demonstrating their potential as a safe haven amid anticipated monetary policy changes and banking sector turmoil.
However, it is important to exercise caution amidst the excitement. The positive sentiment began in January with a favorable inflation report that hinted at potential relief from Federal Reserve rate hikes.
Skeptics raise concerns that this rally in the industry is not sustainable because of challenges such as heightened regulatory scrutiny. These factors cast doubt on the longevity of the current market rally.
Government authorities focus on major players like Binance and Coinbase (NASDAQ:COIN), while crypto firms struggle to establish essential financial infrastructure.
Although recent cryptocurrency success may fuel speculation of a new bull market, it’s crucial to recognize the underlying risks. Liquidity issues and declining trading volumes make the market susceptible to negative news.
Regarding widespread acceptance, cryptocurrencies are moving in a positive direction. BlackRock (NYSE:BLK), the world’s largest asset manager, has applied for an ETF, inspiring other notable companies to follow suit.
This has led to a new wave of Bitcoin ETF applications from prominent investment firms like WisdomTree (NYSE:WT) and Invesco (NYSE:IVZ), indicating a growing interest in the sector spurred by BlackRock’s move.
This list prioritizes the functionality of cryptocurrencies over their price. While numerous cryptocurrencies are available for purchase, they emphasize assessing their usefulness and practicality.
The belief is that if a cryptocurrency offers strong functionality, it will likely experience an overall increase in price. Favorable functionality and general market trends will contribute to its desirability and potential for the best cryptos.
Solana (SOL-USD)
Solana (SOL-USD), one of the best cryptos to buy, is down primarily due to regulatory concerns. The Securities and Exchange Commission recently filed lawsuits against major cryptocurrency exchanges, including Binance and Coinbase, alleging that they operated unregistered securities trading platforms.
Solana was among the unregistered securities, leading to an immediate 20% drop in value within 24 hours.
It is crucial to contemplate whether the market’s reaction was an exaggerated response.
The SEC has taken no enforcement action against Solana yet, and the cryptocurrency has responded, implying that the SEC might lack a substantial case against it. The wider crypto industry, spearheaded by Coinbase, seems to be uniting against what they perceive as an excessive regulatory intrusion from the SEC.
Signs of sympathy from several U.S. lawmakers towards the crypto industry indicate that the situation for Solana may be less severe than it initially appears.
Another reason to anticipate Solana’s potential rise is its improving blockchain metrics. Despite initial concerns, top non-fungible token collections have successfully migrated away from Solana. NFT trading volume on the platform has recently experienced a significant surge.
The floor prices of Solana NFTs have been consistently rising, indicating a healthier and more vibrant NFT ecosystem on the blockchain. This upward trend in minimum selling prices reflects positive growth and increased interest in Solana NFTs.
Amidst these developments, Solana continues to introduce new growth initiatives. In April, the platform unveiled the Saga, a $1,000 “crypto phone,” as part of its mobile crypto strategy.
Solana believes that the crypto industry’s future lies within mobile devices, and with the introduction of the Saga smartphone, it aims to entice millions of new users to its blockchain. With these positive factors in mind, Solana is one of the best cryptos to buy.
Avalanche (AVAX-USD)
While traders are selling off Avalanche (AVAX-USD) because of similar downturns faced by rival Layer 1 blockchains like Solana, it is important to consider that this might be an overreaction by the market.
Looking at recent underlying metrics, Avalanche is making strides in the decentralized finance sector, currently ranking seventh in total value locked, a critical measure of DeFi strength.
There has been a notable increase in daily active addresses and transaction volumes on the Avalanche blockchain. Avalanche is finally emerging from its prolonged crypto winter hibernation.
Avalanche possesses a captivating long-term growth catalyst. It partnered with industry giants like Amazon Web Services and Tencent Cloud, aiming to deliver blockchain solutions to cloud-computing customers.
While the results of these partnerships are still pending, they contribute to an intriguing long-term growth potential for Avalanche.
When comparing Solana and Avalanche, both are Layer 1 blockchain networks vying to challenge Ethereum’s dominance.
Despite Solana’s higher regulatory risks, it continues to be one of the best cryptos and one of my top choices for a cryptocurrency poised to achieve substantial growth in the second half of 2023.
Ethereum (ETH-USD)
Ethereum (ETH-USD), the powerhouse of the crypto world, has cemented its position as the second-largest cryptocurrency after Bitcoin. With its strong market presence, Ethereum entices developers, users, and investors alike.
The past year hasn’t been easy for the crypto market. However, there is a resurgence this year, even though Ethereum experienced a decline from its 2023 peak.
Developers love Ethereum, with the total number of developers compared to other players increasing by 52% in two years to over 5,800. Ethereum leads the way in hosting decentralized applications (dApps) and non-fungible tokens (NFTs). This solidifies its position as the preferred blockchain for innovative and cutting-edge projects.
While Ethereum faced complaints about slow transactions and costs, it’s actively working on solutions.
Planned updates are set to enhance the speed and affordability of the blockchain. Additionally, Ethereum has achieved a remarkable 99% reduction in energy consumption by transitioning to a proof-of-stake validation method.
To scale up, Ethereum is utilizing rollups, which make transactions up to eight times cheaper than the mainnet, with the potential for fees to become at least 40 times cheaper.
Additionally, Ethereum is committed to improving security and exploring quantum-safe cryptography to ensure its long-term viability.
While reaching a trillion-dollar market value may require Ethereum to more than quadruple from its current price, economic uncertainties, such as a potential recession, may slow down its rapid ascent.
Nevertheless, Ethereum’s outlook remains bright for investors seeking the best cryptos, with planned upgrades to enhance the network’s performance significantly. These improvements are poised to attract investors looking for long-term potential in this leading cryptocurrency.
On the publication date, Faizan Farooque did not hold (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
