Cryptocurrencies have been performing better than most stocks in other sectors this year.
The price of Bitcoin (BTC-USD) is up a whopping 75% in 2023. Compare this to a 35% gain in the technology-laden Nasdaq index and a 19% increase in the benchmark S&P 500. Many other cryptocurrencies are up more than 50% on the year. A few digital coins and tokens have seen their price double since January.
The gains are a sharp reversal from last fall. Thats’ when the global crypto sector was in the grips of a steep decline following the high-profile failures of several digital lenders and exchanges. While the market for cryptocurrencies is not back to the frenzied levels seen in late 2021 and early 2022, the industry is firmly back in growth mode. It’s trending in the right direction, leading to forecasts of continued gains in the coming months.
If you can only buy one crypto, it better be one of these three names.
Worldcoin (WLD)
A new cryptocurrency called Worldcoin (WLD-USD) was launched by Sam Altman, CEO of artificial intelligence company OpenAI, and is attracting lots of attention since its debut.
Cryptocurrency exchange Binance reports that the WLD token rose nearly 3,500% on its market debut, rising to $5.29 from a starting price of 15 cents. The new crypto’s main product is World ID, a digital passport that proves its holder is an actual human being rather than an AI bot.
To receive a World ID, a person signs up to have their eye scanned by Worldcoin. Once the scan verifies that a person is human, it creates a World ID for them. The Worldcoin project amassed two million users during its beta phase. It’s now scaling operations, offering World ID verifications in 20 different countries.
People who sign up early for an eye scan get free WLD tokens. Verified World IDs are stored on blockchains in a way that preserves an individual’s privacy which can’t be controlled or shut down by a single entity. Definitely worth a look.
Ethereum (ETH)
Investors are bullish on Ethereum (ETH-USD), the second largest cryptocurrency by market capitalization. Year to date, ETH is up 54%, bringing its five year gains to 355%.
In addition to the rise in price, Ethereum continues to be touted by crypto enthusiasts as the best long-term bet in the blockchain space. Additionally impressive is that last September, Ethereum completed its transition to a proof-of-stake operating model. This move cuts energy use by more than 99%.
Crypto continues to be criticized for the energy consumption used in mining new coins. Before the change, ETH miners employed banks of energy intensive computers to validate transactions through a protocol called proof-of-work.
The new proof-of-stake system swaps out miners for validators. Instead of running computers, validators leverage their cache of ETH to verify transactions and produce new tokens. This requires far less energy and has led analysts to forecast that Ethereum will eventually surpass Bitcoin as the dominant digital currency.
Bitcoin (BTC)
As the originator of cryptocurrency, Bitcoin (BTC-USD) continues to be the forerunner. BTC is both the largest crypto by market capitalization and the most widely held digital asset.
Further, BTC has staged quite a comeback, gaining 75% year to date and rising more than 80% from a low reached below $16,000 last December. Bitcoin bulls were a slightly disappointed recently when the price slipped below $29,000 as stock indexes continue to trend higher. But the long-term trend for BTC remains encouraging.
Investors’ risk appetites have improved significantly over the last six months as equities have recovered. This produced improved sentiment towards cryptocurrencies in general, and Bitcoin in particular. Sentiment was at rock bottom last autumn following the $8 billion collapse of the FTX exchange and subsequent arrest of its founder Sam Bankman-Fried. The good news for investors is that the “crypto winter” of 2022 appears to have thawed. This led to a Bitcoin resurgence. Importantly, BTC’s price remains 57% below its all-time high reached in 2021.
On the date of publication, Joel Baglole did not have (either 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.
