In a span of just 15 years, cryptocurrencies navigate here emerged from obscurity to become an important part of financial markets. But there’s one thing the industry’s evolution hasn’t eradicated: extreme volatility.
At its peak in November 2021, the crypto market was worth upwards of $2.9 trillion. By mid-2022, hit by rising inflation and an aggressive rate-hiking cycle by the Federal Reserve, the entire market was worth less than $900 billion. Fast forward to April 2 of this year, and cryptocurrencies collectively were worth more than $2.4 trillion.
Bitcoin (BTC)
Cryptocurrency is an incredibly nascent asset class, with origins only dating back to 2009. Extreme volatility is par for the course, so investors looking to insulate themselves from the potential total collapse of their holdings will want to go with more established names. None is more established than Bitcoin, the first cryptocurrency and largest by market capitalization with a valuation of about $1.3 trillion, or roughly 52% of the overall market.
BTC boasts the most mainstream acceptance of any of the top cryptocurrencies, as evidenced by the January debut of 11 new Bitcoin exchange-traded funds, or ETFs. The fight with the Securities and Exchange Commission to approve spot Bitcoin ETFs was years in the making, but the approval finally materialized. Bitcoin ETFs have ushered in a new chapter for the leading crypto, as mainstream investors can now track its performance without having to directly own the “digital gold” itself.
Ether (ETH)
Second by market capitalization is Ether, which is the native token on the widely used Ethereum blockchain. Often colloquially referred to as Ethereum, ETH’s market cap is about $395 billion and accounts for 16% of the total cryptocurrency market. Unlike Bitcoin, Ether’s underlying network is far more than just a tool for peer-to-peer payments; the Ethereum blockchain is custom-made for smart contracts and decentralized finance tools, as well as for so-called Web3 applications and the trading of non-fungible tokens, or NFTs.
While Bitcoin only functions as a speculative asset and a store of value, Ether has inherent utility as the native token of a wildly popular network. Plus, Ethereum’s switch in recent years from the energy-inefficient proof-of-work protocol to the much more efficient proof-of-stake system gives it a leg up on BTC in an increasingly environmentally conscious world.
Solana (SOL)
Like Ethereum, Solana is a blockchain that was built with utility in mind. In Solana’s case, it’s become known for facilitating the easy creation of decentralized applications, or dApps, but the network is actually even faster than Ethereum, has far lower fees and is intended to be more easily scalable than rivals. The native token of this blockchain is the eponymous Solana, also known as SOL.
SOL didn’t start trading until 2020, but has had a meteoric rise to stardom in the years since. At the beginning of 2021, SOL accounted for just 0.01% of the crypto market’s total value. Fast forward to April 2 of this year, and SOL makes up 3.22% of the multitrillion-dollar space
Avalanche (AVAX)
When investing in cryptocurrency, investors should understand that it’s Bitcoin and Ether in their own tier, and then there’s everything else. SOL, AVAX and the following altcoins on this list all have more risk, and investors should factor that into their decisions. Consider them purely speculative wagers.
Caveats aside, the Avalanche network’s AVAX token earns its place on this list by virtue of the ambitious goals of the Avalanche blockchain.
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