2 Cryptocurrencies to Avoid, and 1 to Buy Hand Over Fist

Conventional wisdom is that most cryptocurrencies will tend to rise higher until they reach all-time highs in the crypto bull market rally. While this is the case for Bitcoin (CRYPTO: BTC), it is not always true for other cryptocurrencies.

If you want to maximize the performance of your crypto portfolio, you need to know which cryptos you should avoid and which you should pass on. With that in mind, here are my top recommendations.

Cardano

While Cardano (CRYPTO: ADA) is still among the top 10 cryptocurrencies based on market cap of $15.5 billion, it continues to lose ground against other cryptocurrencies. For example, at the end of May, meme coin Shiba Inu briefly surpassed Cardano in terms of market cap. If there’s one cryptocurrency that has the annoying habit of trading flat for months, it’s Cardano. Investors are waiting for Cardano to make a big breakout past the $1 barrier, but nothing seems to happen.

Unfortunately, the situation did not improve in 2024. Cardano is currently down 27% for the year and I am hard-pressed to find a potential short-term catalyst that could push this crypto higher. And trust me, I tried. At first I thought it might be decentralized finance (DeFi) and Cardano’s adoption of smart contracts. I then thought this could be about artificial intelligence (AI) and the potential for Cardano to attract high-profile AI crypto tokens onto its blockchain.

But either way I was proven wrong and I won’t touch Cardano with a 10-foot pole anymore. Sorry Cardano. It’s not you, it’s me.

Litecoin

Litecoin (CRYPTO:LTC) is another cryptocurrency that I am actively avoiding these days. And that’s a real shame because Litecoin has a long history that almost extends to that of Bitcoin. In fact, Litecoin was built with almost the same source code as Bitcoin and was designed by a former Google engineer to be a lighter, faster version of Bitcoin (hence the term “lite” in its name).

Unfortunately, every potential Litecoin catalyst in recent times seems to have fallen short. Litecoin, for example, has an expected halving every four years, just like Bitcoin. The halving cycles of these two cryptocurrencies are about a year behind, and Litecoin actually halved last year.

So what have investors gained since then? Nada. On the date of the third halving in August 2023, Litecoin was trading at $93. Today, almost a year later, Litecoin trades for just $80. It really lost value! I’m tired of waiting for Litecoin to show significant gains.

The story continues

bitcoin

This brings us to Bitcoin. I can’t think of a better, long-term crypto investment that you can buy and hold forever. Bitcoin has been one of the world’s best-performing assets throughout its lifetime, and it’s not even close. For example, from the beginning of 2011 to March 2021, Bitcoin generated annualized returns of 230%. By comparison, technology stocks returned 20% annually over the same period. While Bitcoin had a disastrous year in 2022, it came back with a vengeance in 2023 with a 150% increase. And now it’s up 65% in 2024.

What makes Bitcoin truly fascinating from an investment perspective is that it also comes with some downside risk protection. It can provide unique diversification benefits due to the historical lack of correlation between Bitcoin and other asset classes. In short, when other assets weaken, Bitcoin can also zig. This means you can earn positive returns on your Bitcoin investment even when stocks are falling.

Image source: Getty Images.

Add in the fact that new spot Bitcoin exchange-traded funds (ETFs) are performing exceptionally well, and it’s easy to see why I’m so optimistic about Bitcoin. Although past performance is no guarantee of future performance and Bitcoin is significantly more volatile than other traditional assets, it is proving to be a great store of value over the long term.

Even though Bitcoin may not reach the $1 million price level that some ultra bulls are suggesting, the steady flow of ETF money is almost certain to push Bitcoin higher in the coming years. If there is one cryptocurrency I will buy first in 2024, it is Bitcoin.

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Dominic Basulto has positions in Bitcoin and Cardano. The Motley Fool has positions in and recommends Bitcoin and Cardano. The Motley Fool has a disclosure policy.

2 Cryptocurrencies to Avoid and 1 to Buy Originally Published by The Motley Fool