Cryptocurrency Cornerstones: 3 Tokens to Anchor Your Digital Portfolio

Join the buzz in the crypto world as Bitcoin and Ethereum reach new heights

Crypto Tokens Are Back on Everyone's Mind This Year After bitcoin (BTC-USD) reached a record above $72,000. Ethereum (ETH-USD) is also increasing and, for the first time since 2021, reach $4,000 before losing ground.

Crypto company Galaxy Digital believes that positive impulse we are seeing will continue. Meanwhile, Coinbase (NASDAQ:CURRENCY) is seeing an increase in trading volumes thanks to strong overall performance across multiple currencies.

Furthermore, more and more countries continue to opt for crypto tokens to protect against local currency devaluation. Vietnam and the Philippines are notable examples of countries that are leading the charge.

These factors combine to create bullish sentiment around crypto tokens. Meme coins and altcoins continue to offer astronomical gains, which may attract novice investors.

However, it is better to opt for companies that have proven themselves in volatile markets. These crypto mainstays are coins and tokens that have stood the test of time. They have strong use cases and will continue to lead the charge due to their unique functionality.

Bitcoin (BTC-USD)

Source: Sittipong Phokawatana / Shutterstock.com

Bitcoin briefly rose above $72,000 on Monday before retreating. Excitement builds as leading cryptocurrency hits new highs.

So far this year, the coin is up 62%, easily outperforming the returns of other asset classes. The biggest factor influencing these returns is the optimism surrounding the approval of Bitcoin spot ETFs. Regulators, cautious in the past, approved 11 Bitcoin spot ETFs in January, marking a big change in his stance towards Bitcoin and the crypto world in general.

While Bitcoin has come to serve as “digital gold,” it still faces obstacles, so its adoption remains slow despite its many advantages. The spot approval of bitcoin ETFs gives BTC an air of legitimacy it otherwise lacked.

Furthermore, we also approach the Bitcoin Halving Event projected for April 2024. When the cryptocurrency's mining reward is halved, the creation and distribution of new Bitcoins to the market slows down. This fact has frequently caused the value of Bitcoin to increase in the past. As a result, be careful in April.

Ethereum (ETH-USD)

Another stylized version of the Ethereum logo

Source: Shutterstock

Ethereum's performance this year also reflects the success of Bitcoin. Its native currency is recovering from a low of $1,460 over the past year to surpass $4,000, reflecting broader market sentiment.

Ethereum's significant market capitalization of $477 billion positions it as the second-largest cryptocurrency after Bitcoin. However, these assets serve different purposes. Therefore, cryptocurrency investors will benefit by diversifying their portfolios by allocating capital to both.

Bitcoin is primarily used as an alternative store of value like gold. The focus is on decentralization and hedging against local currency devaluation. Meanwhile, Ethereum is a platform for developers and users to create dApps, smart contracts, and NFTs.

Ethereum also has unique catalysts. In particular, Merge, an update that dramatically reduced Ethereum's energy consumption, making the network more environmentally friendly. This addressed a key criticism facing blockchain technologies: their carbon footprint.

Besides, Ethereum Dencun Update, scheduled for March 13, will increase its appeal. The update will introduce proto-danksharding, also known as EIP-4844. It will reduce Ethereum costs for users of layer 2 networks. It is not uncommon for upgrades like Dencun to cause a spike in coin and token prices.

BNB (BNB)

A Binance Coin lies in front of the trading charts.  Binance Price Predictions

Source: Shutterstock

BNB (BNB-USD), the native currency of binance, the world's largest cryptocurrency exchange, completes this list. Although the exchange faces regulatory issues, BNB continues to rise steadily. In 2024, it has increased by 73% and shows no signs of stopping.

The Binance ecosystem, especially in the DeFi industry, depends on the BNB cryptocurrency. Furthermore, the regular burning of coins, which reduces their quantity, contributes to BNB's deflationary tokenomics.

The development and integration of new projects, how to add Ghost (AAVE-USD) to the BNB chain, further increases the attractiveness of the ecosystem.

As a final note, even though Binance left several locations, like nigeria and Russia, is also expanding in Georgia, Thailand and Indonesia, among others. For each location it leaves, Binance is looking for other cryptocurrency-friendly hubs it can move to. There is no shortage of countries around the world with unbanked or underbanked citizens. It ensures that Binance will continue to expand, also increasing BNB's appeal among cryptocurrencies.

On the date of publication, Faizan Farooque did not have (directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com. Publication Guidelines.

Faizan Farooque is a contributing author for InvestorPlace.com and many other financial sites. Faizan has several years of experience in stock market analysis and was a data journalist for S&P Global Market Intelligence. His passion is helping the average investor make more informed decisions regarding their portfolio.

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