The recent spike in Bitcoin’s (BTC-USD) price above $38,000 has brought a fresh wave of crypto investors into the market. With the long-awaited Bitcoin ETF potentially going live in 2024, renewed optimism avails for a bull run.
However, it goes far beyond the ETF. Bitcoin has major catalysts approaching, like the mining reward halving projected for mid-2024. This event occurs every few years, cutting the rewards that miners receive by half and significantly impacting supply and demand dynamics over the long run. Considering mining rewards are the only new bitcoins entering circulation, halvings tend to precede major bull runs.
Also, macroeconomic factors align to Bitcoin’s favor. Interest rates are still painfully high but will likely decline in 2024 or early 2025. Lower rates combined with the ETF and halving could create a perfect storm for crypto.
Less risky crypto projects for newcomers are important for long-term staying power. Let’s delve into three bigger cryptos that could perform well in the next bull market, especially if Bitcoin ETF gets approved soon.
Bitcoin (BTC-USD)
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Bitcoin is the obvious top pick for any crypto portfolio right now. Since it has several major catalysts lining up in 2023 and 2024, it could kickstart the next major bull run. As digital gold, BTC has a built-in scarcity and capped supply that no other crypto can match. Specifically, only 21 million BTC will be in existence.
Of course, Bitcoin has downsides, too. The network is rather slow and inefficient for payments compared to newer cryptos. Transactions can take over an hour to process, and fees are high due to congestion issues.
When adding crypto exposure or balancing a portfolio with some uncorrelated assets, Bitcoin should be the first token of choice right now. Unless something catastrophic happens to destroy trust in crypto entirely, Bitcoin has likely seen its final bear market bottom around $15k-$17k. With the macro backdrop improving in 2024 and the next halving solidifying dive supply, a crashing of Bitcoin seems unlikely. As noted in June 2022, Bitcoin was not expected to break below $15,000, even in a worst-case scenario. Indeed, it bottomed around that level. Further, $25,000 might possibly be the new floor once the ETF goes live.
Ethereum (ETH-USD)
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Although Ethereum (ETH-USD) differs from Bitcoin, it’s been an exceptional long-term investment nonetheless.
As the second largest crypto by market cap, Ethereum dominates the smart contracts and Web3 spaces. It allows decentralized apps and services to run on its network via the Ethereum Virtual Machine (EVM). In contrast, Bitcoin’s capabilities are quite limited to maximize security. It only supports peer-to-peer payments out of the box.
Already, ETH supply has turned deflationary post-merge. More ETH is now removed from circulation via network burns than issued as staking rewards. Supply is decreasing by 1.75% annually, far below Bitcoin inflation rate.
Of course, Ethereum lacks Bitcoin’s hard cap on supply, which some investors see as a drawback. So, while unlimited supply may seem concerning theoretically, network activity and burn dynamics act as a “soft cap,” keeping inflation below Bitcoin’s. Also, an unlimited supply future-proofs Ethereum, ensuring that stakers still receive adequate future rewards, long after further supply decreases.
Finally, Ethereum stands to gain from accelerating Web3 and crypto adoption. While Bitcoin operates as a relatively simple payment network, Ethereum is an entire ecosystem for decentralized computing. Notably, Ethereum’s correlation to Bitcoin remains high. ETH initially massively outperformed BTC but has lagged recently as the crypto focus returned to being a digital gold hedge against inflation.
However, if Bitcoin sees another parabolic bull run in 2024-2025 off the halving, ETF approval, and macro backdrop, Ethereum is likely to benefit, too. Similar to the 2017-2018 bull market, while BTC may rise faster early, ETH can often overtake its gains in the later speculative frenzy stages.
Litecoin (LTC-USD)
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Litecoin (LTC-USD) can be seen as a smaller sibling to Bitcoin, with higher risk but higher reward potential. One of the oldest and most established crypto projects, Litecoin is essentially a faster Bitcoin fork with lower fees and a few tweaks. It operates similarly, capped at 84 million LTC instead of 21 million BTC. The vast majority of code is identical.
Thus, Litecoin correlation to Bitcoin price action tends to be extremely high. However, LTC generally amplifies BTC moves in both directions. When Bitcoin rises or crashes, Litecoin usually does so even more dramatically as happened in 2013, 2017, and the recent 2022-2023 crash. With its smaller $5.3 billion market cap, LTC remains more volatile and speculative than the blue chip-like BTC.
So, if Bitcoin indeed kicks off a new bull market in 2024, Litecoin seems poised to massively outperform it. Even though it’s still a big project that’s been around for over a decade now, much existential risk exists to LTC. It could be a safer smaller cap play than 99% of altcoins. Although the use case remains questionable, the correlation and historical precedent remain.
On the date of publication, Omor Ibne Ehsan 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.
