US President Donald Trump’s announcement of the Strategic Bitcoin (CRYPTO: BTC) Reserve and the United States Digital Asset Stockpile has sparked excitement among crypto investors. However, it’s essential to assess the viability of these cryptocurrencies as investments.
Bitcoin is the most successful cryptocurrency, with a market cap of $1.7 trillion. Its price has increased by 98% over the last three years, outperforming the S&P 500. Despite high processing times and fees, Bitcoin serves as a digital store of value, making it worth considering for inflation hedging or portfolio diversification.
Ethereum, the second-largest cryptocurrency, offers smart contracts and decentralized apps (dApps). However, its performance lags behind Solana’s faster transaction processing and lower fees. Ethereum’s market share is still significant, with $46 billion in total value locked into DeFi applications. But it’s essential to monitor its downward trend before investing.
XRP, the native cryptocurrency for Ripple, offers fast transaction processing and low fees. Its real-world use case makes it a stronger investment than some of its peers. Over the last three years, XRP has returned 187%, but recent headwinds include a lawsuit from the Securities and Exchange Commission (SEC).
Solana is another competitor to Ethereum, with a faster proof-of-history system that validates transactions efficiently. Its low transaction fees and high processing speed make it attractive for developers. Solana’s price has increased by 39% over the last three years, but it remains volatile.
Cardano, an Ethereum competitor, supports smart contracts and dApps. However, its slow development pace has hindered its growth. Cardano’s price has decreased by 18% in the last three years, making it a less attractive option for now.
While the US government’s decision to stockpile these five cryptocurrencies may generate interest, investors should exercise caution. Cryptocurrency is a high-risk asset class, and even popular options like Bitcoin can be volatile. A diversified portfolio with multiple use cases is recommended.
Investors considering these cryptocurrencies should limit their allocation to 5% to 10% of their overall portfolio. The remaining amount should be invested in stable assets such as stocks, bonds, and other established investments.
Source: https://finance.yahoo.com/news/president-trump-planning-crypto-5-125000969.html