The world’s two most popular cryptocurrencies – Bitcoin and Ethereum – are both at all-time highs this week. Investors who bought BTC just two years ago are now sitting on a 600% gain. Ethereum adopters, meanwhile, have secured a stunning 2,342% gain over the same period.
However, now both cryptocurrencies are bumping against the law of large numbers. In other words, these assets are simply too big to offer triple-digit returns going forward. Growth investors should seek out the next boom. Here’s how.
Finding the next Bitcoin
Bitcoin’s impressive run can be attributed to two things — an information gap and a wide market size. In other words, Bitcoin’s potential market was immense: roughly the size of gold’s total valuation, which is US$10 trillion. However, investors didn’t know this a few years ago or ridiculed the idea that BTC could disrupt gold.
This gap between BTC’s price and its future potential created an opportunity for savvy investors.
Similarly, investors need to seek out assets with valuations that are significantly lower than their total future potential. Solana or Chain Link are two excellent examples. Solana’s total aggregate value is US$2.9 billion. However, the network is designed to disrupt Ethereum, which is seven times larger. The total market for smart contracts and NFTs is worth trillions.
Similarly, Chainlink has genuine utility; it’s a bridge between data on the traditional web and smart contracts on the decentralized web. It could be a crypto web giant, which is a market already worth several trillion. However, Chainlink’s market capitalization is just US$16.4 billion.
These are just a few examples of cryptocurrencies that could deliver better returns than heavyweights like Bitcoin or Ethereum in the future. However, making the right choice is tricky. Which is why I prefer to choose them all.
Buy the hackstack
Rather than looking for a needle in a haystack, investors may want to consider buying the whole haystack. Some companies are exposed to the upside of all cryptocurrencies. These service providers are, in my opinion, a better way to bet on the future of this industry.
Banxa Holdings (TSXV:BNXA) is an excellent example. The Australia-based, Canada-listed company has over 77 corporate clients that use its platform to convert fiat currencies into crypto. Banxa gets a cut of the transaction. This means it benefits from the surge in valuations across the industry, regardless of which crypto is popular during the cycle.
Banxa stock is up 7.55% yesterday as the market surged. It’s also up 2,100% since late January of this year. The company’s fortune is linked to the growing popularity of digital assets, which is why it’s on my personal portfolio too.
The value of digital assets has surged to an all-time high. Investors have never been more bullish about Bitcoin and Ethereum’s prospects. However, growth investors should focus on smaller cryptocurrencies or underrated service providers for better exposure.