In most market segments, the recovery-fueled growth is often led by the leaders. In the case of cryptocurrencies, those leaders are Bitcoin and Ethereum. They usually get most of the limelight, and since they also have secondary markets (publicly traded miners, ETFs, etc.), they get more “capital” attention than most others.
From an investment perspective, following the trend may not be the best strategy in this regard. Because even though the two cryptocurrencies, especially Bitcoin, offer more liquidity than most other tokens, the growth potential it might offer could fall short of its relatively smaller counterparts.
Image source: Getty Images
The fourth in line
Binance (CRYPTO: BNB) is not that far from the leaders when it comes to market cap (it is fourth in line), but the discrepancy between the Binance market cap and the market cap of Bitcoin is huge — Bitcoin’s market cap is over 12 times larger.
Binance is relatively lighter from a price perspective and is currently trading at $512 per unit. Its performance in the last 12 months (compared to Bitcoin) is reason enough to consider this crypto instead of the leader. It saw two growth phases in the last 12 months and rose over 150% both times (from the lowest to highest point).
Bitcoin, however, grew once and topped at about 122%. The lead crypto is also higher on the recovery scale and offers a slightly lower discount compared to the recent peak. So, even if both stop growing at exactly their former peak, Binance’s growth potential would be higher. And its chances of growing past its former peak are slightly higher as well.
A real-time gross settlement system
If you are willing to look past the legal troubles Ripple (CRYPTO: XRP) is going through right now with the SEC, it’s also a great Bitcoin alternative to capitalize on the crypto recovery. It’s currently available at $0.96 per unit. So, even if all it achieves at the end of its recovery road is the 2021 peak ($2.3 per unit), you could more than double your capital by investing in it right now.
And if there is even a slight possibility that the upcoming recovery momentum will push Ripple to its 2018 peak ($4.2 per unit), the growth can be significantly more phenomenal.
The relatively daring approach would be to buy the dip as soon as it fully matures. But if you want to stay prudent, you may wait till a verdict is reached. However, if the overall crypto recovery starts pushing the Ripple upwards before that, a verdict in its favour can accelerate its growth, and you may miss a great discounted opportunity.
Foolish takeaway
The recovery trend and timelines might not be the same for all cryptocurrencies, which is a good thing. That’s because even if you miss the opportunity to buy some of the cryptos and they are already halfway to their new peak, you may buy crypto or crypto-oriented tech stocks that are lagging behind in the recovery journey.
