In our latest deep dive into the cryptocurrency landscape, we have compiled a list of the 12 Best Cryptocurrencies to Invest in According to Reddit. This analysis places particular emphasis on Ethereum (ETH) and its position relative to other digital currencies.

The past year has been nothing short of a rollercoaster for cryptocurrency investors. The approval of spot Bitcoin ETFs in the first quarter significantly impacted the market, hinting at potential spot Ethereum ETFs approvals by the SEC in May. The result? Spot Bitcoin ETFs amassed over $50 billion in combined assets within just six months of trading. Market experts hailed this as perhaps the most successful ETF category launch ever.

In addition to spot offerings, crypto-themed ETFs experienced a stellar performance in the first half of 2024. Notably, the First Trust SkyBridge Crypto Industry & Digital Economy ETF enjoyed a robust ~20% year-to-date increase. Blockchain-focused products also gained traction among enthusiasts, with the Amplify Transformational Data Sharing ETF seeing a rise of ~19% YTD.

AI and Crypto: A Synergistic Intersection

Artificial Intelligence has recently found its way into the crypto ecosystem through AI tokens—cryptocurrencies designed to support AI-driven projects, applications, and services. These tokens can be used to pay for services or access data on the platform, while platforms can reward users with tokens, offering governance rights in some cases. CoinMarketCap reported a healthy ~70% market cap increase for AI and big data cryptocurrency projects within weeks, indicating renewed investor confidence.

Regulatory Oversight in the Cryptocurrency Sector

The recent turbulence in the crypto industry, epitomized by the collapse of FTX, has brought regulatory concerns to the forefront. The lack of regulation contributed to the downfall of major exchanges, prompting a more active regulatory stance. The Securities and Exchange Commission (SEC) has emerged as a significant watchdog, taking legal action against major crypto exchanges. Clear regulatory standards are paving the way for institutional investors, including banks and asset management companies, to invest in crypto assets.

A survey by KPMG in Canada and the Canadian Association of Alternative Assets and Strategies (CAASA) revealed that ~22% more financial services organizations offered crypto-asset products in 2023 compared to 2021. Additionally, ~26% more institutional investors included crypto-related assets in their portfolios during the same period. Coinbase highlighted that 2Q 2024 13-F filings showed strong institutional inflows into US spot Bitcoin ETFs, with institutional ownership increasing from 21.4% to 24.0% between Q1 and Q2 2024.

Cryptocurrency Market Outlook

According to the United States International Trade Commission, global revenues from tokenized asset exchanges reached ~$26.5 billion in 2022, with cryptocurrencies accounting for ~76% of these revenues. The surge in revenues was driven by growth in nonfungible tokens (NFTs) and rising prices of major cryptocurrencies. McKinsey projects that total tokenized market capitalization could reach ~$2 trillion by 2030, driven by adoption in mutual funds (MFs), bonds, exchange-traded notes (ETN), loans, and securitization.

Forbes reported that global crypto market capitalization exceeded $2.5 trillion, with Bitcoin hitting a record high of over $73,000 and a market cap of $1.4 trillion by mid-March 2024. The cryptocurrency market is expected to reach ~$6.6 billion by 2024, with user numbers projected to hit 107.30 million by 2025.

Growth drivers include increased institutional and individual acceptance of cryptocurrencies, advancements in blockchain technology, expanded use of decentralized finance (DeFi) platforms, and higher usage for cross-border transactions.

Our Methodology

We sifted through numerous communities, subreddits, and threads to narrow down our list to the 12 best cryptocurrencies by trending metrics. These were then ranked in ascending order of market capitalization as of August 29.

At Insider Monkey, we have a keen interest in the stocks favored by hedge funds. Our research shows that imitating the top stock picks of leading hedge funds can outperform the market. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks each quarter, achieving a 275% return since May 2014, outperforming its benchmark by 150 percentage points.

Ethereum: A Closer Look

Ethereum stands out as a decentralized computing platform using ETH (Ether) to pay transaction fees. Developers leverage Ethereum to run decentralized applications (dApps) and create new crypto assets called Ethereum tokens. It aims to be a global platform for dApps that are resistant to censorship, downtime, and fraud.

Operating through a decentralized blockchain network, Ethereum uses Ether as its native digital currency to facilitate computations and validate transactions. Coinbase allows users to stake ETH easily and securely via its built-in staking feature.

Ethereum is a dominant smart contract platform with the largest base of developers and users, fostering an environment ripe for growth and innovation. The network’s upgrade to EIP-1559 means transaction fees are partially destroyed over time, potentially increasing the value of remaining Ethereum coins.

Ranking second on our list of top cryptocurrencies to invest in now, Ethereum holds significant potential. However, we believe some undervalued AI stocks offer greater promise for higher returns within shorter timeframes. For those interested in deeply undervalued AI stocks trading at less than five times earnings, our report on the cheapest AI stock offers valuable insights.

Disclosure: None. This content was originally published at Insider Monkey.

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