Since the beginning of 2023, the crypto asset class as a whole has more than doubled. By just about every account, the brutal crypto winter that lasted for much of 2022 is thawing by the day.
So, as it looks like crypto is preparing for another bull market run, a lucrative opportunity presents itself. Known for its huge gains, just a little crypto can give your portfolio a serious boost. If you’re looking to increase your crypto exposure, look no further than these two gems.
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The original cryptocurrency
As the first cryptocurrency, Bitcoin‘s (BTC -0.85%) veteran status has pushed it to become synonymous with the asset class. This pick won’t get any points for originality, but no crypto portfolio is complete without Bitcoin.
As it stands, Bitcoin makes up more than half of the value in the entire crypto market. Recently surpassing the $1 trillion mark, Bitcoin is the most valuable cryptocurrency and it’s not even really close. The next closest is Ethereum (ETH -1.69%), with a market cap of roughly $350 billion today.
This overwhelming dominance means that the majority of other cryptocurrencies are correlated to Bitcoin’s price. So when Bitcoin is doing well, it usually pulls the rest of the market along with it.
As the crypto market continues to gain momentum, there are few better options than Bitcoin. It is the cryptocurrency with the longest track record while also being the most decentralized and secure. In fact, in many ways, Bitcoin is the quintessential cryptocurrency, making it the most deserving of a spot in portfolios as another bull market looms.
The DeFi champ
Similar to Bitcoin, no crypto portfolio can be considered complete without exposure to Ethereum. While Bitcoin may have started the crypto race, Ethereum took the baton and changed the game. When Ethereum launched in 2015, it was the first blockchain with smart contract functionality.
With these smart contracts, Ethereum became the first programmable blockchain where developers could build custom applications that transferred money when preset parameters were met. This functionality eventually paved the way for a burgeoning digital economy today known as decentralized finance (DeFi).
As one of the most innovative and popular uses of blockchain technology, DeFi is a multifaceted economy full of non-fungible tokens (NFTs), stablecoins, yield farming, and much more. And none of it would have been possible without Ethereum’s smart contracts.
Since Ethereum’s arrival, new smart contract blockchains have launched. Yet, while there are other DeFi-capable cryptocurrencies today, Ethereum still dominates. As of last count, Ethereum makes up nearly 60% of the $65 billion DeFi economy.
Again, Ethereum won’t get me any points for originality, but it remains the simplest and most straightforward means to gain exposure to crypto’s burgeoning DeFi sector. As the prospects of a bull market grow, Ethereum’s dominance of DeFi makes it an ideal option for investors.
Final considerations to keep in mind
There are thousands of cryptocurrencies on the market today. And the fact of the matter is that a considerable number of them could outperform Bitcoin and Ethereum. This is natural during bull markets as the smaller and more obscure cryptocurrencies tend to soar off of pure speculation. But the reality is that these cryptocurrencies carry much more risk and many may not even make it to the next bull market if they fall just as fast as they rose.
While newer cryptocurrencies might appear more glamorous or promise life-changing gains, these options carry exponentially more risk. For investors looking for a proven and reliable strategy while also enjoying what a crypto bull market has to offer, Bitcoin and Ethereum should do the job.
RJ Fulton has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.
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