According to a growing number of analysts, the next crypto bull market rally has officially started. Enthusiasm over the arrival of new crypto investment products is building, top cryptos are surging, and the long, cold "crypto winter" now seems to be a distant memory.
It's time to start looking for coins and tokens likely to skyrocket higher as part of a broad-based crypto market rally. Three that are on my short list are Bitcoin (BTC 1.46%), Ethereum (ETH 0.34%), and Chainlink (LINK -0.40%).
Bitcoin
If there is a no-brainer crypto investment in 2024, it's Bitcoin. After an awkward start to the year, when it briefly fell below $40,000, Bitcoin is now on a tear. It's up 35% for the year, and is holding strong above the $50,000 mark.
Most of those gains, of course, have come on the basis of the Securities and Exchange Commission's (SEC) approval of the new spot Bitcoin exchange-traded funds (ETFs) in early January. In a single move, the SEC gave the green light to Bitcoin as an asset that anyone could hold as part of a well-diversified portfolio. Investor fund inflows into the new Bitcoin ETFs have been off the charts. All of this new buying of Bitcoin, of course, should continue to send the price of Bitcoin higher.
And that's really just the start, because Bitcoin has another catalyst in place that might be much more powerful: the upcoming halving, scheduled for April. There have been three previous Bitcoin halving events, and each one has sent the price of Bitcoin to a new all-time-high.
Past performance is no guarantee of future performance, of course, but investors are understandably excited about just how much higher Bitcoin could go after April. Suddenly, Bitcoin's all-time high of $69,000 looks well within reach, and many investors believe Bitcoin could end the year at $100,000 or higher.
Ethereum
Amid all the buzz surrounding the new spot Bitcoin ETFs, Ethereum is also soaring higher. This is primarily due to the growing narrative that Ethereum will be the next crypto in line to get its own spot ETF. A handful of Wall Street firms have already submitted applications, and SEC approval could come as early as May.
The only question, of course, is whether Ethereum will be another case of "buy the rumor, sell the news," as Bitcoin was in January. Simply stated, the huge rally Ethereum has seen thus far in 2024 might fizzle out in May, as soon as the new ETFs become available to investors.
That being said, there's still enormous upside potential with Ethereum, which is currently undergoing yet another upgrade to remain a best-in-class blockchain.
Chainlink
Given that Bitcoin and Ethereum together account for nearly 70% of the total value of the $2 trillion crypto market, it's worth looking for ways to diversify your portfolio beyond just the two biggest names. Of all the cryptos that rank in the top 20 by market cap, my personal pick is Chainlink.
Image source: Getty Images.
That's because Chainlink, as a data oracle network, is completely different from both Bitcoin and Ethereum. Chainlink provides real-world data to smart contracts, which are one of the key building blocks of decentralized finance. Since Chainlink is the biggest and best-known data oracle network, it is also the most valuable. The crypto currently has a massive $11 billion market cap, which ranks No. 12 among all cryptocurrencies.
What makes Chainlink particularly interesting is that it is also a long-term play on an emerging trend known as real-world asset tokenization. This refers to the process of transforming traditional financial assets (such as stocks and bonds) into digital assets that live on the blockchain.
These financial assets require data for proper pricing, and that's where Chainlink comes into the picture. Right now, Chainlink is one of the leaders when it comes to real-world asset tokenization, which has the potential to become a multitrillion-dollar trend by the year 2030.
Portfolio diversification and risk factors
While the long-term prospects for Bitcoin, Ethereum, and Chainlink look good, just remember to do your due diligence before investing. Crypto is notoriously volatile, and regulatory risk is always a very real risk factor. As a rule of thumb, it's best to invest in large-cap cryptos that have a diversified base of both retail and institutional investors.
If forced to rank these three cryptos, Bitcoin would easily be my No. 1 choice. But, as they say, it's best not to put all your eggs in the same basket. Portfolio diversification is key, and two cryptos that could play a key role in this regard are Ethereum and Chainlink.
Dominic Basulto has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin, Chainlink, and Ethereum. The Motley Fool has a disclosure policy.
