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Cryptocurrencies are booming again. Bitcoin, the original example of digital money, hit a record high of $99,830 (£79,541) per coin earlier this month, and may need to rise further.
It’s no surprise that President-elect Donald Trump has previously pledged to make the United States “the Bitcoin capital of the world.” It has been just two and a half years since cryptocurrencies suffered such a drop in value that many thought they would almost sink into oblivion.
In May 2022, holders lost around £300 billion of value in less than a month, and by the end of that year, bitcoin was worth less than $17,000.
Now its value has skyrocketed more than 150 percent in just 12 months and many financial experts predict it could surpass the $100,000 barrier this year. Other cryptocurrencies have seen similar resurgences.
So is it now a viable investment or as volatile and dangerous as ever? And for those who want to bet, where are the experts spying opportunities and which options are flops? Should you get stuck?
Before jumping into the world of cryptocurrencies, remember that they are not an investment.
They are largely unregulated, highly volatile and high risk, and if you lose money you have no protection under the safety net of the Financial Services Compensation Plan.
Scammers are also taking advantage of the lack of understanding and regulation of cryptocurrencies to steal savers’ cash.
Bitcoin, Ethereum and Dogecoin
Matthew Long, director of payments and digital assets at the Financial Conduct Authority (FCA), says: “We continue to warn people about scams and inform them about the risks associated with cryptocurrencies.” If you buy cryptocurrencies, be prepared to lose all your money.’
That said, cryptocurrency ownership is on the rise, with 12 per cent of UK adults now owning one, FCA figures reveal.
It’s clearly capturing people’s curiosity. So if you have money you’re willing to gamble with and you’re sure you know how to buy cryptocurrency safely, where do experts suggest you should look for opportunities?
1.Bitcoin
Bitcoin is the largest, best-known and most established cryptocurrency. It is the closest thing to achieving acceptance by the investment establishment. Traditional investment house fund managers – such as Ruffer, Schroders and Jupiter – have bought it in the past, although never more than a small fraction of portfolios.
This growing acceptance, combined with Trump’s return, has many thinking another race to the top is possible.
Tony Sycamore, analyst at IG Markets, says: ‘Bitcoin’s recent rally failed to reach the $100,000 mark, causing a pullback. This pullback is considered a natural correction, with expectations of a retest of the $100,000 level in the coming weeks. The presence of a pro-crypto president in the White House reinforces long-term optimism for Bitcoin.
2. Uniswap
Founded in 2018 by a former Siemens engineer, this is a user-owned cryptocurrency exchange. Those who own the digital currencies of the same name have the right to vote on changes to their operation.
It is currently valued at $12.99 per token and has doubled in the last 12 months.
Glen Goodman, author of the bestseller The Crypto Trader and former ITV News business correspondent, says the fact that Uniswap is owned by its users rather than a large corporation may appeal to cryptocurrency enthusiasts who believe it is intended to disrupt traditional finance.
“This project revolutionized cryptocurrency trading and showed the world what the future of finance could look like,” he says.
‘It is a decentralized market for the purchase and sale of cryptocurrencies. Large stock exchanges are run by large corporations, but Uniswap is governed by a community of users.’
3. Ethereum
The second most popular cryptocurrency is worth an impressive $434.5 billion, but it is still 78 percent smaller than the Bitcoin market.
Although technological and network improvements may help demand for Ethereum, Danny Scott, author of Bitcoin: Explained Like a 5-Year-Old and CEO of cryptocurrency trader Coincorner, said sentiment toward Bitcoin will ultimately determine its future performance. .
“As the famous saying goes, ‘a rising tide lifts all boats,'” he says.
4. Cardano
This coin was founded in 2017 and its co-creator Charles Hoskinson helped create Ethereum.
Like Bitcoin, it is considered a “Trump business” as its value has skyrocketed since the US election.
Goodman says: ‘This blockchain platform has struggled to gain popularity over the years, but now the founder says he hopes to advise the Trump administration. Cardano price has skyrocketed in anticipation of Hoskinson landing a role close to the president.
5. Solana
The blockchain platform or digital ledger has its own native currency with its own name.
The cryptocurrency is currently worth $235 per coin, making the market for them $112 billion. Observers believe that as adoption of its blockchain platform grows, the value of its cryptocurrency could also grow.
“This is a well-established blockchain platform with impressive speed and transaction capacity,” says Goodman.
“It has some big competitors like Ethereum, but its popularity is growing.”
CRYPTO CRIB SHEET
Cryptocurrency is essentially digital money, designed as an alternative to traditional currencies such as the pound or dollar.
Transactions made with them are recorded on a decentralized digital ledger called blockchain, so they are not controlled by banks or other financial institutions.
So the only way to make money with cryptocurrencies is to get someone to buy them from you for more than what you paid for them.
Glen Goodman is a cryptocurrency expert
And five that really aren’t worth the risk
1. Dogecoin
Best known for being backed by Elon Musk, the head of Tesla and efficiency czar in the incoming Trump administration, this is what is known as a “meme coin.”
They have no inherent value and are inspired by Internet trends. These memes are represented in virtual currencies, which in the case of Dogecoin is a dog.
Dogecoin, currently worth 40 cents per coin, has risen 412 percent over the past 12 months. US investment group FRNT Financial says this and other meme coins are “a mix of gambling and social media.” He adds: ‘Investors in meme currencies essentially bet on the virality of concepts or memes. Dogecoin’s rally emerged as a bet on Musk’s new role in the Trump administration.
2. Moon coin
Another meme coin, it was introduced in 2013 and failed to gain traction. Author Glen Goodman says: ‘The name references an internet meme, where cryptocurrency investors say the price of their favorite coin is going “to the moon.” The problem with jokes is that the humor tends to fade if you repeat them too often.’
3 and 4. Lambo and Poocoin
Both are meme coins, one featuring an image of a yellow Lamborghini and the other poop. Both are worth less than 0.1 cents and their performance currently seems unlikely to take off.
5. Anti-Elon
Created as a form of protest against the billionaire owner of Twitter and Tesla, AntiElon is worth just 0.3 cents per coin, having lost more than 30 percent of its value. Goodman said a recovery is unlikely. ‘This was invented to protest Elon Musk’s influence over the cryptocurrency market. Now it is so close to the president-elect of the United States that almost no one buys it,” he adds.
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