With the crypto markets consolidating choppily in recent months, investors might be wondering if it’s time to treat the “sideways correction” as a buying opportunity. Undoubtedly, Bitcoin (CRYPTO:BTC) is a go-to for many crypto investors. As to whether there’s value in spreading bets across some of the other tokens remains a big question mark. More recently, it has paid off to broaden one’s horizons beyond Bitcoin.
Though I personally favor gold and silver over cryptocurrencies, especially in today’s risk-filled, richly priced market, I do view cryptocurrencies as a great risk-on supplement. Despite the “digital gold” name that some have coined to Bitcoin, I’m more inclined to subscribe to the thesis that crypto is more of a “risk-on” asset while gold is “risk-off.”
XRP raises the bar on risk and potential return
In any case, investors seeking higher-risk, higher-upside investments may be looking at Bitcoin and XRP (CRYPTO:XRP) as opportunities to put a bit of new money to work. Undoubtedly, the latter has been more explosive in recent years, rising 474% in the past two years and more than 1,089% in five years. Meanwhile, Bitcoin has trailed behind with a gain of over 330% and 1,011%, respectively, over the last two and five years.
As a more widely accepted cryptocurrency, Bitcoin, I believe, stands out as the less risky option. And while there’s a time and a place for XRP, I do think that those not seeking to jump into the deep end of the crypto waters may wish to stick with the now widely-adopted digital asset. While the level of volatility to be expected with Bitcoin is still high, it’s at another level with XRP. Still, with the rise of decentralized finance (DeFi), the potential applications might be a source of outperformance for XRP.
Add the potential for growing regulatory acceptance (could central banks begin to pad their reserves with digital assets beyond Bitcoin?) in the next few years, and it’s hard not to be enticed by XRP, especially if you’ve got a strong stomach and seek to wander beyond Bitcoin for a change, perhaps for those looking to play the crypto asset class more broadly. While there’s a strong correlation between Bitcoin and XRP, as well as the rest of the crypto markets, I do view XRP as having more room to fall in a sell-off that beckons in the next “crypto winter.”
XRP is relatively overheated. It might be best to stick with Bitcoin
Given the widening performance gap in recent years, I’d be more inclined to stick with the safer option in Bitcoin. Fundstat’s Tom Lee, who’s a notable crypto and stock bull, thinks Bitcoin can finish the year above $200,000. There are only three months to go, but time will tell if Lee’s bull thesis comes true. More Fed rate cuts would certainly help the cause.
Perhaps the better bet comes down to whether investors want upside from the emerging field of DeFi and are willing to pay the price (higher volatility) for such exposure. Either way, Bitcoin and XRP are both risky bets that investors should seek to dollar-cost average into, rather than buy in a lump sum. There’s just too much on the line, especially as the technical picture, in my opinion, starts to look somewhat less pound-the-table bullish. Perhaps the real gold is a better bet than any form of digital gold, especially considering the risks that could drag on markets in the fourth quarter.
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