On December 17, Bitcoin (CRYPTO: BTC) hit a new all-time high above $108,000. While Bitcoin has been fairly volatile, it's still up more than 50% since the presidential election. And it is up a staggering 148% year to date.
However, Bitcoin might be overheating. After all, Bitcoin is now up more than 500% over the past two years, and the market might be overvaluing some of the pro-Bitcoin promises made by the incoming Trump administration. With that in mind, here are two affordable alternatives that could turn out to be undervalued gems.
Cardano
Like Bitcoin, Cardano (CRYPTO: ADA) has had a strong post-election rally. However, it is still up only 74% for the year. That's well behind the torrid pace of Bitcoin, leading me to think there's still upside potential ahead for Cardano .
Moreover, Cardano -- unlike Bitcoin -- is trading well below its all-time high. Currently trading around the $1 mark, Cardano is still 66% below its all-time high of $3.10. That's a very steep discount.
Another key factor in Cardano's favor is the potential for a spot ETF launch sometime in 2025. According to some investors, that could be the catalyst for a 3x appreciation in price, with Cardano quickly regaining its all-time high from 2021. Some have even suggested that Cardano could zoom to a price of $5.
However, Cardano could be dirt cheap for a reason. A spot ETF for Cardano is a long shot at best. And Cardano appears to be losing ground in the Layer 1 blockchain race. There's Ethereum (CRYPTO: ETH) at the front of the pack, followed by a host of other competitors. Right now, Cardano might only be the third- or fourth-best Layer 1 blockchain.
Despite that, my thinking here is that Cardano -- priced at just a buck -- could be "the poor man's Ethereum." That's because Cardano is actually outperforming Ethereum this year and seems to have more upside potential in 2025 once you factor in the spot ETF scenario.
Litecoin
Much like Cardano, Litecoin (CRYPTO: LTC) is trading well below its all-time high. At a current price of $116, Litecoin is trading 72% below its all-time high of $413. That could be a red flag, or it could be an invitation to pick up an ignored, undervalued crypto at a fantastic price.
Until recently, I would have said this steep discount was a red flag. For much of the past two years, Litecoin seems to have fallen out of favor with investors. The much-hyped halving event for Litecoin in 2023 turned out to be a nothingburger, and Litecoin has consistently underperformed other top cryptocurrencies.
But here's the thing: in mid-December, Litecoin suddenly became the talk of the crypto market. According to ETF analysts at Bloomberg, Litecoin -- and not Solana or XRP -- is now at the front of the pack for spot ETF approval by the SEC. If there's going to be a splashy ETF debut in early 2025, it's likely to come from Litecoin. And that could result in a tsunami of new money pouring into Litecoin, pushing up its price rapidly.
Moreover, Litecoin is much easier to understand than other cryptocurrencies. As its name suggests, it's a "lite" version of Bitcoin. If you understand Bitcoin, then you understand Litecoin. That's because Litecoin was formed from a version of the same source code used to create Bitcoin.
Litecoin is mined, just like Bitcoin. It has a halving every four years, just like Bitcoin. And, since it is based on the same code as Bitcoin, it should behave similarly to Bitcoin. If Cardano is "the poor man's Ethereum," then Litecoin could be "the poor man's Bitcoin."
Best of all, Litecoin has largely been determined not to be a security, and that seemingly strips away any potential regulatory risk. For risk-averse institutional investors, that is a key selling point.
What does it mean to be an "affordable" cryptocurrency?
Granted, I've taken a rather limited approach when it comes to defining an "affordable" cryptocurrency. My primary methodology was simply to look at the list of the Top 25 cryptocurrencies as ranked by market cap and then determine which ones were trading significantly below their all-time highs.
That approach can help to isolate a few potential investment prospects, such as Cardano and Litecoin. However, it also turns up a few cryptocurrencies that I would never think about investing in. For example, Shiba Inu (CRYPTO: SHIB) is 70% below its all-time high. But, as a rule of thumb, I don't put meme coins in my long-term portfolio.
Just remember this: There is significant risk anytime you rummage through a bargain basement bin of any kind. You might find a true gem, yes. But you might also buy something that is highly flawed for reasons that might not be immediately apparent. So, if you are thinking about investing in Cardano or Litecoin, remember to do your due diligence.
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