One of the primary reasons the cryptocurrency sector is undergoing a resurgence is current volatility across traditional financial systems. Banking instability is renewing all kinds of questions about the conventional ways in which we pay for goods and services. Non-conventional finance is growing in demand as a result, and cryptos have come back into focus.
Further, it increasingly looks like we are in for a hard landing and subsequent recession this year. Many people blame Federal Reserve policy, and rightly so. Inflation is clearly not transitory. Rates were held too low for too long. And it increasingly feels like the everyday citizen suffers the effects, while corporate executives get bonuses for mismanaging banks. None of this sentiment inspires confidence in our systems.
That renews the argument in favor of cryptocurrencies as a way to traverse this volatility, and puts a few obvious cryptos in a sweet spot of sorts.
As far as cryptos sitting in the sweet spot are concerned, Bitcoin (CCC:BTC-USD) is one of the top options investors continue to focus on. The peer-to-peer currency was already performing strongly in 2023, even prior to the banking collapses. But the recent failures of Signature Bank (OTC:SBNY) and Silicon Valley Bank (NASDAQ:SIVB) have served to fortify the leading crypto further.
The notion that a decentralized economic system is necessary is one of the strongest arguments in favor of crypto in general. The Fed’s loose monetary policy and weak bank oversight contributed to SVB’s collapse. Both are innately central figures in a centralized system that is showing serious distress.
Bitcoin is the antithesis of what SVB represents due to its lack of a centralized intermediary facilitating transactions. In the aftermath of the SVB collapse, we’ve seen contagion spread to other regional U.S. banks and into Europe with the recent buyout of Credit Suisse (NYSE:CS). Credit Suisse was forced into a takeover by UBS (NYSE:UBS). Deutsche Bank (NYSE:DB) may be the next domino to fall.
In short, Bitcoin becomes that much more attractive as each piece of new negative news about the traditional financial system emerges.
Litecoin (CCC:LTC-USD) also has an excellent opportunity right now. It is based on the Bitcoin protocol, and thus should benefit as demand for BTC increases. As mentioned immediately above, that demand spike is predicated on the weakening of the traditional financial system.
Litecoin differs from Bitcoin in several technical aspects. But the main thing to note is that it is more suited to point-of-sale transactions and so-called micro transactions. Litecoin is one of the more widely-accepted cryptocurrencies. Accordingly, given it’s reasonable to anticipate that overall crypto acceptance is likely to increase as a result of this turmoil, further trouble in the traditional banking sector could bode well for those betting on the Litecoin ecosystem.
Demand is already growing, particularly among an ever-increasing list of businesses around the world. This list highlights some of the more prominent merchants currently accepting cryptocurrency as payment. As you can see, those merchants began accepting crypto during specific time periods. Perhaps 2023 will see another such acceleration of merchants offering crypto payments as a result of current volatility.
In any case, Litecoin’s association with Bitcoin, so-called digital gold, bodes well for this crypto project now.
Last on this list of cryptos to buy, but certainly not least, is Cardano (CCC:ADA-USD).
Cardano isn’t necessarily in position to benefit from current volatility in any direct manner. Nevertheless, it’s a cryptocurrency that will see its ship pushed higher amid rising tides. That’s true of all cryptos, but Cardano has certain advantages over most of its peers.
Cardano’s Ouroburos blockchain protocol relies on peer-reviewed research to inform development. The company claims to be the first such crypto to rely on peer-reviewed research. In theory, such a base should lead to a better-developed platform, and one that’s less prone to contain fundamental flaws. That should also result in a cryptocurrency that has longevity and stability with respect to growth moving forward.
Like most cryptocurrencies, ADA can be used to facilitate peer-to-peer transactions independent of a central authority. But it also has enterprise utility, in addition to individual use.
Cardano is being built to solve problems across industries as diverse as education, retail, agriculture, government, finance, and health care. Cardano has developed products and solutions across each of those sectors. Verification is a key issue across most of those sectors, and Cardano addresses third-party centralization conflicts inherent to those conversations.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks.Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.