fourth half Bitcoin (Cryptocurrency: BTC) Mining rewards are in the books and the cryptocurrency world is buzzing. As Bitcoin's inflation rate declines and its scarcity increases, experts predict that the price spike could ripple through the market.
The halving means that miners receive fewer Bitcoins to verify transactions, increasing the value of each digital coin. Assuming demand for Bitcoin remains stable or increases, this is expected to drive the price higher over the next year or so. Without market reaction, mining becomes unprofitable and transaction processing systems fail.
This is clearly good news for Bitcoin investors. If you are looking to step into the world of cryptocurrencies these days, the major cryptocurrencies should be first on your list.
Cathie Wood, head of growth investing at ARK Invest, also believes that in addition to the anti-inflation effect of the halving, the arrival of spot Bitcoin exchange-traded funds (ETFs) will push the price of Bitcoin to $1.5 million by 2030. I agree that it will rise even more.
In Wood's opinion, the coin's price could rise to $3.8 million if Bitcoin becomes more aggressively adopted in the financial world. And I don't think she's wrong about that. The only question is how quickly traditional bankers will embrace an increasingly digital global economy.
However, Bitcoin is not the only cryptocurrency currently in use. Ethereum (Crypto: ETH) and Polka dot pattern (cipher: dot) I also think it's a great long-term investment for completely different reasons.
Ethereum
Bitcoin and Ethereum often move together. Their price charts are almost twin-like, except that Ethereum's long-term returns tend to be a little higher.
This happens for several reasons.
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Market sentiment towards Bitcoin tends to color the overall cryptocurrency market. When the oldest and biggest names in the business world write the headlines, the idea of a digital currency itself gains space in public discussion. So Ethereum rides the tailwind of its larger cousin in a fairly direct way.
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Ethereum is also a pioneer in cryptocurrencies. Its smart contracts add value to a wide range of industries, and many popular digital currencies are actually ERC20 tokens on the Ethereum network. Developers tend to start building apps and programs that rely on smart contracts when cryptocurrencies make headlines, so it's likely that major smart contract platforms will outperform Bitcoin's simple value storage profile. It's only natural that you do it.
Therefore, I expect Ethereum to follow Bitcoin's upcoming price rise and get more adrenaline pumping. Bearish analysts will point out that Ethereum has many competitors these days, led by faster Ethereum. Solana (Code: SOL) and cardano (Code: ADA) system.
However, Ethereum has had a multi-year head start over these potential alternatives and enjoys a much larger market share. And don't forget that the Ethereum blockchain is in the middle of a long upgrade process to increase the speed of contract execution and add new features.
The king of digital contracts may end up sharing the cryptocurrency throne with several rivals, but there is room for a few real winners.
Polka dot pattern
If Ethereum is Bitcoin's powerful chart twin, Polkadot serves as an undervalued low-priced alternative. While the price of Bitcoin has more than doubled in the past two years, Polkadot has fallen 34% over the same period.
Still, Polkadot seems poised to make a splash in the near future. This is the official blockchain ecosystem of the Web3 Foundation, and as we know, the internet seems to be slow to emerge with new architectures. The age of social media giants is starting to feel tired.
With a focus on Web3 ideals and interoperability between different blockchain systems, Polkadot is uniquely poised to win in the coming massive changes. The Polkadot project aims to build a decentralized internet and attract developers and projects seeking advanced functionality in an era of more personal online interactions.
Polkadot is currently kind of lost in the noise of the market, as investors don't see much evidence that the Web3 revolution is coming. I see this price decline as a wide open buying window with the potential for Polkadot to rise by a larger percentage from a lower base.
With the Bitcoin halving event boosting overall market sentiment, now may be the perfect time to invest in Polkadot at a steep discount.
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Anders Bylund has positions in Bitcoin, Cardano, Ethereum, Polkadot, and Solana. The Motley Fool has positions in and recommends Bitcoin, Cardano, Ethereum, and Solana. The Motley Fool has a disclosure policy.
Bitcoin halving has ended. 3 cryptocurrencies you can buy right now.Originally published by The Motley Fool
