Last year was a turning point for cryptocurrencies, with cryptocurrencies becoming mainstream investments for the first time. New spot cryptocurrency exchange-traded fund (ETF) begins trading, virtual currency emerges as an issue in presidential election, Bitcoin also appears (Cryptocurrency: BTC) By the end of the year, it had exceeded $100,000.
Therefore, it is perhaps no surprise that many investors are looking for ways to invest in cryptocurrencies in 2025. But which cryptocurrencies are worth buying, and how much exposure should you have to them? Let’s take a closer look.
The obvious choice here is Bitcoin, one of the world’s best performing assets. Compare and contrast, for example, the Nasdaq Composite Index, which rose 30%, and the S&P 500, which rose 24%.
Over the past decade, Bitcoin has consistently been one of the best-performing investments. While there have been some down years along the way, 2022 stands out as a particularly dire year – Bitcoin can typically deliver double-digit and even triple-digit returns. Of course, past performance does not guarantee future results, but Bitcoin certainly has a stellar track record.
Heading into 2025, Bitcoin has tremendous momentum, thanks in large part to President-elect Donald Trump’s campaign promises. During the election campaign, Trump promised to strengthen the Bitcoin mining industry, make America the crypto capital of the world, and create a new strategic Bitcoin reserve. All these factors combined are very bullish for Bitcoin.
Best of all, investing in Bitcoin has never been easier. It used to be that you needed a cryptocurrency wallet, crypto market expertise, and access to a cryptocurrency trading platform. To invest in Bitcoin, all you need to do is purchase one of the new Spot Bitcoin ETFs. This makes investing in Bitcoin as easy as buying your favorite stock.
So, what other cryptocurrencies can you get a spot ETF in 2025? Two of our top prospects are Solana (Code: SOL) and XRP (Crypto: XRP). Both rank among the top 10 cryptocurrencies in terms of market capitalization, both have attracted the attention of retail and institutional investors, and both could receive ETF approval from the Securities and Exchange Commission (SEC). The quality is relatively high.
These spot ETFs are important for one main reason. This is because it leads to an influx of new capital from investors, which helps push up the price of the underlying cryptocurrency. This is the same pattern investors saw with the Spot Bitcoin ETF, which was approved last January. The Spot Solana ETF could see up to $3 billion to $6 billion in inflows, and the Spot XRP ETF could see up to $4 billion to $8 billion in inflows, according to JPMorgan.
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Even if you don’t get an ETF this year, both Solana and XRP are worth further consideration based on their underlying features and utility. Solana is a leading smart contract blockchain network with a very robust blockchain ecosystem. There are also new mobile crypto strategies to attract users in 2025.
And XRP continues to be a reliable platform for settling financial transactions, especially those involving cross-border flows of funds. Ripple, the company that developed the XRP token, recently settled a long-standing lawsuit with the SEC and now appears poised to launch a new wave of innovation supporting the XRP blockchain network.
Proper allocation is important when it comes to investing in cryptocurrencies. One common way to do this is to look at the market capitalization of a particular cryptocurrency and use data from CoinMarketCap to calculate how much of the cryptocurrency’s market capitalization it accounts for.
So, for example, Bitcoin has a market capitalization of approximately $2 trillion, which is more than 56% of the $3.5 trillion cryptocurrency market. As a general rule of thumb, Bitcoin should make up about 50% to 60% of your long-term crypto investment portfolio. You can adjust this number higher or lower depending on your level of risk tolerance.
Another way to calculate how much to allocate to each cryptocurrency is to analyze the new Coinbase 50 Index designed by Coinbase Global. (NASDAQ:Coin) It is intended to be the best tracking index for the entire crypto market. The index currently has a 50% weight on Bitcoin, a 9% weight on XRP, and a 5% weight on Solana.
So you might set a rule so that your top three holdings make up two-thirds of your entire crypto portfolio. You then have even more flexibility to add a few high-risk, high-return cryptocurrencies to complete your portfolio. For example, adding the best artificial intelligence (AI) crypto could be one way to significantly increase your profits.
With this framework in mind, the challenge of investing in cryptocurrencies in 2025 shouldn’t seem so daunting. Make Bitcoin the cornerstone of your investment strategy and diversify your portfolio by finding some high-quality cryptocurrencies like Solana and XRP. Doing so will give you the best chance of maximizing the performance of your crypto portfolio over the long term.
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JPMorgan Chase is an advertising partner of Motley Fool Money. Dominique Basurto has positions in Bitcoin and Solana. The Motley Fool has positions in and recommends Bitcoin, Coinbase Global, JPMorgan Chase, Solana, and XRP. The Motley Fool has a disclosure policy.
Looking to invest in cryptocurrencies in 2025? Here are my top 3 recommendations: Originally published by The Motley Fool
