The value of Bitcoin, the most well-known cryptocurrency, soared more than 135% in 2024. And as crypto-friendly politicians prepare to take office one after another, the crypto craze is only increasing.
“We encourage investors to consider cryptocurrencies as another asset class that can be included in long-term wealth creation strategies,” said Dr. Alex Michalka. Vice President of Investment Research at Wealthfront. “Regardless of what is happening in the market, we recommend that clients allocate no more than 10% of their portfolio to cryptocurrencies.”
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So which cryptocurrencies have the highest trading volume, and more importantly, should you also consider adding them to your portfolio?
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The most traded coins are actually stablecoins rather than investment coins. As of this writing, Tether's 24-hour trading volume is 186.44 billion, according to Yahoo Finance's volume rankings.
Stablecoins are tied to a specific currency. In the case of Tether and USD Coin (the 6th largest coin in circulation), they are designed to trade at the same price as the US dollar. They work by backing each coin with real dollars in real bank accounts.
“These are not investments; they function more like the cryptocurrency equivalent of cash,” explained Joe DiSanto, financial consultant and founder of Play Louder. “They are often used when buying and selling cryptocurrencies or temporarily holding funds. Their high trading volumes reflect this usefulness rather than their investment potential.”
In other words, people can use them like real currency to pay for things and transfer value. However, they are not designed to increase in value, in fact, the opposite is true.
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Everyone knows Bitcoin, the first and most famous of all cryptocurrencies.
Nic Puckrin, CEO and co-founder of crypto education platform CoinBureau, argued that Bitcoin:
“To the skeptics, I would say that Bitcoin is the only asset in the world where the supply defined by the protocol is not influenced by price,” Packlin said. “It is the only completely permissionless decentralized asset that cannot be seized by a higher power. It is the only asset that can be easily stored and transmitted without the need for a third party.
“Additionally, the US is considering a strategic reserve for Bitcoin, and the BlackRock IBIT (Exchange Traded Fund) ETF has grown the fastest in history.More importantly, people around the world are looking to create an exchange and store of value. It's using it as a tool.”
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Pucklin makes a convincing case, and the coin's performance in 2024 certainly exceeds expectations. Just don't bet on Bitcoin or other cryptocurrencies proverbially.
It's no surprise that the third-highest cryptocurrency by trading volume is Ethereum, Bitcoin's younger brother.
While Ethereum hasn't exploded in value this year at the same pace as Bitcoin, it hasn't stagnated at all either. The coin is up over 46% year-to-date in 2024 and over 60% over the past 12 months.
“Ethereum gives users access to their transaction history,” explains Melanie Masson, financial expert at Clearsurance.com. “Traders who like to dig deep into their trades can access as much information as they need.”
But the appeal doesn't end there. CoinDataFlow.com CEO Alexandr Sharilov said the code backbone behind Ethereum has a lot of utility and room for growth.
“Ethereum is the basis for decentralized finance (DeFi) peer-to-peer financial platforms and NFTs,” Sharilov explained. “There is a lot of development going on and over time there are plans to move to Ethereum 2.0, which should reduce energy consumption. After all, the reason transaction fees are high is because Ethereum has a high energy consumption .”
Some cryptocurrencies are backed by real-world physical assets.
In the case of Max Properties, the fourth highest traded coin, that means Himana Condotel & Residences in Bali, Indonesia. Purchasing coins gives you partial ownership of real estate.
Be careful with volatile formats. The value of real estate is relatively stable precisely because it is so illiquid. Adding instant liquidity to an asset creates similarly instantaneous volatility, leaving room for value to be distorted by speculators rather than long-term investors.
Solana remains a coin just outside mainstream financial media coverage, out of the spotlight of Bitcoin and Ethereum, but it still has billions of dollars in trading volume.
“Solana is very fast and has low fees, making it ideal for large-scale DeFi projects,” Sharilov said. “However, there are now concerns about its centralization as the network has experienced outages.”
Please consider proceeding with caution. However, it is also worth noting that Solana has outperformed both Bitcoin and Ethereum this year, rising over 150%.
What started out as a tongue-in-cheek joke about the fabricated value of cryptocurrencies eventually exploded in value thanks in part to Elon Musk's promotion. (If you want to know how it all unfolded, check out Business Insider's quick summary of Dogecoin's history.)
Its value has skyrocketed even more since President-elect Trump appointed Musk to lead the new Department of Government Efficiency (DOGE).
Think of Dogecoin as the ultimate “memecoin,” a virtual currency born from popular online jokes.
“Meme coins like Dogecoin and Pepe exist purely for speculative purposes and have no underlying business or intrinsic value,” DiSanto explained. “Their trading volumes often spike to gain attention through media stories. For example, Burger King recently gave away Dogecoin with purchases.
“However, investing in meme coins is very risky. Your money can disappear quickly, but there is always the possibility of a quick profit. If you understand swing trading and momentum Unless you are a professional trader, it is best to avoid these coins or only invest in amounts you can afford to lose.
Find out more about the long-term use of any cryptocurrency you're considering. Michael Tunney, senior managing director at Magnus Financial Group, issued a parting warning.
“High trading volume may represent speculative trading rather than long-term investment fundamentals,” he said. “It does not necessarily reflect the potential for future growth or stability.”
Investors beware.
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This article was originally published on GOBankingRates.com: 6 cryptocurrencies with the highest trading volume – should you invest too?
