What is the smartest coin to invest in?

Here’s What 1 of the Smartest Investors on the Planet Is Saying About Bitcoin Right Now

While fears of regulation could hit other cryptos particularly hard, Bitcoin looks to be the most resilient.

Adding to regulation concerns, an uncertain macroeconomic environment is cause for more worry.

CRYPTO: BTC

Bitcoin

Market Cap
$542B
Today’s Change
Arrow-Thin-Down
(0.64%) $177.81
Current Price
$27,976.97
Price as of May 8, 2023, 5:54 a.m. ET

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Bitcoin is off to a hot start in 2023, but strong headwinds could be forming.

Made famous by her love of innovation, Cathie Wood’s Ark Invest is naturally a fan of Bitcoin (BTC 0.64% ) . Every month a team of Ark analysts explore statistics on the Bitcoin blockchain and other economic trends in an effort to gauge Bitcoin’s overall position in the market and where it might be headed.

This month’s report looked back on February. It was full of valuable information for investors and highlighted why Bitcoin will likely remain at the top of the cryptocurrency asset class for years to come.

Bitcoin gets a new feature

Despite retreating more than 14% at the beginning of March, likely due to uncertainty in the crypto landscape as talks of regulation heated up and more crypto-related businesses went bankrupt, Bitcoin has actually had a great start to 2023. Since the beginning of the year, Bitcoin is up nearly 50% and looks to be the most resilient as it is one of the most resistant and resilient to regulation. This comes from a combination of its vast decentralization and high levels of security.

After a successful January, its price climbed further in February thanks to a new technology called Ordinals, which was introduced to make the Bitcoin blockchain non-fungible token (NFT) compatible. Before Ordinals, only blockchains with smart contracts could host NFTs.

With the introduction of Ordinals, the average block size of Bitcoin hit a new all-time high. Ark analysts believe this is a bullish sign as they view the limited space in each block as being similar to real estate. The less block size available, the more valuable the space becomes as demand increases.

Although still in their infancy, Ordinals could prove to add even more pressure to block space demand. While the launch of Ordinals and a stellar February were a bit of good news for Bitcoin, it seemed to be short-lived.

Headwinds could be forming

While there is reason to be optimistic about Bitcoin’s future, Ark believes there are two unknown factors that could dampen growth — looming regulation and an uncertain macroenvironment.

As a result of multiple catastrophes in 2022, politicians and legislators seem to be turning up the heat in the regulatory environment. Just three months into the year, there have been multiple examples of fines and penalties being levied against crypto-related businesses by the Securities Exchange Commission (SEC).

This is likely due to SEC Chairman Gary Gensler’s beliefs that a majority of cryptocurrencies are actually securities and therefore fall within reach of the commission’s jurisdiction.

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To start off 2023, the SEC has already announced a settlement with the cryptocurrency exchange platform Kraken to suspend its staking product. The agency also sent a warning to the stablecoin issuer Paxos, which stated that its products also met the criteria of a security and to cease its offering.

Ark believes that these efforts by the SEC and other government agencies will only pick up in 2023 and could prove to be detrimental for the majority of cryptocurrencies.

However, it also believes that Bitcoin is different from other cryptocurrencies due to its high levels of decentralization. This opinion has been reaffirmed as chairman Gensler is on record saying multiple times that he considers Bitcoin a commodity and, therefore, outside of his commission’s control.

Adding to potential regulation, Ark views the current macroeconomic environment as being less than ideal for more-risky assets like Bitcoin to grow. Analysts pointed to a handful of metrics like the monetary velocity, trends in consumer spending, and patterns in the 10-year Treasury yield as a reason to believe that not only will riskier assets continue to struggle but that a recession might even be looming.

While it remains unknown as to whether our worst fears come to be, Ark analysts painted a clear picture that in the current economic and regulatory landscape, Bitcoin is the safest option for those looking to invest in cryptocurrency. It reiterated this stance with a variety of supporting statistics, such as mining difficulty and the long-term holder supply, which show that even in the depths of a bear market, Bitcoin’s blockchain is still relatively healthy.

As the future remains unclear, Bitcoin offers crypto investors a refreshing sense of hope that no matter what happens, it can still continue on its path of price appreciation.

RJ Fulton has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.

DeFi Coins and Tokens: What Every Investor Should Know

Smart contracts are self-executing, digital, code-based contracts that contain the terms of an agreement. Their functionality enables trackable but irreversible transactions to take place between anonymous parties.

DeFi applications aim to disrupt the financial industry as we know it by making it decentralized and non-custodial.

Decentralization happens when the developers who create a protocol or app hand over ownership of the smart contracts to their users, turning them into community-controlled assets.

The non-custodial element of DeFi means that the individual maintains control over their DeFi coins and/or tokens, which is in stark contrast to the way traditional banks and even cryptocurrency loan programs take control of your assets whenever you need to use them to complete a transaction.

Why Was DeFi Developed?

Much the way cryptocurrency was created as an alternative to fiat money, DeFi was created to provide alternatives to common financial services.

For example, DeFi decentralizes lending so that people who don’t have access to or have been disenfranchised by traditional banks still have a trustworthy outlet from which they can get a loan.

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While there are of course risks associated with such a new and groundbreaking concept, DeFi shows a lot of promise as the basis for a financial future that’s more efficient, flexible, transparent, and most importantly equitable.

How Does DeFi Work?

Right now, most DeFi protocols and apps are built on Ethereum.

Ethereum is an expansion of the technology and concept behind Bitcoin. Instead of just a currency, Ethereum is a global, decentralized technology network — which means it’s not owned or controlled by a central entity — that powers protocols and applications that use smart contracts. Ether is Ethereum’s native cryptocurrency, and just like Bitcoin it can be purchase on a crypto exchange or mined (for now).

It’s important to keep in mind that, right now, DeFi is largely unregulated and not insured by the FDIC the way traditional banks are, so investors are advised to do their research and may only want to contribute assets they can afford to lose.

What Are DeFi Coins and Tokens?

In the crypto world, DeFi coins and tokens are often referred to interchangeably. And while they are quite similar, there are a few key differences that do matter.

A DeFi coin is much like a digital version of a fiat coin — it transfers value in the course of a financial transaction. DeFi coins are built on and often named for their unique, native blockchain networks. In spring 2021, Maker, Compound, Uniswap, Aave, Chainlink, and Ankr are among the most popular DeFi coins.

DeFi tokens also transfer value, but not necessarily always in a financial sense. Utility tokens can be used like passwords to provide access to a resource, asset tokens can be used to represent physical assets such as real estate, and of course there are non-fungible tokens (NFTs) that represent one-of-a-kind “items” such as digital art (For example, Nyan Cat recently sold for $600,000). DeFi tokens are also different from coins because they can be built on existing blockchain networks.

3 Steps to Start Investing in DeFi

Here’s how you can get started with one of the most common uses for DeFi — lending and borrowing assets.

Step 1: Set Up Your Crypto Wallet

First up is choosing a crypto wallet.

Your wallet is how you’ll store, send, and receive DeFi coins. Wallets come in all formats and some are also integrated with exchanges where you can purchase DeFi coins.

MetaMask is a popular wallet, exchange, and browser extension. It supports Ethereum and can connect users to different DeFi protocols, which makes it widely used among DeFi investors.

Step 2: Purchase Your DeFi coins

Next you’ll need to invest in the coins that align with the DeFi protocol in which you want to participate.

Right now, most protocols exist on Ethereum, which means you’ll likely be purchasing Ether coins or ERC-20 tokens.

Step 3: Participate in Your Protocol of Choice

Lending and borrowing are just as integral to DeFi as they are to our traditional financial system. But one of the benefits of DeFi is that it enables its users to both borrow and lend assets without losing custody of their coins.

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There are several protocols that support lending and borrowing, but we’ll use Compound for this example.

You’ll visit Compound’s website, connect your wallet so it has access to your DeFi coins, and then you’ll interact with the protocol to either lend out or borrow tokens. When you lend in Compound, you’ll earn interest. If you borrow, you’ll have to put up 100% of the amount in another supported asset as collateral.

How to Track Your DeFi Coins and Tokens with the Rest of Your Investment Portfolio

From day one, the team at Kubera has been committed to helping our customers track all of their assets in one place.

And that’s why, today, Kubera is the only portfolio tracker in the world where investors can monitor and manage traditional, crypto, and DeFi assets from a single dashboard!

It’s easy to track your DeFi coins, tokens, and all your other precious assets side by side — just visit kubera.com, sign up, create a simple profile, and start adding your assets.

With just a few clicks, you’ll be able to see the real-time value of both your traditional and modern investment accounts on a single page.

Now it’s time to add all the assets that make up the rest of your portfolio.

First, start tracking the value of individual stocks and crypto coins using Kubera’s tickers.

Then, take advantage of our partnership with leading asset experts like EstiBot, Zillow, and more to see the real-time worth of your real estate investments, vehicles, and even domain names.

And for those final few, harder-to-track assets like physical collectibles — there are always Kubera’s spreadsheet-like fields where you can enter asset information and value in order to track them right alongside everything else in your diverse portfolio.

With all your assets and accounts added to Kubera, you can enjoy a recap view of your portfolio that gives you deeper insight into your portfolio’s performance as well as the health of your net worth.

‍As a well-diversified investor — DeFi coins, tokens, and other assets may become part of your portfolio sooner than you think.

To make sure you’re taking advantage of these cutting-edge assets instead of the other way around, use the only complete portfolio tracker in the world — Kubera.

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