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Thinking About Investing in Crypto in 2025? Here Are My Top 3 Picks.
Last year was a tipping point for crypto, which for the first time made it into the investment mainstream. New spot cryptocurrency exchange-traded funds (ETFs) started trading, crypto emerged as a campaign issue during the presidential election, and Bitcoin(CRYPTO: BTC) topped $100,000 at the end of the year.
So it's perhaps no surprise that many investors are now looking for ways to invest in crypto in 2025. But which cryptos are worth buying, and just how much exposure should you have to them? Let's take a closer look.
Bitcoin
The obvious no-brainer pick here is Bitcoin, which was one of the best-performing assets in the world. Compare and contrast it with the Nasdaq Composite, for example, which was up 30%, and the S&P 500, which gained 24%.
During the past decade, Bitcoin has consistently been one of the top-performing investments. Although there have been some down years along the way -- with 2022 standing out as a particularly dismal year -- Bitcoin can generally be counted on to deliver double-digit percentage, and even triple-digit, returns. Historical performance is no guarantee of future results, of course, but Bitcoin certainly has a stellar track record.
Heading into 2025, Bitcoin has a tremendous amount of momentum, thanks in large part to the campaign promises of President-elect Donald Trump. On the campaign trail, Trump promised to bolster the Bitcoin mining industry, make America the crypto capital of the world, and create a new strategic Bitcoin reserve. Combined, all of these factors are very bullish for Bitcoin.
Best of all, it's never been easier to invest in Bitcoin. At one time, you needed a crypto wallet, specialized knowledge of the crypto market, and access to a cryptocurrency trading platform. Now, all you need to do to invest in Bitcoin is buy one of the new spot Bitcoin ETFs. That makes investing in Bitcoin as easy as buying your favorite stock.
Solana and XRP
So which other cryptocurrencies could be getting spot ETFs in 2025? Two of the top prospects are Solana(CRYPTO: SOL) and XRP(CRYPTO: XRP). Both rank among the top 10 cryptos in terms of market cap, both have the attention of retail and institutional investors, and both have a relatively good chance of getting ETF approval from the Securities and Exchange Commission (SEC).
These spot ETFs are important for one primary reason: They will lead to a new influx of money from investors, helping to push up the price of the underlying cryptocurrency. This is the same pattern investors saw with the spot Bitcoin ETFs, which were approved last January. According to J.P. Morgan, as much as $3 billion to $6 billion could flow into spot Solana ETFs, and as much as $4 billion to $8 billion could flow into spot XRP ETFs.
Image source: Getty Images.
Even if they do not get ETFs this year, both Solana and XRP are worthy of further consideration, based on their underlying functionality and utility. Solana is a leading smart contract blockchain network, with a very robust blockchain ecosystem. It also has a new mobile crypto strategy to attract users in 2025.
And XRP continues to be a trusted platform for settling financial transactions, especially those that involve cross-border money flows. Ripple, the company behind the XRP token, recently settled long-running case with the SEC, and now appears ready to launch a new wave of innovations to support the XRP blockchain network.
How much should you allocate to each crypto?
When it comes to investing in crypto, it's important to get the allocation right. One popular way to do this is to look at the market cap of a specific cryptocurrency, and then calculate how much of the total crypto market cap it accounts for, using data from CoinMarketCap.
So, for example, Bitcoin has a market cap of about $2 trillion, which is more than 56% of the $3.5 trillion crypto market. As a general rule of thumb, then, Bitcoin should account for about 50% to 60% of your long-term crypto investment portfolio. Depending on your level of risk tolerance, you can adjust this figure higher or lower.
Another way to calculate how much to allocate to each crypto is by analyzing the new Coinbase 50 Index, which was designed by Coinbase Global(NASDAQ: COIN) to be the premier tracking index for the overall crypto market. Currently, Bitcoin has a 50% weighting in this index, while XRP has a 9% weighting, and Solana has a 5% weighting.
You might set a rule, then, that your top three holdings should account for two-thirds of your overall crypto portfolio. You then have some additional flexibility to add in a few high-risk, high-reward cryptos to round out your portfolio. Adding in a top artificial intelligence (AI) crypto, for example, might be one way to turbo-charge your returns.
With this framework in mind, the task of investing in crypto in 2025 should not feel as daunting as it might. Make Bitcoin the cornerstone of your investment strategy, and then find a few high-quality cryptos such as Solana or XRP to diversify your portfolio. Doing so will give you the best chance of maximizing the performance of your crypto portfolio over the long haul.
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JPMorgan Chase is an advertising partner of Motley Fool Money. Dominic Basulto 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.
