What role should Shiba Inu, Bitcoin, and Ethereum play in your wallet?

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Cryptocurrencies have taken the world by storm. With tokens including Shiba Inu (CRYPTO: SHIB), Bitcoin (CRYPTO: BTC) and Ethereum Ether (CRYPTO: ETH) up by around 75,000,000%, 110% and 523%, respectively, this year , it’s not hard to see why.

However, investors should always be mindful of the coins they are placing their money on. Read on to see what role a panel of Fool.com contributors think three of the most popular cryptocurrencies should play in your wallet.

Image source: Getty Images.

Filter out noise and focus on the fundamentals

Daniel Foelber (Shiba Inu): Shiba Inu, a cryptocurrency created as a joke to compete with Dogecoin (which was also created as a joke), took the market by storm with its price increase of 14,044,998% since its launch on August 1, 2020.

According to coinmarketcap.com, Shiba Inu has a market cap of $ 27.6 billion, even after falling 45% from its all-time high. At first glance, it may seem like Shiba Inu is valuable, but in reality it has no intrinsic value due to virtually endless supply and limited use cases. Instead, Shiba Inu’s value stems from its intangible assets. Specifically, its entertainment value and casino features that have, to be honest, made a lot of people rich.

Shiba Inu’s insanely high market capitalization is similar to the type of values ​​attributed to non-fungible tokens (NFTs). NFTs represent the ownership of a digital asset, such as a work of art or a tweet. Some of the early NFT projects on the Ethereum blockchain, such as the fixed supply of 10,000 NFT CryptoPunks, can reach very high values. On Thursday, one of those NFTs was sold for 119 Ethereum, which is over $ 500,000. However, others have reached prices in the millions.

So what role should the Shiba Inu, NFTs, and this original new subset of the crypto market have in your wallet? The short answer is none.

Fear of Missing Out (FOMO) can be emotionally taxing. And seeing others get rich with little more than luck and speculation can be a tough pill to swallow. But for the vast majority of investors, the risk / reward profiles offered by Bitcoin, Ethereum, bigger altcoins like Solana or Cardano, and smaller altcoins like Polygon or Cosmos are much more attractive and potentially much more profitable than launching the dice on something like Shiba Inu. Of course, if a person wanted to throw a few dollars at Shiba Inu for fun, then that’s fine. As long as we understand that Shiba Inu could very well be worth almost nothing in a few years.

This volatility was never the plan

James Brumley (Bitcoin): It’s become a bit too obvious – and even a bit cliché – for the tastes of some investors. But Bitcoin is expected to remain a centerpiece of the crypto world by becoming the first poster of the movement. However, his future is unlikely to be like his burning past. Rather than staying in perpetual rally mode, I see the price of Bitcoin stabilizing at a relatively stable and more predictable price.

This has always been the intention, of course. The initial concept of cryptocurrency was not to make it a means of price speculation, but a digital currency serving as an alternative to fiat currencies. For a crypto to function legitimately as “cash,” however, its price must be stable enough that lenders, traders, and spenders feel comfortable using it to transact; buying and selling using amounts of Bitcoin in US dollars defeats the purpose.

For investors, this simply means that Bitcoin is likely to become more of a parking space akin to cash or a money market, and less of an investment itself.

The Bitcoin community is not quite there yet. However, Bitcoin is leading the way in this regard as it is the first digital currency to become a mainstream concept and one that every crypto fan can agree to use.

Ethereum is a bit like a potentially explosive tech stock

Keith Noonan (Ethereum): Although some cryptocurrencies are just currencies, the value and growth of Ethereum is different. The Ethereum blockchain provides a platform for smart contracts – exchanges of verified information that is backed up by network processing. Apps pay the cost of utilizing the capabilities of the Ethereum blockchain with ether – the cryptocurrency token that underpins the network.

The Ethereum blockchain is essentially a framework on which other blockchain applications can be built. For now, this mainly takes the form of cryptocurrencies and associated decentralized financial applications. Thousands of cryptocurrencies and decentralized financial applications are already built on the Ethereum blockchain, and the growing adoption on the network is helping to drive the demand for ether. This positive price catalyst is occurring in conjunction with broader bullish momentum for the global cryptocurrency space.

Investors have already seen Ethereum benefit from a tremendous network effect. The question is whether this powerful tailwind will continue for the long term and strive to significantly increase the valuation of its cryptocurrency token.

Ethereum provided the network that serves as the foundation for much of the global cryptocurrency and blockchain ecosystem. With the rapid adoption of crypto tokens and smart contract applications, the valuation of ether tokens could still have enormous leeway in the long run. However, investors should also assess the possibility that the valuation of Ether will experience large swings in conjunction with the volatility of the global crypto space. Ether could generate bigger gains, but investors should keep their risk tolerance in mind when allocating portfolio space for the token.

This article represents the opinion of the writer, who may disagree with the official recommendation position of a premium Motley Fool consulting service. Were motley! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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