Led by Bitcoin (BTC 0.57%), which is already up 60% this year, the crypto market appears to be on the cusp of a major bull market rally. However, not all major cryptocurrencies are up this year. Several popular cryptos are in the red for the first five months of 2024.
The three cryptocurrencies that I’m most concerned about right now are XRP (XRP 0.21%), Cardano (ADA 0.70%), and Polygon (MATIC 0.83%). These three cryptos are down 15% or more for the year, firmly putting them in “buy the dip” territory. But should you be buying the dip on any of them?
1. XRP
Let’s start with XRP, which has been in a holding pattern for much of the past two years. After briefly making a run at $2 in 2021, the crypto has been unable to regain any former momentum. It now trades for just $0.52. XRP is down 15% in 2024 and trades at a shocking 86% discount to its all-time high.
But there’s still room for optimism because Ripple, the company that created XRP, could be close to winding up its epic legal battle with the SEC. Investors are convinced that if Ripple wins the case (which is attempting to determine if XRP is a security), then XRP will skyrocket in value.
The successful resolution of the SEC lawsuit could unlock a number of different opportunities. For example, it could lead to Ripple ramping up its business operations in the United States, or the SEC signing off on a new ETF investment product for XRP.
If you’re really dreaming big — it might lead to an initial public offering (IPO) for Ripple. All IPO proceeds could then be plowed back into building projects featuring XRP.
2. Polygon
Polygon is another disappointing underachiever. It trades for just $0.70, which is 76% below its all-time high of $2.92. For the year, Polygon is down 27%. That’s particularly concerning, considering how well other cryptos are faring right now.
Polygon’s primary claim to fame is that, for a short period, it was the premier Layer 2 scaling solution for Ethereum (ETH -0.74%). In simple terms, Polygon helped Ethereum run faster, cheaper, and better.
The investment thesis was very simple: If Ethereum skyrockets in value, so will Polygon. Around the time of The Merge in 2022, Polygon was regularly mentioned as a prime candidate to benefit from any future surge in value for Ethereum.
Image source: Getty Images.
However, nearly two years later, we’re still waiting. The lack of any sustained upward price movement is largely the result of all the new competition that’s been flooding into the Layer 2 space. At one time, Polygon reigned supreme, but not anymore. There are a handful of other top rivals taking away market share from Polygon.
3. Cardano
Finally, there’s Cardano, which is down 25% for the year. It still ranks as a top 10 cryptocurrency with a $16 billion market cap and as one of the top Layer 1 blockchain networks in the world. But Cardano trades 86% below its all-time high of $3.10 and shows no signs of making up lost ground.
While Cardano has had its share of wins over the past few years, it always seems to be playing catch-up. At first, that meant playing catch-up with Ethereum. But now, it must also deal with the likes of Solana (SOL 0.12%), which has arguably displaced Cardano as the top competitor to Ethereum right now. That helps explain why Solana has been skyrocketing in price over the past 18 months, but Cardano has not.
The best “buy the dip” candidate?
At one time, all three of these cryptocurrencies had very bullish outlooks. But there’s a good reason why all of them are now trading for less than $1. If they don’t turn things around fast, they’ll risk becoming irrelevant in the current crypto bull market cycle.
Of the three “buy the dip” candidates here, my top pick is XRP. Recent developments appear to be shifting the legal and regulatory landscape in favor of crypto. And that dramatically boosts the odds that Ripple can win its SEC legal case. If so, XRP could soar past the $1 mark and finally reward all the patient investors who have stayed the course over the past few years.
But just remember, crypto remains a highly volatile market, and investing in a crypto priced under $1 involves substantial risk. So if you do decide to invest in one of these beaten-down cryptos, make sure you do your due diligence.
Dominic Basulto has positions in Bitcoin, Cardano, Ethereum, Polygon, and Solana. The Motley Fool has positions in and recommends Bitcoin, Cardano, Ethereum, Polygon, Solana, and XRP. The Motley Fool has a disclosure policy.