3 Cryptos to Watch in 2023

When you're swimming in a sea of volatility, it may be time to play it safe.

When times were good in crypto, people's annual watchlists were filled with new and exciting projects as investors chased the next big thing. In 2021, Solana (SOL), an Ethereum alternative, jumped over 11,000%, while play-to-earn crypto Axie Infinity (AXS) increased by 17,000%, according to CoinMarketCap data. Both are now down more than 90% from their all-time highs.

Some die-hard crypto enthusiasts think the market slump is a good time to pick up quality cryptocurrencies at bargain prices. They may be right, but if 2022 taught us anything, it's that these are risky assets. Even popular projects can fail, get hacked, or both. That's why I'll be sticking to well-established cryptos in the coming year. There are no guarantees, but they have the best chance of surviving continued market turbulence.

Here are the three cryptos I'll be watching in 2023.

1. Bitcoin (BTC)

Bitcoin is the grandaddy of cryptocurrencies, and its market cap accounts for almost 40% of the total value of all cryptos. Bitcoin has already survived several crypto winters and, so far at least, it's always gone on to reach new highs. There are no guarantees, particularly as regulation could transform the way we all buy and sell cryptos and we don't have that long of a track record to judge by.

All the same, some believe that Bitcoin has the potential to become the currency of the internet. Others, like Ark Invest's Cathie Wood think Bitcoin could reach $1 million by 2030. Ark Invest thinks the lead digital currency could take a share of the global remittance market, play a role as a currency in emerging markets, and gain traction as a form of digital gold.

On the other hand, Bitcoin critics such as Warren Buffett say that it has no intrinsic value and dismiss the whole industry. Others worry that Bitcoin is too slow and clunky to function as a currency, and question whether a volatile asset can ever replace traditional money.

2. Ethereum (ETH)

Ethereum is the second-biggest cryptocurrency on the market. It pioneered smart contract technology, which are tiny pieces of code that live on the blockchain. This transformed the project into a whole ecosystem as it means other cryptocurrencies and projects can be built on Ethereum's network.

The downside? Transactions on Ethereum are slower and more expensive than its competitors. Ethereum is in the process of a series of upgrades, designed to make it more scalable and sustainable. But it's taking years to deliver and in the meantime, there's a risk that Ethereum will lose market share to its faster counterparts.

3. Cardano (ADA)

Like Ethereum, Cardano is a programmable cryptocurrency where developers can build applications and cryptocurrency projects. Cardano stands out for its dedication to testing -- it takes a slow-and-steady approach to development that may give it a stronger chance of surviving long term. Cardano has also developed a number of real world partnerships, particularly in Africa where it says it has a mission to use blockchain to solve local problems.

However, Cardano has its fair share of critics. Some feel that it has moved too slowly and still doesn't offer as much utility as other Ethereum alternatives. According to DefiLlama, there's over $25 billion locked in projects on Ethereum's network, while Cardano only has around $50 million.

Buying crypto in 2023

As pundits move from talking about a crypto winter to a crypto ice age, it's hard to know when cryptocurrency prices will recover -- if ever. Many crypto investors are severely underwater on their investments, meaning their assets are worth less than they originally paid for them. Indeed, a lot of the people who bought crypto during the frenzy of 2021, aren't wondering which cryptos to buy, rather whether they should sell the crypto they already own.

If you're considering buying crypto this year, do a lot of research and only invest money you can afford to lose. Sure, if the crypto market recovers, you could be positioned for some sizable returns. But that doesn't justify gambling with money you need for other financial goals. There is a good chance that crypto prices could fall further and many more projects could fail before the crypto winter is over. If this happens, the surefire way to make sure it doesn't damage your financial security is to limit the amount you buy.

Finally, think carefully about which crypto exchange you want to use and how you plan to store your crypto. What we saw this year is that investor funds can get tied up in bankruptcy proceedings or lost altogether if platforms collapse or mismanage their funds. Some exchanges have FDIC insurance on U.S. dollar deposits, others have third-party insurance against crime. But if you hold your crypto in a non-custodial crypto wallet, you're in control and won't be impacted if your crypto exchange fails.