With the next Bitcoin (CRYPTO: BTC) halving just two weeks away, crypto investors are lining up to buy Bitcoin. This makes sense, given the historical correlation between halving events -- when the reward for mining the crypto is cut in half -- and Bitcoin price gains. In three previous halving cycles, the price of Bitcoin soared, and many investors are expecting the same to happen in 2024.

So, buying Bitcoin ahead of the halving is basically a no-brainer at this point. But are there other cryptocurrencies that could also see a price spike after the halving? By analyzing a few key metrics, it's possible to come up with a short list of potential investment prospects. Let's dig in.

Favorites of institutional investors

Given that there are more than 20,000 cryptocurrencies in the world, we need a quick, easy way to narrow down potential investment targets to a short list of high-quality names. As a general rule of thumb, we're looking for cryptos that are seeing strong interest from institutional investors.

The good news is that it is possible to narrow the list of potential investment targets significantly since most institutional investors are not interested in cryptos with less than a $2 billion market cap. That shrinks the list of 20,000 potential cryptocurrencies to a pool of about 50. While not all of these cryptos may be household names, they all have significant upside potential if institutional investors decide to load up on them.

We can go one step further by looking at where institutional investors are actually moving their money. CoinShares, for example, produces a Weekly Crypto Asset Flows report showing inflows and outflows for the top cryptocurrencies. Since the flows are tracked weekly, monthly, and year to date, it's possible to see which cryptos are gaining or losing momentum with investors.

Based on the most recent CoinShares numbers, only five cryptocurrencies beyond Bitcoin seem to be garnering any sort of interest this year: Ethereum (CRYPTO: ETH), Solana (CRYPTO: SOL), Litecoin (CRYPTO: LTC), XRP (CRYPTO: XRP), and Polkadot (CRYPTO: DOT). You can think of these as the five favorites of institutional investors.

Bitcoin correlations

Next up, we'll want to look at a cryptocurrency correlations matrix to see which of these five cryptocurrencies are highly correlated with Bitcoin. The logic here is simple: If we expect the price of Bitcoin to skyrocket after the halving, then we want cryptocurrencies that can go along for the ride and capture the maximum potential upside. The higher the correlation, the more upside they should be able to capture.

While all cryptocurrencies are correlated with Bitcoin to some degree, given that they are all part of the same asset class, some have historically shown very high correlations. Of our potential list of five cryptocurrencies, three particularly stand out: Ethereum, Solana, and Polkadot. For example, Ethereum has a 0.82 correlation with Bitcoin, Polkadot has a 0.73 correlation, and Solana has a 0.67 correlation. By way of comparison, XRP has only a 0.44 correlation, while Litecoin has a 0.61 correlation.

And the two winners are...

As a final filter, we'll want to focus on Layer 1 blockchain networks, which are the building blocks of the blockchain world. Of the three remaining cryptos on our list, only Ethereum and Solana make the cut. These two Layer 1 blockchains are well diversified and do a little bit of everything, from non-fungible tokens (NFTs) and gaming to decentralized finance (DeFi). As such, they are best positioned to benefit from mainstream crypto adoption.

Polkadot, alas, is what crypto enthusiasts refer to as a Layer 0 blockchain -- it's not so much a blockchain to build on top of as it is a sort of connecting glue for other blockchains. I've always viewed Polkadot as a way of hedging your bets if you're confident about the future growth of blockchain technology but not confident enough to actually predict a final winner.

With that in mind, my two winners are Ethereum and Solana. If you favor stability and a proven track record that extends back to 2015, Ethereum is the clear choice. If you favor innovation potential and long-term future upside, Solana is your pick. Either way, both cryptos should be on your investment radar ahead of the Bitcoin halving.

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Dominic Basulto has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin, Ethereum, Solana, and XRP. The Motley Fool has a disclosure policy.

2 Cryptocurrencies Other Than Bitcoin to Buy Ahead of the Halving was originally published by The Motley Fool