• Sat. May 21st, 2022

Crypto Winter: 2 Top Cryptocurrencies to Buy Now and Keep

ByHazel R. Lang

May 6, 2022

Rampant inflation and rising interest rates led to a sell-off in several asset classes, but crypto-assets were particularly hard hit. Since peaking last November, the crypto market has fallen around 42%, and some analysts are now predicting another crypto winter – an extended period of suppressed prices.

What does this mean for investors? The last crypto winter was brutal – the market saw 88% of its value wiped out in 2018. But prices have more than rebounded since then, rising 1,700% in the past few years. From this perspective, the current downturn actually looks like a buying opportunity, and Bitcoin (BTC -8.67%) and Ethereum (ETH -7.59%) should be on every crypto investor’s bucket list.

Here’s why.

Image source: Getty Images.

1.Bitcoin

On several occasions, the managing director of Ark Invest, Cathie Wood, explained the importance of Bitcoin as the first global, private and decentralized monetary system ever invented. Never before in the history of mankind has there been a currency without borders beyond the control of a government or a centralized institution. That fact alone makes a compelling investment thesis.

Bitcoin also benefits from scarcity. Its supply is limited to 21 million coins, and if demand continues to increase, this rarity will make it more valuable over time. This would make Bitcoin a powerful inflation hedge, as its purchasing power would actually increase over time.

Some investors may disagree with this statement, but the data is clear so far: the consumer price index has risen about 30% over the past decade, which means the US dollar is worth less today than it was 10 years ago. But Bitcoin’s value has deflated by 99.996% against the dollar, according to Bloombergwhich means it is worth much more.

Investors have good reason to believe that demand for bitcoin will continue to grow. Crypto fever has overtaken retail traders. According to Fidelity, institutional investors are increasingly interested in digital assets, especially Bitcoin. Beyond that, Bitcoin has also become an important part of the cash strategy of many companies and governments. In fact, these entities own over 3% of the Bitcoin in circulation.

Ark Invest believes these trends will continue for years to come, and the company estimates that the resulting demand could push Bitcoin’s market capitalization to $28.5 trillion by 2030. At that level, every coin would be worth close to $1.4 million, implying a 36x return from its current price of around $38,000. Sounds pretty good, right? Even if that doesn’t happen, Bitcoin is still a popular asset with a finite supply. These qualities should create wealth for long-term investors.

2.Ethereum

The Bitcoin blockchain is just a digital ledger for transaction data, but the Ethereum blockchain can run self-executing computer programs called smart contracts. Since its beginnings in 2015, smart contract technology has evolved into a thriving ecosystem of decentralized applications (dApps) and decentralized finance services (DeFi).

DeFi is particularly notable because it allows investors to lend, borrow, and earn interest without involving banks or other financial institutions. Simply put, DeFi makes financial services more efficient by eliminating intermediaries. Concrete example: The Compound The protocol currently pays 1.7% annual percentage yield (APY) on Attached deposits, a stablecoin pegged to the US dollar. But the average savings account only pays 0.06% APY.

Ethereum has turned its status as a smart contract pioneer into a significant competitive advantage. It currently ranks as the largest DeFi ecosystem by far, with $110 billion invested in blockchain. This figure represents 55% of all DeFi investments on any blockchain. Unfortunately, this popularity has led to significant network congestion, which has caused transaction fees to skyrocket.

As a result, many rival blockchains have emerged to challenge Ethereum, though none come close to its scale. More importantly, the developer community has a fix in the works. A scaling solution slated to launch in 2023 could accelerate Ethereum throughput to 100,000 transactions per second, four times faster than Visathat the network can handle.

With this in mind, Ark believes Ethereum could take market share from traditional financial service providers. As adoption of Ethereum-based software and services increases, demand for the underlying cryptocurrency is expected to increase, both because it is used to pay transaction fees and because it is This is the preferred guarantee on the platform. To that end, Ark believes Ethereum’s market capitalization could exceed $20 trillion in the next 10 years. This implies 59 times the returns from its current market capitalization of $332 billion and is why this cryptocurrency is worth owning.


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