What goes up generally must come down, and that's certainly been the case with cryptocurrency over the past two months. Crypto prices have been on a downhill slide after reaching all-time highs last year, and it's uncertain how long this slump will last.
Although there's a chance crypto prices could continue falling for the foreseeable future, it's likely they'll bounce back eventually. And there are two cryptocurrencies, in particular, that I'm stocking up on before they rebound.
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1. Ethereum
Ethereum (ETH +0.21%) was one of the strongest cryptocurrencies of 2021, and it's poised for even more growth in 2022 and beyond.
Later this year, Ethereum is expected to complete the next phase of its upgrade to move it from a proof of work (PoW) protocol to a proof of stake (PoS) protocol. Once the upgrade is fully rolled out, Ethereum will be significantly faster and more energy-efficient and will also have much lower transaction fees.
This upgrade will make it easier for Ethereum to scale, closing the gap between it and its biggest competitor, Bitcoin (BTC +0.66%). It could also help Ethereum compete with so-called "Ethereum-killer" competitors like Solana and Cardano.
Currently, Ethereum's price has fallen by around 34% since its peak in mid-November. Much of the recent crypto sell-off is due to widespread investor uncertainty rather than concern surrounding Ethereum itself. That means there's a good chance Ethereum will be able to recover from this downturn, making right now a smart opportunity to buy at a discount.
2. Bitcoin
Bitcoin has its fair share of challenges, primarily concerning its sluggish transaction speed and impact on the environment. But it's the most popular cryptocurrency for a reason, and it's also one of the safer investments in the crypto space.
One of Bitcoin's most significant advantages is its potential to hedge against inflation. There's a limited supply of Bitcoin tokens that can be mined, creating built-in scarcity. Those who are bullish on Bitcoin believe this scarcity will increase its value over time, making it a smart long-term investment.
Bitcoin also has the first-mover advantage in the crypto space, giving it a significant leg up over the competition. It currently has a market cap of more than $800 billion, nearly half of the $2 trillion crypto market as a whole. The only cryptocurrency that comes anywhere near Bitcoin is Ethereum, with a market cap of around $376 billion.
This isn't to say that Bitcoin is too big to fail, as there's always a possibility that it could fizzle. But if there's any cryptocurrency that could potentially become a widely adopted form of payment or hedge against inflation, it's most likely going to be Bitcoin.
Should you invest in Ethereum or Bitcoin?
If you've been on the fence about whether to invest in crypto, right now may be your best opportunity as prices continue to slide. But cryptocurrency isn't right for everyone, so consider your tolerance for risk before you buy.
Both Ethereum and Bitcoin have a long history of recovering from downturns, so it's likely they'll eventually bounce back from this slump, as well. But there are never any guarantees when it comes to crypto, so there's still a chance they may not succeed over the long run.
There will almost certainly be more volatility in the future, as well, so make sure you're prepared for the inevitable rollercoaster of ups and downs if you decide to invest.
Crypto may be having a rough start to the year, but that can make it a smart buying opportunity for investors. If you're willing to take on higher levels of risk, Bitcoin and Ethereum could be fantastic investments right now.
