Bear markets aren't fun. But despite the near-term pain, these challenging market conditions create an opportunity for investors to acquire industry-leading assets at a discount to their previous highs. Let's explore why Bitcoin (BTC 0.06%) and Ethereum (ETH 0.96%) could make great ways for investors to bet on a long-term crypto rebound.
1. Bitcoin
With a current price of $30,100, Bitcoin is down 56% from its all-time high of roughly $68,800, reached in November 2021. But this dip could represent a good entry point for investors, because the iconic asset's long-term bull thesis as an increasingly trusted store of value remains intact.
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Never underestimate the power of a first-mover advantage. It gives an entity name recognition, which can translate into trust and staying power. And after the high-profile meltdown of Terra/Luna (a $40 billion blockchain that collapsed 99% after its complex stablecoin algorithm failed), Bitcoin looks even more appealing. Its relatively simple design and 13-year track record make it ideal for investors who want a reliable place to keep and potentially grow their wealth without all the frills.
Bitcoin's strong brand has also earned it institutional interest from organizations such as the derivatives marketplace CME Group, which offers Bitcoin (along with Ethereum) futures. Institutional investment can help improve the liquidity of the Bitcoin market, and possibly reduce its volatility relative to more speculative and illiquid cryptocurrencies.
2. Ethereum
As the second-largest cryptocurrency with a market cap of $223 billion, Ethereum enjoys much of the same trust and brand recognition that gives Bitcoin its staying power. But the asset's utility and ambitious development roadmap will give it a long-term edge over rivals.
Unlike Bitcoin, which primarily serves as a way for people to store and transfer wealth, Ethereum boasts a much broader use case. The blockchain is optimized to support autonomous programs called decentralized applications (dApps), which use smart contracts to offer services on the blockchain. And it is the undisputed leader in this category, hosting almost 3,000 of the roughly 4,000 projects.
To keep up with demand, Ethereum's developers are implementing an ambitious upgrade called The Merge, which will transition Ethereum from a proof-of-work consensus mechanism where miners solve puzzles to verify transactions and mint new coins to a proof-of-stake where users can verify transactions by locking up or staking' existing coins in return for new ones.
The first step in this process is expected to go live in August, reducing Ethereum's energy consumption by over 99% and opening the door for more changes to improve the platform's speed and scalability.
Get greedy when others are fearful
It's tempting to buy when prices are rising and sell when they are falling, but investing legends like Warren Buffett recommend doing the opposite. Buying during a bear market allows you to get in cheaper and capitalize on the potential recovery. Bitcoin and Ethereum's industry leadership and active development could make them top picks for investors who want to get greedy when others are fearful.
