The cryptocurrency market has been more difficult to navigate in 2022 than it was in the banner year of 2021, and many of the top cryptocurrencies are down considerably from the all-time highs that they hit toward the end of last year.
Some of the top cryptocurrency projects have been down 75% or more since that time, but at this point, many look like buying opportunities for long-term investors. Here are two top cryptocurrencies that are down 75% or more from their all-time highs and look ready to rally in the future.
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1. Ethereum
Ethereum (ETH +1.47%), the second-largest cryptocurrency of all with a market cap of $146 billion, is down 75% from its all-time high set in November. But a major, long-awaited catalyst is coming up for Ethereum, meaning that it could soon be ready to fight its way back from these lows.
Ethereum's long-awaited Merge upgrade will transform Ethereum from proof-of-work consensus to proof of stake. The long-awaited transition looks like it is finally coming to fruition, with the testnet trial said to be taking place in June and the full transition expected in August.
CRYPTO: ETH
Key Data Points
Changing to proof of stake will have several benefits for the Ethereum network and investors. First and foremost, the transition should lead to improved transaction times and lower gas fees for users. Proof-of-stake consensus is also more green than proof of work as large quantities of energy will not be used to mine new blocks. It will enable more holders to earn rewards from the network, as anyone can stake their Ethereum to validate transactions, whereas proof-of-work cryptos like Bitcoin (BTC +0.85%) have increasingly become the purview of large, heavily resourced miners with fleets of industrial-grade miners.
In addition to this major change to the Ethereum network, the Ethereum landscape has also been showing some other signs of life. While non-fungible token (NFT) sales have cooled off during the crypto bear market, some green shoots are emerging. For example, the Goblin Town NFT collection, while not particularly appealing from an aesthetic perspective, has taken the crypto world by storm. The Goblin Town NFTs were minted for free and have since netted over $40 million in secondary sales. At the time of writing, several Goblins had been sold for $10,000 or more, and the floor price is now 5.5 ETH on NFT marketplace OpenSea, or about $9,845 at the time of writing. One Goblin was purchased by the Sandbox metaverse for 26 ETH, or about $48,000 at the time of purchase.
In sum, a major transition that should lower transaction fees and improve speed, plus make Ethereum deflationary, coupled with some signs of life in the NFT market, means Ethereum could soon rally from its lows.
2. Avalanche
As another layer-1 blockchain enabling smart contracts, Avalanche (AVAX +2.62%) is one of Ethereum's competitors. Like its rival, Avalanche is also down significantly from its highs. Avalanche was one of the best stories in crypto and investing in general in 2021, starting the year with a price of about $3.50 and hitting an all-time high of $146.11 by November. Avalanche has since fallen almost 90% since that point.
Avalanche is a proof-of-stake cryptocurrency, and it thus already has some of the features that Ethereum is seeking to gain by moving to proof of stake. Transacting on the Avalanche network is fast and cheap, with a throughput of 4,500 transactions per second with settlement times of just several seconds and fees costing several cents or less for most common transactions.
CRYPTO: AVAX
Key Data Points
While the price of Avalanche is down significantly, the Avalanche ecosystem continues to show signs of life. For example, the top play-to-earn game on Avalanche, Crabada, recently overtook Axie Infinity on a trading volume basis. This is a significant development because Axie Infinity is the top-selling NFT collection of all time by a wide margin with over $4 billion in sales, according to NFT-tracking site Cryptoslam. A panoply of other games is being developed on Avalanche, including Ragnarok, Shrapnel, Castle Crush, and Highrise. Avalanche is conducive to gaming because it utilizes subnets. A subnet essentially acts as a separate blockchain within the Avalanche network for an application or game. This allows the game or application to function without slowing down the rest of the Avalanche blockchain and without the game itself being bogged down by activity on the main Avalanche blockchain, making Avalanche more scalable.
If interest in these games builds as they are released and more users come into the Avalanche ecosystem, this is bullish for Avalanche. The growing development of gaming on Avalanche, coupled with its low fees and impressive transaction speed, means that the bottom could be in for Avalanche.
In conclusion, the current market looks like a good opportunity for risk-tolerant investors who are interested in crypto to establish an entry point into some of the space's blue chip projects.
