Last November, Bitcoin (BTC 0.40%) and Ether (ETH -1.54%) hit their all-time highs of more than $68,000 and $4,800, respectively. Many other smaller cryptocurrencies were also lifted by that rising tide.

But today, Bitcoin trades at about $20,000 while a single Ether token is worth roughly $1,100. Many of the smaller altcoins -- such as Dogecoin (DOGE -0.28%) and Cardano (ADA 0.54%) -- fared even worse.

That dizzying crash was largely caused by rising interest rates, which drove investors away from more speculative investments; the alarming failures of "stablecoins" like TerraUSD; tightening regulations for the crypto market; and liquidity issues at several cryptocurrency exchanges. Pricey publicity stunts -- including Coinbase's (COIN -3.80%) Super Bowl ad and Matt Damon's commercial -- also suggested the market was bubbling over.

A Bitcoin dangling on a fish hook.

Image source: Getty Images.

But after that bubble popped, some contrarian investors might be wondering if it's finally time to buy some top cryptocurrencies like Bitcoin and Ether. Let's review the bull and bear cases for the crypto market to decide.

What do the bulls believe?

The bulls believe the crypto crash is resetting a market that had become saturated with dangerous coins and speculative traders. After the weaker cryptocurrencies are burned away, the stronger ones -- such as Bitcoin and Ether -- could stabilize and become viable assets for investors.

Many crypto evangelists previously claimed that cryptocurrencies could shield investors from inflation, but the volatility of the immature market prevented that scenario from playing out as consumer prices soared this year. But if the prices of Bitcoin and Ether stabilize, they could become viable hedges against inflation, like gold, silver, and other precious metals, in the future.

However, no one is sure when those prices will actually stabilize. Last year, Ark Invest's Cathie Wood predicted that Bitcoin's price would hit $560,000 by 2026 if all institutional investors allocated just 5% of their portfolios to the cryptocurrency. Earlier this year, she claimed Bitcoin's price would reach $1 million by 2030. Fundstrat's Tom Lee, who correctly predicted Bitcoin's ascent from $9,000 to $20,000 before the pandemic started, believes its price could eventually climb to about $200,000 over the next few years.

As for Ether, the bulls believe the recent Ethereum 2.0 (Eth2) upgrade for its blockchain, which could potentially reduce its total mining energy consumption by about 99%, will make it a more environmentally friendly alternative to Bitcoin, which consumes massive amounts of energy. They also believe the smart contract technology on Ethereum, which facilitates decentralized transactions across its blockchain, can be used to create a new generation of decentralized apps (dApps) that aren't tethered to centralized mobile app stores, operating systems, and cloud platforms.

The price targets for Ether vary widely, between $4,000 and $8,000, but all those bullish estimates are pegged to the notion that the Eth2 upgrade will stabilize Ether's price and improve its mining efficiency.

What do the bears believe?

The bears frequently compare the crypto bubble to the tulip mania bubble of the early 1600s. If it fully follows that trajectory, then all the cryptocurrencies -- including Bitcoin and Ether -- could drop to zero.

Just like the tulip mania bubble, the prices for cryptocurrencies were driven up by a "fear of missing out" (FOMO) instead of actual value or scarcity. When the tulip bubble burst, people realized that they had paid absurd prices for single bulbs -- and investors could be destined to repeat history with their cryptocurrencies and NFTs (non-fungible tokens). 

The bears believe the cryptocurrency mania was primarily driven by social networks like Reddit, commission-free trading platforms like Robinhood, sheer boredom during the pandemic, and stimulus checks. Those tailwinds are now dissipating as inflation, rising interest rates, and a potential recession drive investors toward safer investments instead. That's why Brian Armstrong, chief executive officer of crypto exchange Coinbase, recently warned investors that a new "crypto winter" had begun. 

Government regulators around the world are also cracking down on cryptocurrency trading and exchanges. That regulatory pressure, which has intensified in the U.S. under the new Securities and Exchange Commission (SEC) Chair Gary Gensler, could eventually deflate the entire market. After all, cryptocurrencies were initially promoted as anonymous alternatives to fiat currencies -- but now they're being aggressively tracked, regulated, and taxed.

Simply put, cryptocurrencies are the type of investment that can flourish in a bull market -- but they're destined to fade away in a bear market.

Is it the right time to buy crypto?

I don't plan to dive into the crypto market as interest rates rise, but I also don't think leaders like Bitcoin and Ether will fade away anytime soon. Therefore, I believe investors should wait for the broader markets to stabilize before nibbling on these top cryptocurrencies, and only allocate a low single-digit percentage of their portfolios to those coins when that finally happens.