Cryptocurrencies are off to a rough start this year. The Federal Reserve has become more hawkish, which has been a headwind for the sector. Additionally, long-term crypto holders and whales seem to be more likely to sell and lock in tremendous gains from recent years. All this has put pressure on the sector, despite a much-improved regulatory environment.
However, this could also present a significant opportunity to buy the dip. After all, crypto is inherently volatile and has survived many drawdowns in the past, only to hit new highs.
Image source: Getty Images.
While thousands of cryptocurrencies are now in circulation, only a handful are worthy of investment, in my opinion. The best one to buy with $500 right now is Ethereum (ETH 0.90%), the second-largest cryptocurrency in the world, with a market cap of over $343 billion.
A play on stablecoins
Several years ago, Ethereum adopted a new energy-efficient consensus mechanism, proof-of-stake (PoS), to govern its network. In PoS, Ethereum holders stake their tokens to validate transactions and create new blocks, earning rewards in the process. Ethereum's network also supports smart contracts, enabling developers to build decentralized applications for a range of use cases.
Transacting stablecoins has become one of these use cases. Stablecoins are digital assets backed by a currency or commodity. They're intended to use blockchain technology without carrying the inherent risk of cryptocurrencies. For instance, stablecoins pegged to the U.S. dollar can offer people a very efficient way to transfer money internationally.
Ethereum has become the go-to place for stablecoin transactions. In the fourth quarter of 2025, Ethereum's network recorded $8 trillion in stablecoin transactions, according to data from Token Terminal. Stablecoin issuance on Ethereum also increased approximately 43% to over $180 billion by the end of 2025, according to Blockworks.
CRYPTO: ETH
Key Data Points
It's also evident that interest in stablecoins is growing, with many mainstream companies exploring the technology for their respective businesses, including large banks, Amazon, and Uber. As more companies adopt stablecoins, most of which are issued on Ethereum, network activity should grow, driving greater demand for Ethereum tokens.
Additionally, Ethereum has not enjoyed the same rise in recent years as Bitcoin, the world's largest cryptocurrency. Part of that is likely due to Bitcoin's digital gold narrative, which at times has led the token to break out from the sector.
However, the two are usually correlated, so Ethereum should catch up at some point. Given strong network activity and a lagging price in recent years relative to other cryptocurrencies in the sector, I think Ethereum is the best cryptocurrency to buy with $500 right now.
