Cryptocurrency investors have embarked on a crazy journey over the past few years. In 2021, the crypto market fell over 50% between May and July, with more than $1 trillion in earnings disappearing. The market then rose 150% in November to a peak of $3 trillion and then fell 40% to its current valuation of $1.9 trillion.
Of course, volatility has become a hallmark of the crypto market, and it seems like the time to invest for those who can handle these price fluctuations. In retrospect, every sale has been a buying opportunity, and there is no reason to believe that the current crypto crash is different. With this in mind, Ethereum (ETH 1.41%) and Bitcoin (BTC 0.34%) seem like a good asset that a long-term investor should add to their portfolio.1. Ethereum
The Ethereum Blockchain is a programmable computing platform. This means that in addition to serving as a digital ledger for transaction data, it can be used to create decentralized software and services. For example, decentralized finance (DEFI) products allow users to borrow, lend, and earn interest on money without going through a bank. DeF makes financial services more accessible and more efficient by eliminating traditional financial institutions. Ethereum is the most popular DeFi ecosystem, with more than $115 billion invested in the platform, accounting for more than 55% of all DeFi investments on any blockchain.
As the second most valuable cryptocurrency with a market capitalization of about $360 billion, Ethereum also powers a number of other notable software products and services. For example, according to Token Terminal, OpenSea is the world’s most visited non-changeable token marketplace, generating nearly $2 billion in revenue last year. Similarly, the popular Metaverse game Axie Infinity generated about $1.3 billion in revenue last year. And because both products run on Ethereum, purchases and transaction fees are funded with the native cryptocurrency, ETH coin (i.e. Ether).
For Ethereum, the bullish situation is clear: Decentralized software and services eliminate the biases and inefficiencies that come with centralized ownership, and Ethereum is the market leader. As Ethereum’s ecosystem becomes more and more popular among consumers and investors, the demand for the ETH coin should increase and raise its price. That’s why this cryptocurrency seems to be a smart long-term investment.2. Bitcoin
Bitcoin was the first widely accepted cryptocurrency and remains the most popular digital asset by a wide margin. With a market capitalization of over $800 billion, Bitcoin accounts for 42% of the collective value of the crypto market and is currently worth more than blue-chip companies like Berkshire Hathaway and Meta Platforms (formerly Facebook). In fact, there are only six publicly traded companies in the world that are worth more than Bitcoin.
What makes it valuable? The underlying computer code imposes a hard limit of 21 million tokens, which means that Bitcoin is a limited asset. Basic economic principles tell us that when the demand for a limited asset increases, so will its price. But retail investors aren’t the only ones driving this demand.
A new study by Fidelity shows that 37% of institutional investors own Bitcoin in their own portfolio or in a client’s portfolio. It’s worth noting that Ethereum is the second most popular digital asset with 20% institutional ownership penetration. Furthermore, 71% of investors surveyed said they plan to buy cryptocurrency in the future, up from 59% in 2020. In other words, institutional adoption is on the rise, and that’s good news for Bitcoin (and Ethereum). As the demand for Bitcoin rises, it should also follow the price. So this is a good time to buy this cryptocurrency.
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