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Motley Fool Issues Rare “All In” Buy Alert
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You may not be overly eager to get into the cryptocurrency market right now. Market value has declined by more than $1 trillion since the start of the year. And even the biggest players like Bitcoin (BTC 29.26%) and Ethereum (ETH 1.17%) have dropped nearly 60% in that time period.
But there’s reason to look beyond the gloom — and focus on what could be a very bright future. Actually, there are three no-brainer reasons to buy more cryptocurrency today, even with financial markets in the doldrums. Let’s take a closer look.
Investors have shied away from riskier assets — such as cryptocurrency — amid concerns about the economy. And that has resulted in declines for, as I mentioned above, even the top crypto players.
Up-and-coming cryptocurrencies such as Solana (SOL 2.30%) and Cardano (ADA 3.47%) have suffered. They’ve lost more than 80% and 60%, respectively, since the beginning of the year.
It’s temping to buy assets as their prices are rising. It often seems like they’re sure winners. But the time to get in on the market — or buy more of an asset — is actually when the particular asset is on sale. And that’s the case today with the cryptocurrencies I’ve mentioned above and many others.
This doesn’t mean it’s time to go all in and buy any cryptocurrency that’s lost some ground. It’s critical to examine each player closely before buying. Is the crypto attracting users and developers? Does it have the potential to transform the way business is done? Is the technology working?
These are all key questions to ask. If the answers are positive, a drop in the price of that particular crypto may be a great buying opportunity. It’s important to remember that cryptocurrencies have retreated significantly in the past — and eventually rebounded.
Bitcoin Price data by YCharts
Cryptocurrency prices have dropped across the board. Rising inflation and economic worries are hurting the financial markets today. At the same time, though, cryptocurrency players’ stories haven’t changed.
Today’s economic situation isn’t getting in the way of a crypto’s ability to make its blockchain faster or more efficient. And it won’t halt the player’s ability to progress, bring on new developers, and eventually offer more and more applications on the blockchain.
So, a drop in cryptocurrency prices today isn’t a reflection of the industry’s potential. If, a year ago, you were positive about cryptocurrency’s ability to change the financial world — and even other areas, such as entertainment — there’s reason to still be positive about that today.
Key moments are just around the corner for various crypto players. And these can pave the way for future success — for these players and their investors.
For example, just this month we can expect two. Ethereum is set to complete “The Merge.” This is the merging of its Beacon chain with its mainnet. The result? Ethereum will officially switch the method it uses to validate transactions to proof of stake from proof of work.
This will cut the network’s energy use by 99%. And it’s part of the general update set to increase transaction speed and decrease transaction costs.
Another big event this month: Cardano plans to launch the Vasil hard fork. This is an update that will improve the performance of the blockchain. And that could attract more and more developers — and users — down the road.
Of course, before increasing your position in cryptocurrency, it’s essential to look at your own comfort with risk. The industry is a risky one because it’s pretty new. That means it’s difficult to completely predict what it will look like a few years from now. So never invest more than you can afford to lose.
But if you are ready to bet on the success of cryptocurrency over time, for the reasons I’ve talked about above, now is a great moment to do so.
Adria Cimino has positions in Ethereum. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and Solana. The Motley Fool has a disclosure policy.
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