The best cryptocurrencies to buy on the dip.
There's no getting around it: Cryptocurrencies had an absolutely devastating start to the year, as many of the world's top digital assets swiftly fell into bear-market territory. To make matters worse, this sell-off coincided with a broader decline in the stock market – the worst January for stocks since the depths of the financial crisis in 2008. If anything, the first month of the year should underscore the high risk tolerance that crypto investors need to have. If a 30% decline in a month is too volatile for your liking or would force you to sell out, this is the wrong asset class for you. But for those willing to accept high risk and a bumpy ride, February looks like an excellent entry point for top cryptos. Here are seven of the best cryptocurrencies to buy now:
In this asset class, Bitcoin is one of the few tried-and-true, blue-chip coins you can buy. Aside from being the first-ever cryptocurrency, Bitcoin also became the first that CME Group Inc. (ticker: CME) offered futures contracts on, the first to have a U.S.-based exchange-traded fund following its price movements and the first crypto that an S&P 500 company put on its balance sheet. That last one is perhaps the most important catalyst to keep in mind: Before Tesla Inc. (TSLA) announced it had purchased $1.5 billion worth of Bitcoin in February 2021, BTC was trading at about $39,000. Any time Bitcoin trades for less than $39,000 is a buying opportunity, and with a combined $2.7 trillion in cash on S&P 500 companies' balance sheets, there is a lot of potential for corporate treasuries to diversify from from dollars to Bitcoin in coming years.
No list of the best cryptocurrencies to buy is complete without Ethereum. This platform hosts the Ether currency, which is the second-most-valuable crypto, with a market capitalization of about $300 billion at the time of this writing. The January crypto crash briefly put ETH down more than 50% from its November all-time high of $4,891. The most widely used blockchain in existence, Ethereum is central to exciting and emerging areas like decentralized finance, or DeFi; smart contracts; and nonfungible tokens, or NFTs. With a huge advantage in network adoption over rivals, numerous decentralized applications, or dApps, are built on top of the network, giving it staying power. Ethereum's biggest shortcoming is its proof-of-work protocol, which makes transactions energy-inefficient and inexpensive, but a shift to the faster and cheaper proof-of-stake protocol is underway.
Solana is one of Ethereum's most serious competitors, boasting a fast network with a growing number of dApps, although Solana's most compelling advantages at the moment are its programmer-friendly compatibility with the easy-to-code Rust language and its rock-bottom transaction fees in comparison to Ethereum. Solana is also an early contender to become one of the preferred networks for blockchain-based games, which could yield huge usage – and in turn spark major demand for the SOL token – if successful. Still down more than 60% from its all-time highs mere months ago, Solana's upside to its past peak of $260 is far greater than either BTC or ETH. That said, it's not all sunshine and rainbows for Solana, as its network has had about a half-dozen meaningful outages recently as the young network grapples with rapid growth, price volatility and bots.
If Avalanche is good enough for the youngest member of the Forbes 400, it should be worthy as a nominee for one of the best cryptocurrencies to buy. Sam Bankman-Fried, the 29-year-old co-founder and CEO of cryptocurrency exchange FTX, whose net worth is estimated at $22.5 billion, recently heaped praise on both Solana and Avalanche in an interview with Decrypt. Bankman-Fried thinks Avalanche holds some explosive promise in 2022: "I think that there's a world in which it gets absolutely huge," he told the outlet. Avalanche's low fees and ability to execute smart contracts should help it gain market share over Ethereum until the long-awaited upgrade to Ethereum 2.0 – whenever that comes. As with most cryptos, AVAX is extremely volatile. It has a 52-week low of $9.34 and a 52-week high of $146.22, and it currently goes for about $70.
Unlike Avalanche, Yearn.finance is one of those cryptos with an eye-popping price tag. Currently trading at about $25,000 per coin, YFI has a market cap near $920 million. As with Bitcoin, one appeal to YFI is its scarcity: Only 36,666 YFI tokens exist, and that's all there will ever be. Those high prices don't make it immune to volatility, however, with the token fluctuating between $18,566 and $93,435 over the last year. Being closer to its 52-week low than its high is attractive for crypto investors searching for a rebound candidate, but YFI's mission is also worth betting on. Yearn.finance serves as an onboarding platform of sorts to the nascent and promising field of DeFi, aiming to optimize yield-farming returns for less technically proficient investors. Cutting out financial intermediaries is only going to become more popular, and that rising tide should lift YFI.
Polygon, with a market cap of about $12 billion, is meaningfully larger than Yearn.finance but shares a very similar goal to YFI, aiming to help usher along mass adoption of cryptocurrency by increasing the scalability of Ethereum. Polygon's technology aims to allow potentially limitless dApps to run on Ethereum, boosting its utility to the masses. Hitching its fate to the top network for DeFi has been a lucrative bet, and the MATIC token is up about 40-fold from its 4-cent level just a year ago. With MATIC trading more than 40% below its late-December peak, there's more room for this one to run.
Last and least serious of the best cryptocurrencies to buy is Dogecoin, the meme-inspired cryptocurrency that saw a legendary run in 2021. Of course, the "easy come, easy go" adage applies here as well, and DOGE is down 80% from its all-time high just nine months ago. While certainly only the most speculative crypto investors should consider buying Dogecoin, it's still managed to maintain enough value to be worth about $19 billion – good enough to be a top-10 crypto by market cap when stablecoins are removed from the equation. And, as superficial as it sounds, the continued endorsement of Tesla CEO Elon Musk is actually worth something, especially if he can attract more and more developers to the Doge ecosystem. Just last month, Tesla began accepting payment in Dogecoin for some of its merchandise (but no electric vehicles just yet).
Top cryptocurrencies to invest in now:
- Bitcoin (BTC)
- Ethereum (ETH)
- Solana (SOL)
- Avalanche (AVAX)
- Yearn.finance (YFI)
- Polygon (MATIC)
- Dogecoin (DOGE)
Comments
Post a Comment