What goes up can come down –and usually does. That’s what we’re seeing with cryptocurrency prices right now. After generating sizzling returns throughout much of 2021, the latter part of the year and the beginning of 2022 have been downright ugly.
It’s certainly possible that cryptocurrencies could fall even more. However, the pullback could also present a great buying opportunity. Here are two no-brainer buys in the current crypto crash.
Ethereum (CRYPTO:ETH) soared more than 400% last year. Now, though, it’s down more than 30% below the peak set in November. There are several reasons to believe this decline will only be temporary.
For one thing, Ethereum has experienced even bigger sell-offs in the past and recovered nicely. For example, the digital token plunged nearly 60% in the middle of 2021. But within four months, it had come back fully and moved even higher than before.
Ethereum is also likely to gain wider adoption. The second phase of the Ethereum 2.0 upgrade is scheduled for this year. This will merge the beacon chain that’s already live with the Ethereum mainnet. As a result, Ethereum will fully switch to a proof-of-stake (PoS) protocol.
The third and final phase of the upgrade is planned for 2023. When completed, Ethereum’s blockchain will be much faster, more scalable, less energy-intensive, and have significantly lower transaction costs.
Only Bitcoin (CRYPTO:BTC) has a larger market cap than Ethereum right now. With the Ethereum 2.0 upgrade, though, look for Ethereum to close the gap with Bitcoin quite a bit.
Avalanche (CRYPTO:AVAX) ranked as one of the breakout stars of the crypto world in 2021. The price of its native token skyrocketed more than 4,500% at one point before finishing the year up around 3,380%.
Like Ethereum, though, Avalanche is now down more than 30% below its peak. The broader cryptocurrency crash has pulled the high-flying token down in its wake. Don’t think the good times have completely come to an end for Avalanche, however.
Its blockchain remains the fastest smart contract platform around for finalizing transactions. Bitcoin takes around 60 minutes to irreversible add a transaction to the blockchain. Ethereum takes roughly six minutes. Avalanche does it in less than two seconds.
And while Ethereum needs a major upgrade to improve its processing capabilities and lower transaction costs, Avalanche is already blazingly fast and has low transaction fees. It can handle over 4,500 transactions per second. Avalanche’s fees are also much lower than Ethereum’s despite a spike toward the end of last year.
The bottom line is that Avalanche has competitive advantages that attract developers. So far, there are 160 projects in the Avalanche ecosystem, including blockchain wallets, stablecoins, and non-fungible token (NFT) exchanges.
Another high-profile project will be added to that list soon. International accounting and consulting firm Deloitte selected Avalanche’s blockchain to develop a disaster recovery system.
No one can know for sure how long the current crypto crash will last. Sooner or later, though, a rebound will come. Avalanche and Ethereum should be two of the biggest winners when the bounce begins.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.