Even the non-crypto investor is likely aware that the cryptocurrency asset class has been routed this year. Recent news related to the fallout of FTX, one of the largest crypto exchanges, has once again launched cryptocurrency into the headlines for all the wrong reasons.
However, past data shows that crypto goes through these boom and bust cycles. Periods of growth are followed by stretches of correction. Although investors might be in the depths of one of these corrections, there are three cryptocurrencies that are poised to lead crypto’s next bull run: Bitcoin (BTC 0.11%), Ethereum (ETH 0.16%)and polygon (CRYPTO:MATIC).
The original cryptocurrency
Neil Patel (Bitcoin): If inflation has really peaked, and it starts to come down in the next few months, the Federal Reserve will do a victory lap with the knowledge that its aggressive interest rate hikes worked. And with a more accommodative monetary stance, I think Bitcoin is poised to do well.
The world’s most valuable cryptocurrency is also the oldest digital asset out there, with a market cap of $318 billion as of this writing. And despite its 64% price drop in 2022, Bitcoin has still produced a monster return of more than 4,400% over the past eight years. That compares to a 126% total return for the S&P500 during the same time period.
For many investors, both individual and institutional, Bitcoin is their first exposure to the world of cryptocurrencies. As I mentioned earlier, not only is Bitcoin the oldest and most valuable crypto, which results in significant mindshare among spectators, but it now has a budding ecosystem of financial infrastructure supporting it. Investors can buy Bitcoin directly on a number of different platforms, like Coinbase Global and Robinhood Markets. There are several Bitcoin-focused exchange-traded funds out there, too. The barriers to purchasing Bitcoin keep falling.
If crypto prices start to trend higher, those who have been on the sidelines will probably rush to get in, as the fear of missing out takes over. And in this scenario, Bitcoin will be a big beneficiary of capital that flows into the crypto space. Plus, Bitcoin looks much less risky when compared to other tokens, particularly in light of recent turmoil in the crypto industry.
Not only is it likely that Bitcoin could lead the next crypto bull market, but it is also an asset that is worth owning for the next decade. Bitcoin is starting to become a real store of value, and it may one day be a global currency used by individuals, corporations, banks, and governments. The upside is huge, making this a worthwhile investment to make
The home of smart contracts
Michael Byrne (Ethereum): The FTX debacle is a blow to the industry in the short term, but over the long term cryptocurrency has survived many black swan events before, meaning it is unlikely that FTX’s downfall will lead to the end of crypto.
As the second-largest cryptocurrency, with a market cap of nearly $150 billion, Ethereum will play a pivotal role in any renewed bull market. Unlike cryptocurrencies like FTX’s FTX Token gold Terra Luna, Ethereum is a decentralized asset that is not controlled by any one entity. There is no single individual or group that can make a bad decision that destroys the value of Ethereum, as has happened with many other cryptocurrencies issued by a centralized entity. Ethereum’s transition to proof of stake made it more decentralized than ever before, as Ethereum’s 71 million users all over the world can stake their Ethereum holdings to help validate transactions and secure the network. Ethereum is also the world’s largest smart contract platform; over 50 million smart contracts are written on Ethereum.
If anything, the FTX fiasco and the implosion of many other centralized exchanges and protocols that preceded it this year shows the importance of decentralization in crypto, and Ethereum is the blockchain that underpins much of today’s decentralized finance (DeFi) ecosystem. Decentralized exchanges such as Uniswap and dYdXwhich are built on Ethereum, are seeing their prices surge as more crypto investors take their holdings off of centralized exchanges.
Ultimately, Ethereum is a decentralized worldwide network with millions of users, powering smart contracts, decentralized exchanges, non-fungible tokens (NFTs), and more. As the crypto world picks itself up and dusts itself off after the FTX saga, Ethereum is well positioned to play a leading role in the next crypto bull run, whenever that comes along.
The perfect Ethereum sidekick
RJ Fulton (Polygon): It would be difficult to find another cryptocurrency that has had as much success as Polygon this year. Although its price has fallen like much of the crypto market, it has remained resilient compared to others. That resilience can be attributed to a handful of technological accomplishments and partnerships the Ethereum scaling solution made in 2022.
Polygon is one of the premier scaling solutions used to make Ethereum transactions faster. Ethereum is one of the most popular blockchains for things like DeFi, NFTs, and Web3 but it can be slow and costly to use at times. Polygon remedies this by processing Ethereum transactions on its own blockchain and then adding them at a later date. This makes transactions exponentially faster and cheaper.
Due to this highly desired functionality, Polygon is attracting attention from some of the largest and most recognized companies in the world as they begin to pursue their own blockchain ambitions. The list includes waltz disney, Coca Cola, Nike, Meta Platformsand even the banking giant JPMorgan Chase.
All of these companies have a desire to use Ethereum as their preferred blockchain but realize that the costs and speeds make it inefficient. Naturally, they look to Polygon as a solution to remedy this problem.
As more companies start to develop their own blockchain products, users will increasingly seek out Polygon. Current trends revolving around Web3, the metaverse, and DeFi will launch Polygon into the spotlight. It already seems like the cat is out of the bag, but should a crypto bull market return, Polygon might become a household name.
JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Michael Byrne has positions in Bitcoin and Ethereum. Neil Patel has positions in Bitcoin, Coinbase Global, Inc., Ethereum, and Meta Platforms, Inc. RJ Fulton has positions in Bitcoin, Ethereum, and Polygon. The Motley Fool has positions in and recommends Bitcoin, Coinbase Global, Inc., Ethereum, JPMorgan Chase, Meta Platforms, Inc., Nike, Polygon, Uniswap Protocol Token, and Walt Disney. The Motley Fool recommends the following options: long January 2024 $145 calls on Walt Disney, long January 2024 $47.50 calls on Coca-Cola, and short January 2024 $155 calls on Walt Disney. The Motley Fool has a disclosure policy.