The recent decline in the cryptocurrency market has been quite shocking. Within just one day, the crypto market lost $367 billion in value. Bitcoin ( BTC -0.47% ) decreased by 15%, and Ethereum ( ETH 0.21% ) The decrease was 22%. Crypto investors are not only concerned about the significant drop in prices but also the rapid and intense manner in which it happened.
In spite of their recent fluctuations, Bitcoin and Ethereum In 2024, I am confident in including these two cryptocurrencies in a crypto portfolio. With over ten years of existence, these digital assets have demonstrated their strong durability and have provided extraordinary profits to investors. Let’s delve deeper into what sets them apart.
Bitcoin
Bitcoin remains the top choice for cryptocurrency investors, often being compared to “digital gold” due to its similar properties. One key similarity is the capped supply of 21 million coins, with almost 20 million already in circulation. This scarcity is a major reason why some investors now hold onto Bitcoin as they would hold onto physical gold.
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Bitcoin stands out from other cryptocurrencies due to the prevailing strategy of holding onto it for the long term. A fundamental principle in the world of Bitcoin is to refrain from selling it. This philosophy has been embraced by Bitcoin investors, who have coined various terms such as ” HODL ” and ” Diamond Hands “To hodl” is a term used to describe the act of retaining one’s Bitcoin investments despite fluctuations in the cryptocurrency market.
Despite the common focus on short-term Bitcoin speculators, it is worth noting the significant number of long-term Bitcoin holders. Around mid-June, Glassnode data revealed that approximately 14 million bitcoins were held by investors with a long-term perspective. This aspect of Bitcoin is often overlooked but plays a crucial role in enhancing the cryptocurrency’s resilience. The recent trend of institutional investors entering the Bitcoin market is expected to further encourage the mentality of buying and holding among smaller retail investors.
The enduring strength of Bitcoin over the long term cannot be overlooked. Cathie Wood from Ark Invest highlights that Bitcoin has experienced at least five separate instances of significant price drops exceeding 77%. Remarkably, Bitcoin has managed to bounce back from each of these downturns. For instance, following a sharp decline in November 2021, Bitcoin swiftly recovered. By 2023, Bitcoin had surged by over 150%, and by 2024, its price had increased by 30%.
Ethereum
While Bitcoin is often referred to as “digital gold,” Ethereum is likened to “digital silver.” Despite not receiving as much spotlight as the leading cryptocurrency, Ethereum remains a preferred choice for investors seeking stability in a fluctuating and unpredictable crypto landscape.
One major factor contributing to this is the extensive and complex blockchain network of Ethereum. This network provides Ethereum with an unmatched level of variety. For investors in stocks, it may be beneficial to view Ethereum as a A group of interconnected blockchain technologies. Ethereum is a versatile platform that offers a wide range of functionalities. It serves as a foundational blockchain network where developers can innovate and introduce various products and services. These innovations can include the creation of different forms of cryptocurrency tokens and other offerings. finance that is not controlled by a central authority Decentralized finance (DeFi) trading platforms.
Due to the wide range of blockchain options available and the extensive global network of developers on Ethereum, Ethereum can serve as a valuable protection against volatility in the cryptocurrency market. When one sector of the blockchain industry is not performing well, there is probably another sector that is thriving. In contrast, a cryptocurrency associated with a specific trend or story, like a “metaverse coin,” could suddenly lose value if that trend loses popularity.
Ethereum stands out not only for its diverse capabilities but also for excelling in all areas. Despite facing competition from a few contenders aiming to surpass it as the leading Layer 1 blockchain network, Ethereum remains unchallenged. Particularly in the realm of DeFi, Ethereum maintains an impressive 60% share of Total Value Locked (TVL), a crucial indicator of overall DeFi engagement. Such unparalleled market dominance attracts investors who are willing to pay a premium for Ethereum’s services.
Purchase and retain investments for an extended period of time.
Bitcoin and Ethereum collectively make up 70% of the total market capitalization of the cryptocurrency market. This percentage may increase in the future as Bitcoin and Ethereum remain the only cryptocurrencies with their own unique attributes. spot ETFs Bitcoin and Ethereum are currently more readily available for both individual and institutional investors. Therefore, funds are expected to keep entering both cryptocurrencies, regardless of the general market situation.
When considering the future, I believe there are no other cryptocurrencies that I would prefer to include in my investment portfolio. These two have demonstrated success and possess strong potential for long-term growth. While investing in cryptocurrency carries risks, the past performance of Bitcoin and Ethereum indicates their ability to recover from challenges.
