TThe US stock market is roaring, but that’s nothing compared to the gains we’re seeing in the crypto market. Less threatening regulatory hurdles, increased confidence and security, and inflation-resilient characteristics are all positive winds propelling cryptos to new all-time highs. Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) both hit new highs on Nov. 10 of $ 69,000 and $ 4,867, respectively. Solana‘s (CRYPTO: SOL) the last all-time high of around $ 260 was reached on November 6.
Investors are often rightly hesitant to buy stocks at record highs, but it’s important to remember that the best companies and the best assets are used to growing for the long term. Here’s why Bitcoin, Ethereum, and Solana may be worth buying now.
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The case of Bitcoin
Outside of the crypto world, Bitcoin is viewed as extremely volatile, risky, unproven, unpredictable, and difficult to value. In the crypto world, Bitcoin is considered the slow and stable mainstay that makes up about a third of the entire crypto market.
As Bitcoin has grown, particularly over the past couple of years, investors asked whether it’s a $ 40,000 purchase, $ 50,000, $ 60,000, and now about $ 65,000. The same criticism has long plagued companies like Amazon (NASDAQ: AMZN). Every year there are skeptics wondering if Amazon is a buy. But the reality is that every record for Amazon stocks was, in hindsight, actually a good time to buy. This is because today’s historic highs eclipse past records by several multiples. For example, consider that Amazon has set a new all-time high in nine of the past 10 years.
Bitcoin is by no means Amazon, but it is the leading crypto in the market. Just as the demand for e-commerce, cloud computing, streaming and other industries in which Amazon participates continues to grow, the adoption and use cases of Bitcoin have also increased. Until the investment thesis changes, Bitcoin should continue to be a solid buy capable of providing the backbone of a crypto wallet.
The case of Ethereum
Ethereum is to innovation and creativity what Bitcoin is to stability and reliability. The majority of crypto projects are related or built on Ethereum. For example, the smart contract Oracle service Chain link (CRYPTO: LINK) has an ecosystem containing its own network and its own token, but it runs on the Ethereum blockchain. Smart contracts eliminate the middleman by automatically processing a transaction if certain conditions are met. A good example would be an insurance policy, which normally comes with a lot of hassle that increases the cost and processing time. Chainlink is just one of the many cryptos that are directly related to Ethereum. A common comparison you’ll hear is that Ethereum is like a smartphone that hosts a lot of apps and is incredibly dynamic. In this vein, Ethereum’s long-term growth is virtually unlimited as existing projects mature and new projects enter production.
Ethereum is the crypto of choice for moderate risk and reward. It is unlikely to grow as fast as small altcoins, but it is more volatile and grows faster than Bitcoin. It’s also not as decentralized as Bitcoin and it’s not as good a hedge against inflation, but it certainly beats smaller, newer projects that haven’t been around that long.
The case of Solana
Investors new or unfamiliar with cryptocurrency maybe never even heard of Solana. But there is a reason why it has become the fifth most valuable crypto in the world behind Bitcoin, Ethereum, Binance Coin, and Attached.
Solana is more centralized than Bitcoin and Ethereum, which helps make your blockchain lightning fast. This speed makes Solana’s blockchain more convenient for daily transactions and small transactions. A good example would be purchasing a non-fungible token (NFT) such as a work of art, song, or other virtual asset. Solana’s blockchain can save buyers gas fees, which are much more expensive and take longer to process on the Ethereum blockchain.
The downside is that Solana is easier to hack than Bitcoin and Ethereum because it has a relatively small number of validators that process transactions and support Solana’s network. By comparison, there are magnitudes more miners verifying transactions on the Bitcoin blockchain.
Solana’s meteoric price spike and untested resistance make it much riskier than Bitcoin and Ethereum. Solana is not ideal for risk averse investors or really for anyone new to crypto. But for those who want to allocate a large percentage of their wallet to crypto, Solana is a high growth crypto to complement Bitcoin and Ethereum.
All three cryptos might be worth buying now
Just like with stocks, individual needs, preferences, and financial goals will influence which cryptos are best for you. An investor who buys a dividend-paying stock like Procter & Gamble would probably like stable coins with high interest rates and maybe Bitcoin. On the other hand, investors who prefer growth stocks might like Solana. For everyone in between, there is Ethereum. Ethereum is arguably the best buy right now as it combines an established leadership position in the industry with a ton of growth potential, which is a rare combination.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of the board of directors of The Motley Fool. Daniel Foelber owns shares of Bitcoin and Ethereum. The Motley Fool owns stocks and recommends Amazon, Bitcoin, Chainlink, and Ethereum. The Motley Fool recommends the following options: January 2022 long calls at $ 1,920 on Amazon and January 2022 short calls at $ 1,940 on Amazon. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.