Investing in Crypto Is Risky, But These 2 Cryptos Have Serious Staying Power

The recent drop in the crypto market was shocking, to say the least. In a 24-hour period, the crypto market saw $367 billion worth of value wiped out. During that time, Bitcoin (CRYPTO:BTC) dropped by 15% and Ethereum (CRYPTO:ETH) dropped by 22%. It’s not just the steep price drop that worries crypto investors, but also the speed and pace at which it happened.

Despite their recent volatility, Bitcoin and Ethereum are two cryptocurrencies that I still feel comfortable adding to a crypto portfolio in 2024. Both cryptocurrencies have been around for over a decade and are showing serious staying power, and both have delivered unparalleled returns for investors over that time. Let’s take a closer look at what makes them special.

Bitcoin

Bitcoin continues to be the gold standard for crypto investors. In fact, Bitcoin is often referred to as “digital gold” due to its unique properties that make it similar to physical gold to a certain extent. Most importantly, Bitcoin has a limited lifetime supply of 21 million coins. There are currently around 20 million coins in circulation, so we are approaching a point where almost all of the Bitcoin that will ever be created has already been created. This makes Bitcoin incredibly scarce, and so some crypto investors are now hoarding Bitcoin the way other investors hoard gold.

Image source: Getty Images.

Bitcoin, more than any other cryptocurrency, is driven by a long-term, buy-and-hold mentality. The #1 rule of Bitcoin is: Never sell your Bitcoin. In fact, Bitcoin investors have popularized a number of terms (including “HODL” and “Diamond Hands”) to refer to the process of holding onto their Bitcoin no matter what’s happening around them in the crypto market.

Given how often we hear about short-term Bitcoin speculators, it can be surprising to find out how many long-term Bitcoin holders there really are. According to data from Glassnode, around 14 million Bitcoins were held by long-term investors in mid-June. This is a truly underrated aspect of Bitcoin, and one that gives crypto its immense staying power. With institutional buyers now investing in Bitcoin, it should help reinforce the buy-and-hold mentality that has developed among smaller retail investors.

Finally, it’s impossible to ignore Bitcoin’s long-term resilience. According to Cathie Wood of Ark Invest, there have been at least five separate crashes where the price of Bitcoin dropped by 77% or more. Guess what? The price of Bitcoin has rebounded each time. For example, the price of Bitcoin quickly recovered after falling in November 2021. In 2023, Bitcoin rose by more than 150%, and in 2024, the price of Bitcoin rose by 30%.

The story continues

Ethereum

If Bitcoin is “digital gold,” Ethereum is “digital silver.” Ethereum may not get as much attention as the world’s most popular cryptocurrency, but it’s top of mind for many investors looking for security in a volatile and uncertain cryptocurrency market.

One of the biggest reasons for this has to do with Ethereum’s massive, widespread blockchain ecosystem. This ecosystem gives Ethereum its unique diversity. For equity investors, it can be helpful to think of Ethereum as a blockchain conglomerate that does a little bit of everything. That’s because Ethereum is a Layer 1 blockchain network that developers can build upon to create new products and services. These can range from new crypto tokens to new decentralized finance (DeFi) exchanges.

Given how diverse these blockchain offerings are and how large Ethereum’s worldwide developer network is, Ethereum could be a useful hedge against uncertainty in the crypto market. If one niche of the blockchain world is underperforming, there’s likely another niche that’s performing quite well. In comparison, a “metaverse coin” can disappear overnight if support for a particular trend or narrative evaporates.

It’s not that Ethereum does a little bit of everything, it’s that it does everything exceptionally well. There have been a handful of competitors that have tried to unseat Ethereum as the leading Layer 1 blockchain network, but none have been successful. In DeFi, for example, Ethereum still holds a whopping 60% share of the Total Value Locked (TVL), a key metric for measuring overall DeFi activity. Many investors are willing to pay a premium for that kind of market dominance.

Buy and hold for the long term

Bitcoin and Ethereum together account for 70% of the total market cap of the crypto market. Given that Bitcoin and Ethereum are still the only cryptocurrencies with their own spot ETFs, this figure could continue to grow. Bitcoin and Ethereum are now more accessible than ever to retail and institutional investors. Therefore, money should continue to flow into both, despite the overall market conditions.

I can’t think of two other cryptocurrencies I would want to keep in my portfolio for the long term. They are both proven winners and both have solid long-term growth prospects. Yes, investing in crypto is risky, but Bitcoin and Ethereum have historical records that show they can bounce back from adversity.

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Dominic Basulto has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.

Investing in Crypto is Risky, But These 2 Coins Have Serious Staying Power originally appeared on The Motley Fool