Bitcoin and Ethereum have the best risk-reward profiles among the top cryptocurrencies, according to the consulting firm.
One of these cryptocurrencies is Bitcoin.
As the original cryptocurrency, Bitcoin has the longest history of recovering from sudden market crashes and prolonged bear market dips. In 2014 Bitcoin fell 58% and in 2018 it fell 73%. Both times, Bitcoin bounced back. While past performance is no guarantee of future performance, this past performance reduces some of the risk of holding the cryptocurrency long-term. Where Bitcoin really shines is its ability to deliver market-beating returns over a long period of time. From 2011 to 2021, Bitcoin was the world’s best performing asset with a 230% annual return. Throughout its history, Bitcoin has provided investors with a staggering 16,515% return. There’s a good reason why Bitcoin is the original ‘buy and HODL’ crypto.
While it is unlikely that Bitcoin will perform the same in the future, there are plenty of investors and asset managers who have set pretty high price targets for Bitcoin. For example, Cathie Wood of Ark Invest suggests that Bitcoin could reach a price target of $1 million by the end of 2030. Other asset managers have set price targets of $250,000 and $500,000 for Bitcoin. It should be noted that many of these estimates are based on some rather aggressive assumptions. Bitcoin bull Michael Saylor, for example, thinks that Bitcoin will eventually replace gold as a store of value. Silicon Valley venture capitalist Tim Draper thinks Bitcoin will be ubiquitous as an online form of payment for just about anything. cryptocoin.comAs we mentioned, Bitcoin is instantly traded at $ 16,790.
Ethereum
While Bitcoin may offer more upside potential than Ethereum, the real benefit of holding Ethereum comes from its unique diversification. When Ethereum was launched in 2015, it introduced the world to smart contracts, which are small pieces of executable computer code located on a blockchain. With smart contracts, it has been possible to build the modern blockchain and crypto world, which includes everything from decentralized finance (DeFi) to decentralized applications, Web3, games and NFTs. Because Ethereum has exposure to many niches in the blockchain world, investors can diversify some of the risk of holding crypto. For example, if the NFT market crashes, the advantages of other markets such as the game or metaverse may still be captured. Now that Ethereum has completed its transition to a proof-of-stake blockchain via The Merge, it can present even more market opportunities.
The best way to think of the Ethereum blockchain is as a foundation layer that developers can build on to create value. So when you invest in Ethereum, you are not only investing in a cryptocurrency, you are also investing in the full Ethereum ecosystem. The continued growth of this vibrant ecosystem ensures that Ethereum continues to have long-term value, especially as more brands and companies enter the blockchain space. Ethereum is currently trading at $1,248.
risk-reward
From the company’s perspective, Bitcoin and Ethereum have the best risk-reward profiles of any cryptocurrency on the market today. Bitcoin and Ethereum account for around 60% of the entire capitalization of the crypto market, and for good reason.
Both have enormous upside potential and have also proven their ability to bounce back from tough market conditions. The company recommends that users start with Bitcoin and Ethereum if they are willing to take on the risk and volatility of investing in crypto. The company is optimistic about them in the short and long term.