After Market Crash, Buy These 2 Cryptocurrencies Now

After every drop in the cryptocurrency market, a popular strategy is to “buy the dip.” When prices drop, many cryptocurrencies suddenly appear undervalued and therefore much more attractive to investors who have a long-term view.

But there’s a catch: This strategy doesn’t work with every cryptocurrency. The key is to find cryptocurrencies that have long-term resilience and a proven track record of bouncing back from adversity. With that in mind, the two cryptocurrencies at the top of my list are Bitcoin (BTC 3.25%) And Ethereum (ETH 1.66%).

1. Bitcoin

The top investment is Bitcoin, as this cryptocurrency has shown the greatest potential to rebound after a sell-off. Time and again, Bitcoin has crashed in value, only to bounce back stronger and better than before.

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In 2023, Cathie Wood of Ark Invest analyzed Bitcoin’s history to see if the “buy the dip” strategy for Bitcoin was valid. Her findings certainly didn’t disappoint. She found that there have been five times in Bitcoin’s history where its price has crashed by 77% or more. Each time, Bitcoin has rebounded to new highs.

Consider the most recent pullback, which occurred after Bitcoin hit an all-time high of $69,000 in November 2021. Bitcoin’s value subsequently plummeted 77%, with many pessimists declaring it the end of the cryptocurrency. But guess what? Bitcoin quickly rebounded in 2023, gaining over 150% in value. Bitcoin continued to gain in early 2024, reaching a new all-time high of $73,750.

In this historical context, the recent Bitcoin price crash in August, which saw Bitcoin lose 28% of its value almost overnight, is not exactly catastrophic. And as expected, many long-time Bitcoin investors did what they always do in August: they bought the Bitcoin price on the dip. As a result, Bitcoin has now stabilized around $60,000.

2. Ethereum

Much like Bitcoin, Ethereum also has a long track record of bouncing back from adversity. If you look at a long-term price chart of Ethereum going back to its launch in 2015, you’ll see a surprising number of sharp spikes and dips. For example, in 2018, Ethereum fell from $1,400 to $400 in just a few months. And in 2021, Ethereum’s value collapsed by nearly 50% before recovering to a new all-time high by the end of the year.

The key to Ethereum’s longevity is its diverse blockchain ecosystem. Ethereum is more than just a digital currency used to transact goods and services. It’s also a blockchain network that developers can build on to create anything from applications to tokens to decentralized marketplaces. As a result, Ethereum has a strong presence in nearly every sector of the blockchain world. This helps diversify risk in the event of a market sell-off.

That being said, Bitcoin is clearly a priority over Ethereum if you’re looking to buy during the dip. For one, Bitcoin’s recovery period is typically much faster than Ethereum’s. And, as noted above, Bitcoin tends to hit a new all-time high after a selloff. That’s not necessarily the case for Ethereum, which is still looking to rebound from its 2021 all-time high of $4,891.

What happened is prologue?

The only caveat here is that past performance is no guarantee of future performance. In other words, there is no iron law of finance that says an asset—especially a digital asset—must bounce back after a market drop. Bitcoin and Ethereum’s ability to bounce back so many times over the past decade could be a coincidence. Maybe it’s just a bizarre statistical anomaly, along the lines of the January effect in the stock market.

But I don’t think so. What’s different this time around is the new spot ETFs for Bitcoin and Ethereum. They will help put a floor on the prices of these two cryptocurrencies and alleviate any downward selling pressure. As long as investor flows into the new spot ETFs for Bitcoin and Ethereum show signs of recovery, this could very likely be another opportunity to buy Bitcoin and Ethereum.