Will Crypto Recover? | The motley fool

The cryptocurrency market showed some signs of recovery in early 2023, but now it is back in dire straits again. Just when you thought the FTX meltdown might be over, another crisis is rocking the crypto world. Silvergate capital delayed submission of its annual report and warned that it could be in financial trouble. This could start another prolonged downturn, or you could see it as another chapter in the FTX saga.

So the crypto rally that started in January is taking a break again. Bitcoin (BTC -5.18%) prices are down 10% in two weeks and Ethereum (ETH -5.52%) has lost 8% in the same period. Also, ultra-volatile meme coins take an even bigger cut. Dogecoin is down by 14% and Shiba Inu has taken a 17% haircut over the same two week period.

In this unpredictable market, many investors wonder if cryptocurrencies will ever return to solid long-term growth.

I’m sure they will, but the rising tide won’t lift all boats. This crypto winter is also a house wash that should separate the long-term winners.

Reshaping economic systems

The basic premise of crypto investing is simple: Digital currencies are poised to reshape and disrupt how money is earned, stored and transferred. Many financial functions that require banks and other intermediaries today will move to decentralized systems in the relatively near future.

Many things will change as automated blockchain networks and smart contracts replace human agents and middlemen who want a cut of every transaction. Transactions will be faster and cheaper. Risk assessments will rely on artificial intelligence and machine learning. From banking and insurance to online gaming and gambling, a host of trillion-dollar industries are on the threshold of a new era.

Every step forward is a struggle

The promise of huge improvements also points to radical change, and change can be scary. It’s no surprise to see the old guard of financial institutions digging in their heels to preserve the world they know and the business they do today. So the change in the ocean will take years and every step forward is a struggle. Some of the world’s largest and most powerful companies and governments are fighting.

But even they cannot stop the inexorable march of progress. Better economic systems will come whether people like it or not.

And even the biggest crypto bulls should agree that the painful challenges along the way also come with a serious upside. Any technical glitch, fraudulent business practice, and unstable financial platform uncovered could trigger a crypto industry crisis, but also bring attention to the problem and a long-term solution.

It’s like crafting solid government policy from conservative, liberal, and independent viewpoints through congressional debates and legal challenges. The final policy is stronger thanks to these challenges. The same will apply to the regulatory system for owning, trading and creating cryptocurrencies.

Double down on the classics

Bitcoin and Ethereum have been around for more than a decade, but their history as serious financial tools is much shorter. This is still early in the blockchain-based business era, and there are likely many more scandals and crises to come.

Just remember that the last crisis is not the end of the crypto world and the next one will be no different.

I’m not very interested in finding the next red-hot crypto idea in this environment. For every permanent winner, there are dozens of flashbacks, bad ideas, and maybe even outright scams. Instead, this is the time to double down on the proven giants of the field.

• Bitcoin is the closest thing to digital gold, with an inflation-proof mining mechanism and a grized security model.
• Ethereum is the proverbial silver to Bitcoin’s gold, with a robust platform for developing the next generation of financial tools and applications.
• As the official blockchain network of the Web3 project, Polka dot (DOT -4.21%) appears to be another important component of this sea change.

Your preferences may vary, and it’s always a good idea to double-check someone’s recommendations with your own research. But these are the three cryptocurrencies I want to buy every time the crypto market takes another dip. I don’t mind skipping Shiba Inu and Dogecoin when Bitcoin, Ethereum and Polkadot are on fire sales.