The U.S. stock market is roaring, but it’s nothing compared to the gains we are seeing in the crypto market. Less threatening regulatory hurdles, increased trust and security, and inflation-resistant characteristics are all tailwinds propelling cryptos to new all-time highs. Bitcoin (CRYPTO:BTC) and Ethereum (CRYPTO:ETH) both reached new highs on Nov. 10 of $69,000 and $4,867, respectively. Solana‘s (CRYPTO:SOL) last all-time high of roughly $260 was reached on Nov. 6.
Investors are often rightfully hesitant to buy securities at all-time highs, but it’s important to remember that the best companies and assets have a habit of growing over the long run. Here’s why Bitcoin, Ethereum, and Solana may be worth buying now.
The case for Bitcoin
Outside of the crypto world, Bitcoin is seen as extremely volatile, risky, unproven, unpredictable, and hard to value. Inside the crypto world, Bitcoin is seen as the slow and steady stalwart that makes up about a third of the entire crypto market.
As Bitcoin has grown, especially over the last two years, investors have questioned whether it’s a buy at $40,000, $50,000, $60,000, and now around $65,000. The same criticism long plagued companies like Amazon (NASDAQ:AMZN). Every year, there are skeptics that question whether Amazon is a buy. But the reality is that each past all-time high for Amazon stock was, in hindsight, actually a good time to buy. That’s because today’s all-time highs eclipse past records by several multiples. For example, consider that Amazon has set a new all-time high in nine out of the past 10 years.
Bitcoin is by no means Amazon, but it is the market-leading crypto. Just as demand for e-commerce, cloud computing, streaming, and other industries that Amazon participates in continue to grow, so too have the adoption and use cases for Bitcoin. Until the investment thesis changes, Bitcoin should continue to be a solid buy capable of providing the backbone of a crypto portfolio.
The case for Ethereum
Ethereum is to innovation and creativity as Bitcoin is to stability and reliability. The majority of crypto projects are tied to, or built upon, Ethereum. For example, smart contract oracle service Chainlink (CRYPTO:LINK) has an ecosystem containing its own network and token — but it runs on the Ethereum blockchain. Smart contracts cut out the middleman by automatically processing a transaction if certain conditions are met. A great example would be an insurance policy, which normally comes with a lot of hassle that drives up the cost and time to process. Chainlink is just one of many cryptos that are directly tied to Ethereum. A common comparison you’ll hear is that Ethereum is like a smartphone that hosts many applications and is incredibly dynamic. In this vein, Ethereum’s long-term growth is virtually limitless as existing projects mature and new projects come on stream.
Ethereum is the crypto of choice for moderate risk and reward. It’s unlikely to grow as quickly as smaller altcoins, but it’s more volatile and faster growing than Bitcoin. It’s also not as decentralized as Bitcoin and isn’t as good of an inflation hedge, but it sure beats smaller, newer projects that haven’t been around as long.
The case for Solana
Investors new or unfamiliar with cryptocurrency may have never even heard of Solana. But there’s a reason why it’s risen to become the fifth-most valuable crypto in the world behind Bitcoin, Ethereum, Binance Coin, and Tether.
Solana is more centralized than Bitcoin and Ethereum, which helps make its blockchain lightning fast. This speed makes Solana’s blockchain more practical for everyday transactions and smaller transactions. A good example would be buying a non-fungible token (NFT) such as a work of art, song, or another virtual asset. Solana’s blockchain can save buyers gas fees, which are much more expensive and take longer to process on Ethereum’s 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 that are verifying transactions on Bitcoin’s blockchain.
Solana’s meteoric price increase and untested staying power make it much riskier than Bitcoin and Ethereum. Solana is not ideal for risk-averse investors or really anyone new to crypto. But for those who want to allocate a large percentage of their portfolio to crypto, Solana is a high-growth crypto to complement Bitcoin and Ethereum.
All three cryptos could be worth buying now
Just like with stocks, individual needs, preferences, and financial goals are going to influence which cryptos are best for you. An investor who buys a dividend-paying value stock like Procter & Gamble would probably like stablecoins with high interest rates and maybe Bitcoin. On the other hand, investors who prefer growth stocks might like Solana. For everyone in between, there’s Ethereum. Ethereum is arguably the best buy now because it combines an established industry-leading position with a ton of growth potential — which is a rare combination.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.