For investors looking for deals on the best cryptocurrencies, last week provided what could turn out to be an early Black Friday sale. The majority of large-cap cryptocurrencies have taken a hit lately, outside of specific groups of digital assets, such as those related to the metaverse, that cryptocurrency investors have clung to.
Unfortunately, the cryptocurrency world seems to adopt some of the characteristics of other asset classes. Whether good or bad, macroeconomic factors now play a greater role than ever in the valuation of these digital assets.
This week, one of the main catalysts for lowering the valuations of the most valuable asset classes was the appointment of Jerome Powell as chairman of the Federal Reserve. While the market initially seemed to view this renaming as positive, it became clear that investors expected some likelihood that a more accommodating option would be chosen. This liquidation continued until Tuesday and Wednesday, with the Nasdaq and cryptocurrency markets under pressure.
Investors today have certainly been rewarded with a “buy down” approach to risky assets over the past decade. For those looking to do just that, there are certainly some juicy discounts to jump in with the best cryptocurrencies. Here are two great options to consider right now.
Currently the sixth largest cryptocurrency by market cap, Cardano (CRYPTO: ADA) is one of the cryptocurrencies that has been under pressure lately. Since hitting an all-time high of $ 3.10 on September 1, Cardano has lost over 45% of its value.
Among the main reasons investors like Cardano are the speed and scalability of this network. Cardano could process over 250 transactions per second right now, up from around 4.6 for Bitcoin (CRYPTO: BTC) and 15 to 20 for Ethereum (CRYPTO: ETH). These numbers are expected to increase over time as the network continues to be updated. For a large cap cryptocurrency network, Cardano is fast.
Additionally, Cardano’s proof-of-stake protocol has appealed to investors considering alternatives to Bitcoin and Ethereum. As Ethereum moves towards adopting a proof-of-stake model, Cardano remains one of the largest proof-of-stake networks available to investors today.
The recent declines we have seen in Cardano appear to be the result of two key factors.
First, the network has seen slower adoption among decentralized finance (DeFi) application developers. Cardano’s recent Alonzo hard fork brought smart contract functionality to Cardano. So this token was offered earlier in August ahead of the September 12 launch. However, a rather disappointing performance on this front led to a corrective sell-off among investors.
Additionally, this week it was revealed that the eToro cryptocurrency exchange will be phasing out Cardano. Regulatory concerns were cited as the rationale for this decision, although few details were given. As a result, investors remain on the lookout for Cardano at this time.
That said, for those looking at Cardano for the longer term, these short term headwinds could prove to be a great opportunity to buy it. As investors continue to examine proof-of-stake networks with smart contract capabilities and growth potential, there is a tangible thesis for owning this leading cryptocurrency right now, especially with a generous discount from recent highs.
Tezos (CRYPTO: XTZ) is a cryptocurrency that investors should find further down the list. This is another token that has been beaten by the market in recent times. Since peaking at $ 9.18 on October 3, Tezos has lost around 45% of its value.
However, this cryptocurrency is the one I remain optimistic about, for a variety of reasons.
Tezos is a leader in the field of security tokens. By security tokens, I’m not referring to the security or integrity of the blockchain itself – on this front, Tezos receives top marks, alongside most of the major digital assets in the market. Rather, Tezos’ Layer 1 platform (a term referring to actual blockchains and their tokens) enables the tokenization of securities that are normally traded off-blockchain. Think about the different financial products that investors can buy on the stock market (stocks, bonds, etc.).
Essentially, Tezos provides functionality for trading assets on the blockchain. By tokenizing various asset classes, investors can expand their range of blockchain investments in a secure and transparent manner.
One of the attributes that makes Tezos so attractive in the security token space is the fact that this blockchain is self-modifying. Rather than using hard forks (like the Alonso hard fork that Cardano recently implemented), Tezos’ blockchain includes a chain update mechanism, rather than requiring simultaneous updates to from the nodes of the network.
Unfortunately for Tezos investors, it appears that increased regulatory risks associated with the cryptocurrency industry continue to pose a barrier for networks engaged in tokenization. The Biden administration recently decided to tax cryptocurrency more heavily. Various investigations by the Securities and Exchange Commission into whether several crypto-related assets qualify as “securities” under the law have plagued this industry for some time. And countries like China and India seem to remain adamant with their stance on cryptocurrency at this time.
However, those with a longer time horizon may want to think about a future where blockchain technology can really make a difference in the world. In the DeFi space, Tezos delivers a strong investment thesis as a leader in security tokens. I think this is an area that could bring tremendous value in the years and decades to come. As a result, investors may want to keep an eye out for these tokens at these reduced levels today.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.