Cryptocurrencies are rallying again as the stock market sputters. The price of Bitcoin (BTC-USD) is back above $30,000 and at its highest level in two months. Other cryptocurrencies are also rallying, with the price of Ethereum (ETH-USD) nearing $2,000. The resurgence in crypto comes as stock markets have declined in recent trading sessions. This has led to some possible opportunities to retire with cryptos.
The benchmark S&P 500 index has decreased about 3% since mid-June when the U.S. Federal Reserve (Fed) indicated that it is likely to raise interest rates at least two more times this year. The crypto rally is also being fueled by growing expectations that major financial institutions such as BlackRock (NYSE:BLK) will soon gain approval to offer Bitcoin exchange-traded funds (ETFs).
The renewed growth of cryptocurrencies (BTC has risen 20% in one week) shows that investors should never count out digital coins and tokens. Critics who have called the end of crypto have been proven wrong time and again. Here’s how to retire rich: cryptos edition.
Still the biggest cryptocurrency by market capitalization, Bitcoin remains the most widely held digital token and the most stable. As Bitcoin goes, so goes the entire crypto sector.
Since bottoming last December following the implosion of the FTX crypto exchange, BTC has increased 80%. While it remains volatile, Bitcoin’s trajectory has always continued upward. Over the past five years, the price has risen 375%, outpacing most stocks. Since 2015, Bitcoin’s price has gained more than 9,000%, making investors who’ve held on extremely rich. This is one way that investors could potentially retire with cryptos.
BTC has also benefitted from the growing maturity of the crypto sector and broader acceptance that digital tokens and blockchain networks are legitimate and here to stay. The possibility that American investors could soon have access to Bitcoin ETFs has lit a fuse under Bitcoin, sending its price skyrocketing. While volatility is likely to remain in the near-term, Bitcoin can reasonably be expected to continue trending higher over the long haul. Many crypto bulls are still forecasting that the price of BTC will reach $100,000.
For many crypto enthusiasts, Ethereum remains the top digital asset. Fans point to the practical use of ETH in decentralized finance transactions, and also the fact that Ethereum is now the most energy efficient crypto after it moved to a proof-of-stake operating protocol last September as evidence of its superiority.
Many individual investors also like that ETH can be bought for a fraction of the cost of Bitcoin. While its growth has trailed that of BTC, Ethereum’s gains have still been exceptional. Since last December, ETH’s price has risen 55%.
Over five years, Ethereum’s price gains are closer to those of Bitcoin — 317% versus 375%. Going forward, fans of ETH see it eventually surpassing Bitcoin as the largest and most in-demand cryptocurrency. The underlying utility of Ethereum will help it to win out over the long-term, say advocates, especially as decentralized finance grows in importance. In the meantime, developers continue to make upgrades and improvements to Ethereum and its underlying network to ensure it has staying power.
A smaller but still important cryptocurrency is Polygon (MATIC-USD). Created to support the Ethereum blockchain, Polygon is known as a “layer two solution” that expands Ethereum into a multi-chain system that leads to more accurate transactions and faster verification speeds.
Its heavily traded digital token, MATIC, is used for online payment services and to facilitate transaction fees. Polygon is also becoming a popular option for the execution of so called “smart contracts.”
Developers have designed Polygon to carry out a type of cryptography known as “zero-knowledge proofs” that help to lower transaction costs and increase transactions speed. Polygon has also executed decentralized finance transactions for notable third parties such as Meta Platforms (NASDAQ:META) and Deutsche Bank (NYSE:DB). For all of these reasons, Polygon is worth a look by investors. Plus, the price of MATIC has gained 33% over the last 12 months.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.