In the wake of a significant market correction, opportunity abounds in the crypto market.
Over the last few days, the broader crypto market has experienced a massive sell-off. While these corrections aren't abnormal, it was the first to occur in quite some time.
The total crypto market cap is still up by 40% year-to-date, so after seemingly going up for most of the spring, this correction might have been a little more painful than normal and caught some investors off guard.
Yet it is during these corrections that there is typically the most opportunity. This wasn't the result of any major development but mainly just a natural flushing. Think of it as one step back to go two steps forward.
For those looking for an opportunity to grab some cryptocurrencies with long-term potential, here are three I am buying on the dip.
Image source: Getty Images.
1. Bitcoin
Not much needs to be said here. Bitcoin (BTC 0.07%) has been the leader of the crypto asset class for the last 15 years, and it will likely stay that way for decades to come. Even though it's the most valuable cryptocurrency, that doesn't mean it doesn't have room to grow.
Several predictions claim that Bitcoin will reach $100,000, $500,000, or even $1 million someday. As sensational as they sound, the overarching theme that Bitcoin's value will likely grow is probably not wrong.
With its finite supply, a dwindling inflation rate, and demand on an increasing trajectory, Bitcoin's price will continue to experience upward pressure as it is pushed and pulled by the basic laws of supply and demand. While this doesn't mean there won't be some bear markets and corrections along the way, there is no safer option for growing crypto portfolios than Bitcoin for investors with a long time horizon.
Recently, Bitcoin fell as low as $57,000 but has since regained some of those losses and currently trades for around $63,000. Even though it has risen over the last few days, however, there is still an opportunity for investors. In the same way that the days of a sub-$10,000 Bitcoin are gone, the days of Bitcoin trading for less than $100,000 are likely numbered.
2. Stacks
I am a big fan of Stacks (STX -1.59%). As a Bitcoin-compatible Layer 2 blockchain, it introduces novel functionality that Bitcoin doesn't naturally possess, namely DeFi capabilities.
The thesis for Stacks is clear: It effectively unlocks Bitcoin's $1.5 trillion market cap to be used beyond the traditional buy-and-hold strategy. Its layered architecture provides the benefit of Bitcoin's security and decentralization but with the added ability to participate in several popular DeFi uses such as lending protocols, buying non-fungible tokens, and yield farming.
To quantify Stacks' potential, take a look at the Layer 2 blockchains built on top of Ethereum (CRYPTO: ETH). Today, Ethereum-compatible Layer 2's are collectively worth around $23 billion. If Stacks were to reach similar levels of utility found on Ethereum's comparable helper tokens, then its price would increase a generous sevenfold.
Compared to Bitcoin, Stacks' price was hit particularly hard during the recent correction. Over the course of the last few weeks, it tumbled more than 30%. Like Bitcoin, it has recouped some of those losses, but its price still remains well off of its high of $3.48.
A reclamation of its previous high would treat investors to a generous 50% gain, but when viewing its potential as the premier Bitcoin Layer 2 and its ability to grow as large as Ethereum's Layer 2 blockchains, there is still plenty of upside for Stacks.
3. Aerodrome
If you haven't heard, arguably the most popular blockchain on the market today is Base. It is Coinbase Global's (NASDAQ: COIN) very own blockchain and has been optimized to have a user-friendly interface along with extremely low fees and blazing-fast speeds.
It can get a little technical, but Base doesn't have its own cryptocurrency. This design is likely the result of trying to stay out of the purview of the Securities and Exchange Commission, but this doesn't mean there isn't a moneymaking opportunity.
Instead of investing in a native cryptocurrency on Base, like you would with Ethereum or Bitcoin, the next best option to give your portfolio some exposure to Base's burgeoning potential is by investing in the most valuable cryptocurrency built on Base: Aerodrome (AERO 8.32%).
Aerodrome is known as a decentralized exchange (DEX). Users can swap tokens, provide liquidity to earn a yield, and even earn rewards for participating in voting processes. As it stands, Aerodrome makes up nearly half the total value on Base, making it the ideal proxy to gain exposure to the burgeoning blockchain.
Aerodrome fell roughly 40% over the last week. That might sound bearish, but this type of correction was likely overdue. Since launching in February this year, Aerodrome has been up more than 1,100%.
With its unique technology that incentivizes user participation and its home on one of the most popular up-and-coming blockchains, it could be a hidden gem in the market. But Aerodrome is still new and has much to prove, so proceed with caution.
RJ Fulton has positions in Aerodrome Finance, Bitcoin, Coinbase Global, Ethereum, and Stacks. The Motley Fool has positions in and recommends Bitcoin, Coinbase Global, and Ethereum. The Motley Fool has a disclosure policy.
