Crypto's Brutal Weeks Might Be Over. Here's What to Buy With $1,000.

Motley Fool
11 Mar
  • The crypto sector is having a rough time.
  • Times won't always be bad.
  • Treat this slump as an opportunity.

It is an understatement to say that it hasn't been a good few weeks for Bitcoin (BTC -0.19%), XRP (XRP -0.72%), Solana (SOL -1.78%), and other crypto assets. Between the opening skirmishes of a trade war, major new cryptocurrency policy and enforcement announcements, increasingly chaotic domestic politics, and simmering geopolitical instability, there are a lot of good reasons for investors to be concerned about the entire sector right now.

Fortunately, there are some powerful drivers in play that could reverse the damage and push the leading cryptos higher than ever. That means it's time to start to consider nibbling on certain coins with small investments on the scale of $1,000. Here's what to buy and why it's likely to hold up despite what could happen next.

What a mess!

First, let's assess the damage. Take a glance at this chart:

Bitcoin price data by YCharts.

As you can see, this isn't normal price action for any of these coins. The intense spike on March 2 into March 3 was the result of the announcement of the U.S. national cryptocurrency reserve, which is set to include all three of these assets, along with at least a couple of others.

And it's important to note that, even while the details of how the reserve will work are still in flux, the advancement of the policy will certainly be a major driver of higher values for Bitcoin, XRP, and Solana over the long term. So, this choppiness, as painful as it is, does not necessarily portend a deeper downturn, considering the strength of the positive catalyst now at work.

Nonetheless, the crash immediately after the crypto reserve announcement was caused by the Trump administration's determination that it would follow through with implementing tariffs against crucial trading partners like Mexico and Canada, and that it would be increasing the scale of the newly proposed tariffs on other crucial trade partners like China. The announcement of reciprocal tariffs from Canada and China certainly didn't help the markets feel comfortable, either.

It's important for investors to understand that there isn't necessarily any direct mechanism for the tariffs to make these coins less valuable. Bitcoin isn't used as a medium for international trade, nor is Solana.

The tariffs might make it more expensive to import mining hardware for cryptocurrencies in general, but there's not much reason that activity needs to occur in the U.S. instead of another country, where costs are lower. And for XRP, new tariffs could well be a driver for its target users -- financial institutions making international transfers -- to try to cut their transfer and currency exchange costs, which would lead to wider adoption of the coin.

So, given that a lot of the negativity is driven by sour sentiment about the U.S. economy at large rather than anything specific to the investment theses for these cryptocurrencies, now is the time for brave investors to start looking for opportunities to load up on cheap assets.

Take advantage of the chaos while it lasts

Sentiment will improve eventually. The question is whether you'll have made use of the period when the mood was bad to pave the way for your portfolio's growth.

Make no mistake: Bitcoin, and especially XRP and Solana, could have a lot further to fall. The more that unexpected economic events occur, the more investors will dump their coins and shift to assets that are perceived as safer. The presence of a crypto-friendly administration in the U.S., with a looser regulatory approach and broad policy support, might be enough to mitigate the negative impact -- or maybe not. It isn't possible to know in advance.

But if you're investing for the long term, which you should, you shouldn't really mind being underwater on the purchases you make today, even if it takes a few years for them to recover.

The move here is to initiate dollar-cost averaging for Bitcoin if you're a conservative type, and for XRP and Solana if you're comfortable with a bit more risk. Allocating $1,000 to one or spreading it across all of these coins would be a good starting point.

Just make sure to deploy your funds gradually. And, if things get really bad in the near term, there's always the option of buying the dip and then not checking your portfolio for a few weeks.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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