Cryptocurrency: Why Today’s Selloff Is the Biggest Bargain of 2022

With cryptocurrency down across the board, 2022 may offer the best bargain for investors. And it’s one that isn’t likely to return anytime soon.

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Diagonal chain made of zeros and ones. Cryptocurrency and mining.

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Cryptocurrency stocks continue to drop in today’s market. Investors around the world wanted in on the next big thing, and they got it with crypto stocks. However, as inflation rises, the pandemic wages on, and interest rates bump up, it has many wanting out.

This has led to cryptocurrency companies and stocks dropping across the board. Bitcoin (CRYPTO:BTC) dropped by 13%, and Ethereum (CRYPTO:ETH) dropped by 23% in the last month alone. This is after both reached all-time highs in 2021.

This year is certainly not off to a great start. But that also means cryptocurrency stocks could offer the biggest bargain in 2022 — one that’s not going to last long.

Major drop to incredible recovery

While cryptocurrency may be down, certainly don’t count it out. GameStop became the most recent target of cryptocurrency hunters after announcing it would expand into the world of non-fungible tokens (NFT). This saw shares rise 14% for the meme stock, yet those gains were then almost immediately lost.

It’s important to first realize that 2021 was weird, to say the least. Young people entered the market in droves, with cryptocurrency taking the lead, as tech stocks and other themes soared as well. Everyone wanted the gains they saw in 2020, but those came after a major crash, and they aren’t something future investors should count on.

So, it seems like in 2022, there is already a shift towards normalcy. Cryptocurrency like Bitcoin and Ethereum started to drop, which led to many taking their returns. And that’s all right! But now might be the time long-term investors want to get back in.

What to expect in 2022

The excitement of 2021 is unlikely to shift over to 2022. Well, at the beginning of the year it may be not as much exciting as it will be dramatic. Shares continue to drop across sectors that saw major gains last year. But when the smoke clears, normalcy will reign supreme.

What that normalcy could look like in 2022 is, of course, anyone’s guess. But analysts have some idea. They believe investors should keep their expectations in check. A normal market means there are both ups and downs. And that will remain true for cryptocurrency. And it’s why long-term investors need to have patience. While over the next year, you may not see major gains, as we did in 2021, in the long run, cryptocurrency is likely to continue on its pace upwards.

What investors should do now

If you’re looking to get in on cryptocurrency, that’s great. But Bitcoin and Ethereum are still volatile areas of the market. Even the exchange-traded funds (ETFs) that offer at least some versatility aren’t likely to be immune from the volatile market.

That being said, I would therefore recommend in this next year taking a hard look at your portfolio. Are there stocks that made you incredible gains? Sell them and reinvest in some safer companies. Do you have a lot of risk? Again, think of putting shares elsewhere, whether that’s ETFs or banks — wherever.

Then put aside maybe 10% of your portfolio for something fun and a bit risky like cryptocurrency. That way, if things go sideways, you can have the patience to wait for a rebound.

With all that in mind, cryptocurrency now offers a substantial chance for long-term investors to get in while the market is down. When it does eventually level out, there may indeed be dips, but there are unlikely to be drops in the near future like we’ve seen. So, now is your chance to buy at a bargain and hold on for decades.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. 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, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool owns and recommends Bitcoin and Ethereum.

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