Cryptocurrencies are seen as short or long-term investments. Backed up by great projects, some cryptocurrency prices surge and survive the test of time, thus, giving investors long-term profits. Even though investors look to trade cryptocurrencies through short-term strategies to take advantage of the market’s volatility, holding long-term is the best way to approach the crypto market.
While short-term crypto trading and quick transactions are commonplace, there exists a compelling case for long-term investments. Long-term crypto investments offer the potential for remarkable profits due to their alignment with extended price fluctuations, as opposed to the minor price swings witnessed in the short term.
Nonetheless, with nearly 23,000 crypto projects currently vying for investment, the challenge arises: Which among them are the most promising choices for long-term growth?
What are long-term crypto investments?
Long-term crypto investments involve the acquisition of digital assets with the intent to hold them for an extended duration. This approach transcends the anticipation of short-term price peaks or dips, focusing instead on the enduring growth prospects of robust crypto ventures.
Amidst the burgeoning crypto world, many projects fade into obscurity because they lack the essential attributes for sustainable long-term growth. Long-term crypto investments thrive in projects that have shown their resilience. These solid crypto-based ventures generate tokens endowed with genuine utility and harbor the potential to establish themselves as dominant forces within the crypto sphere.
Moreover, the crème de la crème of long-term crypto investments typically boasts substantial market capitalization. While one may attain substantial gains through well-timed short-term holdings in meme coins or lower-quality projects, long-term crypto investments are generally perceived as less risky and, in the long run, more profitable.
Factors to consider when choosing cryptocurrencies for long-term investment
High growth potential
Focus on the potential for growth, whether in the short or long term. “Potential” can vary significantly and depends on factors like an investor’s risk tolerance and available capital.
Immediate considerations include a project’s current price, its use case, tokenomics, historical performance, future roadmap, as well as its popularity and market sentiment, all of which heavily influence its price dynamics.
For instance, take Bitcoin, currently trading at $25,000-$30,000. Despite being down more than 60% from its late 2021 all-time high of nearly $70,000, it has still achieved staggering gains of over 40,000,000% throughout its existence. Some investors might shy away from Bitcoin due to its size and popularity, requiring substantial capital to reach its previous peak. They may perceive it as no longer offering life-changing returns unless large amounts are risked, which might also entail a lengthy waiting period.
Conversely, newer cryptocurrencies often debut with far greater price potential than a 300% return, but they come with significantly higher associated risks. For example, Tamadoge (TAMA) returned 300% during its presale and subsequently soared almost 2,000% upon listing on exchanges.
Investors should factor in the price of a cryptocurrency when considering a purchase. This entails selecting digital tokens that seem to be trading below their potential value, though assessing this can be challenging. To make an informed decision, investors need to examine other variables, such as use cases and market dynamics.
For example, a cryptocurrency may appear appealing due to its low price, but if it consistently maintains stagnant prices during a bull market, it could signify waning interest within the broader crypto community.
Several online tools aid investors in this regard. Data aggregation platforms like CoinMarketCap and CoinGecko track market caps of various tokens, while DEXTools highlight trending new coins. More advanced tools like TradingView and analytics firms such as Glassnode and DeFiLlama offer further insights.
Another approach to acquiring cryptocurrencies at a lower cost is by investing during a presale or in the project’s early stages when tokens are offered at a significant discount.
Identifying the finest long-term crypto investments can be a challenging task. Regardless of the broader industry context, the most promising cryptocurrency to invest in typically possesses a competitive advantage in the market, often stemming from a unique utility.
This utility provides a compelling reason for investors to choose a particular project from the vast array of options. It signifies that the cryptocurrency serves a real-world purpose, enhancing or simplifying life thereby generating an actual demand for its use, beyond being merely an investment vehicle.
Market cap considerations
When seeking the best cryptocurrencies to invest in, it’s essential to factor in their market capitalization.
The market cap serves as a crucial indicator of a cryptocurrency’s dominance, popularity, and the total value of coins in circulation within the market.
Cryptocurrencies with large market caps are typically more established and safer investments. However, they often come with a lower potential for rapid price increases. On the other hand, investing in cryptocurrencies with small market capitalization can offer significant upside potential, especially when compared to well-established coins. However, it’s important to acknowledge that this approach also carries a higher risk of loss, particularly with new projects in their presale phase.
Investors who embrace these smaller market cap opportunities may find the potential for substantial gains, making them an attractive option for those seeking sizable returns.
Analyzing past performance
Evaluating the historical performance of a cryptocurrency can offer valuable insights into its behavior under various market conditions and provide some guidance for its near and medium-term future prospects.
Many investors, especially those engaged in day trading, rely on technical analysis techniques and indicators like On-Balance Volume (OBV), Moving Average Convergence Divergence (MACD), Relative Strength Index (RSI), and various oscillators. However, it’s essential to note that such advanced strategies are not recommended for beginners, as they require months or even years to fully grasp.
When examining the price history of cryptocurrencies, particularly for casual investors, it’s vital to understand that past performance does not guarantee future results; it’s just one of several factors to consider.
Smaller market cap tokens and meme coins often experience short-lived bursts of popularity before fading into obscurity. Take, for example, MonaCoin, a Japanese meme token that saw extraordinary growth from $0.02 in January 2017 to $16.45 in December 2017, representing a staggering 71,421% increase. However, its price quickly declined, and it hasn’t exceeded $5 since April 2018, nor has it traded above $1 since February 2022. As of the latest data, MONA is available for just $0.35, marking a 98% drop from its all-time high.
Best cryptocurrencies for long-term investments
Ethereum stands out as the preferred blockchain for decentralized app (dApp) developers due to its scalability, speed, ease of development, and extensive user base. With numerous protocols built on its blockchain and a Total Value Locked (TVL) nearly five times that of its closest competitor, Ethereum is regarded as one of the best cryptocurrencies to consider for investment.
Ethereum’s growth trajectory mirrors that of Bitcoin, with its price surging from around $11 to an all-time high of approximately $4,800 between 2017 and 2021, representing an impressive gain of over 43,000%. However, the broader market decline led to Ethereum’s value plummeting to around $1,000 by the end of 2022.
Nevertheless, in early 2023, Ethereum has shown remarkable resilience, currently trading at around $1,850. Beyond its market performance, several other factors make Ethereum a top choice for long-term investment. The blockchain successfully transitioned to a proof-of-stake mechanism in 2022, significantly reducing its carbon footprint. The recent Shanghai upgrade introduced the ability to withdraw staked ETH, contrary to predictions of flooding the market and driving prices down. Remarkably, Ethereum has maintained stability in withdrawals and deposits.
Despite its strengths, Ethereum faces ongoing criticism for its high network fees and relatively slow transaction speeds compared to other networks.
Bitcoin, as the oldest cryptocurrency, holds a prominent position in the market, boasting a significantly higher price and market capitalization compared to other cryptocurrency options. Its acceptance by many businesses, including Visa and Stripe, as a form of payment makes it an attractive investment.
Furthermore, large banks are gradually integrating Bitcoin transactions into their services, enhancing its legitimacy. While Tesla briefly accepted bitcoin, it may reconsider if mining becomes more environmentally friendly, as demonstrated by initiatives like the Tesla-powered Bitcoin mine in Texas.
Bitcoin received a boost in May 2022 when the Luna Foundation Guard announced significant loans denominated in bitcoin and terra USD. Companies like Fidelity and BlackRock are also working on spot bitcoin ETFs, although their applications have faced rejection by the Securities and Exchange Commission.
It’s important to note that the value of Bitcoin exhibits considerable volatility, often experiencing fluctuations of thousands of dollars in a month. In 2022, bitcoin’s price plummeted sharply and correlated with the Nasdaq, challenging the notion that it always serves as a hedge against inflation. Nevertheless, it has shown resilience and is up 75% since the start of the year although it is still facing challenges breaking above $26,000, which could be a good thing for those who may wish to take the advantage of buying at the low price before it starts rising again.
Binance Coin (BNB)
BNB has established itself as a relatively stable investment option over time, primarily due to its association with Binance, the world’s largest cryptocurrency exchange. However, it remains subject to significant volatility.
One favorable aspect of BNB is Binance‘s quarterly coin burn, with the most recent burn in July 2022 eliminating approximately $619.44 million worth of tokens, creating scarcity over time. BNB has a total supply of 153,854,795 tokens, all currently in circulation.
Binance has also played a leading role in stabilizing the crypto industry, particularly following the FTX exchange collapse, committing $1 billion to a recovery fund aimed at supporting struggling players.
BNB’s close ties to Binance make it vulnerable to regulatory challenges. In June 2022, news of a Securities and Exchange Commission (SEC) investigation into Binance’s 2017 initial coin offering led to a 7.3% loss in BNB’s value. The SEC has also raised other allegations against Binance, including the commingling of investor funds and operating Binance.US as an unregistered exchange. These regulatory concerns have the potential to impact BNB’s performance.
Polygon, developed by a team with significant contributions to the Ethereum blockchain, serves as an Ethereum scaling and infrastructure solution. Operating as a “layer two” solution, Polygon transforms Ethereum into a multi-chain system, enhancing transaction speed and verification processes.
Polygon garners support from major cryptocurrency exchanges like Binance and Coinbase, with its native token, MATIC, utilized for payment services, transaction fees, and settlements.
In July 2022, Polygon introduced Polygon zkEVM, a groundbreaking Ethereum-compatible scaling solution that seamlessly integrates with existing smart contracts, developer tools, and wallets. This innovation relies on zero-knowledge proofs, a cryptographic technique that reduces transaction costs and boosts throughput.
Polygon boasts a diverse ecosystem hosting over 53,000 decentralized applications, including contributions from notable companies like Meta, Stripe, Credit Suisse, and Deutsche Bank. Moreover, Polygon’s support for the tether stablecoin positions it for potential network growth. The commitment to carbon neutrality has also triggered occasional price rallies.
However, investors should be aware of certain risks. Ethereum’s Merge upgrade could ultimately result in faster transaction speeds than Polygon offers, potentially diminishing Polygon’s primary advantage in the future.
Polkadot, our final digital token on the list, came into existence in 2016 with a unique mission: to seamlessly connect various blockchains. This interoperability protocol enables secure data exchange and transactions across blockchains.
One standout feature of Polkadot is its ability to empower developers to craft their own blockchains. Additionally, it boasts strategic partnerships, such as its collaboration with Chainlink to leverage its Oracle network and its partnership with Ankr StakeFi, allowing DOT token holders to stake their assets and earn passive income.
While Polkadot experienced the ups and downs of the crypto market, like many other digital assets, its current trading value hovers around $4.02. Despite this dip, many enthusiasts see it as a valuable opportunity given its long-term potential. Notably, Polkadot offers enticing staking rewards of 15%, ranking among the highest in the market.
Benefits of long-term crypto investments
Mitigated risk in long-term crypto investments
The cryptocurrency realm is renowned for its inherent volatility, offering the tantalizing prospect of substantial gains to those willing to devote extensive hours to market surveillance – albeit accompanied by the stress of executing timely orders.
Regrettably, this very volatility can also precipitate staggering losses, a risk that persists even in the realm of long-term crypto investments. Nonetheless, a prolonged holding strategy is typically associated with reduced risk.
Enhanced potential for returns
When discerning the most promising long-term crypto projects, investors often embark on a journey to hold their assets until achieving a specific return or for a predetermined period.
This stands in stark contrast to short-term investors who chase relatively modest gains for daily profits. The upward trajectory in value witnessed among premier long-term crypto investments has been nothing short of extraordinary.
Notably, many astute individuals who have made judicious choices in long-term crypto investments have reaped fortunes, sometimes in the millions, from comparatively modest initial investments – all without the need to vigilantly monitor the crypto markets on a daily basis.
Disadvantages of long-term crypto investments
Securing investments in long-term crypto ventures
To harness the maximum growth potential offered by the finest long-term crypto investments, it is imperative not to disturb the investment until the ultimate goal is met. In the pursuit of long-term growth within a crypto project, investors frequently choose to lock away a modest portion of their funds, showing reluctance to liquidate their investment prematurely.
Conversely, there are investors who allocate a more substantial proportion of their assets, often surpassing their overall net worth or liquidity. Such individuals might find themselves compelled to liquidate their holdings prematurely in the face of unforeseen expenses or other exigencies.
Similar to the realm of short-term crypto investments, long-term crypto investments are not immune to moments of stress. Tales abound of investors either divesting their digital assets too early or too late, resulting in the loss of thousands or even millions of dollars. While these types of decisions frequently plague short-term investments, their frequency is notably diminished in the context of long-term crypto investments.
Nevertheless, as the value of holdings grows over time, the decision of whether to sell an asset or persist in holding can become increasingly challenging due to the substantial worth of the assets involved.
How to buy a long-term crypto investment
You can buy long-term cryptocurrencies on different trading platforms such as eToro and Binance.
Step 1: Open an account on eToro
The first step is to open an account on eToro. Go to the eToro website and complete the registration form by entering your personal information, such as your name, email address, country of residence, income sources, etc.
Step 2: Verify your identity
The next step is to verify your identity on eToro. You need to know that a regulated crypto-exchange such as eToro will demand your government-issued documents such as a passport, I.D., or driver’s license.
Step 3: Deposit funds
Log in to your approved eToro trading account and click on the “deposit” icon on your user dashboard. A funding tab will pop up, giving you different options to pay/deposit funds to your eToro account. Choose one of the options and follow the prompts to fund your account.
Step 4: Search for the cryptocurrency
Once you have deposited money to your eToro account, go to your dashboard, click on the “Discover” button from the list of asset classes supported by eToro, and choose crypto. Use the search button to find your preferred cryptocurrency.
Step 5: Buy the long-term crypto-asset
Once that is done, click on the “Buy” option. A trading menu will appear. Use this to indicate the number of tokens that you want to buy. Click on the “Open Trade” menu to complete the transaction.
So that’s it. We have revealed long-term crypto investments and revealed the risks involved in cryptocurrencies. If you aim to invest in the long-term, you should be able to accommodate the risks involved. But only invest in projects that have a sustainable project behind them.
The pursuit of the best long-term investments requires careful consideration and research. While established giants like Bitcoin and Ethereum continue to hold promise, emerging projects like Polkadot and Polygon showcase innovation.
Diversification remains a key strategy, as assessing factors like utility, market cap, and past performance. As the crypto landscape evolves, it’s essential to navigate with a long-term perspective, embracing both the potential for substantial gains and the inherent volatility. In this dynamic realm, informed decisions and a patient approach can pave the way for rewarding long-term crypto investments.
Don’t be discouraged by fluctuations in the market. Your investment may lose money one day and make a profit the next. Instead of getting caught up in these changes, look at the big picture.
Again, if you are strictly looking to invest without transacting on the network, always know that cryptocurrencies aren’t a get-rich-quick scheme. Instead, you should consider it a long-term investment.
What is a long-term crypto investment?
A long-term crypto investment refers to the practice of acquiring cryptocurrency assets with the intention of holding them for an extended period, typically years, rather than engaging in short-term trading.
Why consider long-term crypto investments?
Long-term crypto investments are often sought for their potential to yield substantial profits over time, as they benefit from the cryptocurrency's growth and adoption in the long run.
What is better between long-term and short-term crypto Investments?
Cryptocurrencies are known for their significant price fluctuations, offering opportunities for small gains in short-term investments. On the other hand, the best long-term crypto investments have historically yielded much larger profits over extended periods due to their strong fundamentals and utility. It's worth noting that many short-term investment options, like meme coins, often lack utility and long-term sustainability.
How do I choose the best cryptocurrencies for long-term investment?
Factors to consider include the project's utility, fundamentals, market capitalization, project roadmap, and past performance. Researching and diversifying your investments is also crucial.
Is long-term crypto investment less risky than short-term trading?
Is long-term crypto investment less risky than short-term trading?
Long-term crypto investments are generally considered less risky than short-term trading, as they reduce exposure to short-term market volatility. However, all investments carry some degree of risk.
Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.