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With over 8,000 different coins and tokens on the market, investor interest is growing rapidly. But choosing the right crypto mix to maximize your long-term return can be overwhelming.
If you’re wondering which are the best long-term cryptocurrencies to buy this year, keep reading to find out.
5 Best Long Term Cryptocurrencies
Here are the top five cryptocurrencies with remarkable potential as long-term investments.
Bitcoin is one of the largest cryptocurrencies in the world by market capitalization. You can use Bitcoin in the market to exchange goods or services or consider it as one of your buy-and-hold assets in your investment portfolio.
In fact, one of the leading manufacturers of electric vehicles, Tesla, has started accepting Bitcoin as a form of payment. The company recognizes the merit of accepting Bitcoin as a high-risk, high-reward investment. Other companies and retail investors are following this path by adding Bitcoin to their investment holdings.
Bitcoin can be a volatile asset when looked at in an everyday scenario. Yet it is the best performing investment asset of the last ten years. It has become more of a safe-haven investment than a currency, and you need to have a significant amount in your cryptocurrency portfolio for the long term.
2. Ethereum (ETH)
Ethereum ranks second among cryptocurrencies by market capitalization. It is both a blockchain platform and a cryptocurrency. Ethereum has become the best platform for decentralized applications, also known as dApps. For this reason, it has become a favorite platform for developers due to its potential applications, such as smart contracts. These contracts allow you to automatically perform a function when specific conditions are met.
3. Gimbal (ADA)
Cardano is another cryptocurrency to invest in for the long term. While it may not have performed exceptionally well over the past few months, some of its most promising dApps are about to roll out. A large demand for ADA tokens would be the result.
Transactions in the Cardano ecosystem are cheaper and faster compared to other ecosystems. These features rely on a network that has a smaller footprint while consuming less power to complete transactions.
Additionally, Cardano has an upcoming hard fork combination event in February 2022. These developments create a scenario for ADA price fireworks in the coming years.
3. Dots (DOT)
With a market capitalization of over $25 billion, Polkadot has become one of the best long-term cryptocurrencies to buy since its launch in 2020. It is not only a cryptocurrency but also a blockchain network where developers can create innovative and decentralized systems.
The coin is designed to connect to various blockchains into a single unified network. The integration allows users to access Polkadot’s security and transaction network proof-of-stake validation.
5. Chain link (LINK)
Chainlink ranks fifth among the best cryptocurrencies to invest in for the long term. The Ethereum-based network provides off-blockchain smart contract data to on-blockchain through nodes and oracles. Chainlink also has a token called LINK that people can use to pay for services on the network.
Benefits of Investing in Cryptocurrency Long Term
A cryptocurrency is a form of digital currency without a central management system, such as a government. You can buy goods or services using cryptocurrency, but many people see it as a long-term investment option.
Long-Term Crypto Investment Expectations
A profitable investment in cryptocurrencies over the long term focuses on the expectation that their prices will rise over time. Your long-term crypto investment involves holding it for a period of time depending on your investment goals.
Typically, long-term investors hold their investments for several years or decades to increase their returns. So if you think blockchain-based technology will explode in the future, investing in crypto for the long term can be a great option.
However, it is crucial to keep in mind that investing in cryptocurrencies exposes your investment to volatility and many risks, such as wallet hacks. Therefore, you need to understand what you are putting your hard-earned money into before venturing into the crypto space.
5 advantages of long-term investments in cryptocurrencies
- Buying and holding cryptocurrencies creates a path to financial independence while helping you fight inflation over time.
- Young investors who are confident in cryptocurrency technology believe it will be more widely adopted in the future, increasing its value.
- As a long-term store of value, the more real-world applications it has, the more likely its value and demand will increase.
- Long-term crypto investing gives you direct control over your portfolio. This means lower fees and better access to your investment.
- Cryptocurrencies offer you a tool to build long-term personal wealth if you invest in a small but diverse group of coins.
How to choose the best long-term cryptocurrencies for your investment portfolio
Before you jump into building a long-term crypto investment portfolio, there are four key questions you need to consider.
1. What is your risk tolerance?
To buy or invest in cryptocurrencies for the long term, you must have a high risk tolerance. Crypto values rise or fall dramatically. Moreover, there is no guarantee that they will not eventually collapse.
Take some time to think about what would happen to you if all your crypto money suddenly became worthless. Again, putting your money into crypto is speculating, not investing per se. You can only hope that someone pays more than you bought an asset for some time in the future.
2. Why do you buy cryptos?
Let’s say you’re years away from your retirement date and you decide you need to allocate at least 20% of your investment portfolio to aggressive investing. If this is your case, long-term cryptocurrencies are your route to high returns.
There is long term value attached to cryptocurrencies due to blockchain technology. This has endless potential to drive innovations within financial and other industries. Therefore, investing in crypto for the long term is like investing in the crown jewel that is blockchain.
3. How and where do you intend to buy cryptos?
You may consider this trivial, but you cannot walk into a bank or financial institution and buy cryptocurrency. Peer-to-peer platforms and crypto exchanges operate with little to no regulation. This means that as an investor, you lack the oversight and protection offered by crypto platforms and traditional banks.
You have the added burden of evaluating and evaluating the different layers of security within your preferred platform. Part of your due diligence duties is finding and securing the right wallet. Your wallet can be cloud-based or a physical device that you can keep safely at home. There is the added danger that once you lose your keywords, you also lose your investment.
4. Which crypto goes in your long-term investment portfolio?
Thousands of token options are available in the crypto market.
Bitcoin has the advantage of being the first born, having the largest market share and currently the most popular. These characteristics allow Bitcoin to maintain and grow in value, making it an excellent long-term crypto investment asset.
Conversely, you can do plenty of research that sparks passion for a specific innovation leading to lesser-known crypto. These innovations are often described in white papers. Investing in such a token can be based on a personal belief and its return on investment.
In the world of cryptocurrency, almost anything can trigger excessively high returns from a crypto – Dogecoin, for example. It saw a massive increase in value, but people often forget that Dogecoin started almost as a joke.
5 tips for investing in crypto
Before putting your hard-earned money into crypto, you might want to consider these tips.
1. Invest with a strategy
You’ve probably heard of the phrase “failing to plan is planning to fail.” This is also true when it comes to investing. Having a strategy that works well with your investment goals is the first step towards reducing losses.
2. Have a risk management strategy
Set a limit on the amount you invest in a token and stick to it. Using stop losses to minimize your losses is also a great way to manage your risk. Also, don’t invest in crypto with money you can’t afford to lose.
3. Diversify your portfolio
Investing in a single crypto in this highly volatile market is not a good idea. Diversifying your portfolio by investing in different tokens will reduce overexposure if one or more coins fall in value.
4. The secret is long term
Prices tend to fall and rise dramatically on a regular basis. Avoid panic selling after a price drop in a short period of time. Instead, hold your investments in the market for long periods of time to get the best return on investment.
Good to know
Cryptocurrencies are very volatile assets. Although investing in digital assets is a way to accumulate wealth quickly, your investment portfolio can crash in as little as a day.
Is it worth investing in cryptocurrencies for the long term?
The correct answer to this question depends on your investment objective. If you have spare money that you won’t hesitate to invest for one to two decades, investing in crypto is a great option.
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