There are numerous ways that you can make money using cryptocurrency, such as day trading, crypto arbitrage, yield farming, and so much more. While all these methods could help you earn a good profit, the effort that needs to be put into the process can be nerve-wracking.
In that case, what is another method to gain from cryptocurrencies without the need to be extensively involved? Maybe it would help if you gave holding cryptocurrencies for long term investment a chance? Buy a cryptocurrency and hold it for as long as you can.
Fun Fact: The Bitcoin Billionaires of today earned the title because they held onto their investment for a long term.
Is cryptocurrency an excellent long term investment?
Yes. According to sophisticated and professional investors such as hedge fund and pension fund investors, cryptos can be suitable for your long term portfolio. Studies show that holding 1% of cryptocurrency for long term investment in a traditional portfolio of stocks and bonds can be very effective.
Think about it:
Suppose you own a portfolio containing 60% stocks and 40% bonds. You add 1% of Bitcoin to the mix. Let’s say the crypto market falls by 50%; what harm could it do to your portfolio?
On the other hand, when the crypto market witnesses a bull run, Bitcoin has returned over 600% so far. So, even 1% of Bitcoin (which has returned over 600% in the past) could at the very least mitigate the losses caused by the traditional investments.
Besides that, suppose you are new to the crypto market. Holding cryptocurrencies for the long term could be less risky than day trading.
Related read: Are cryptocurrencies best for high return investment?
Which cryptocurrency to buy for long term investment?
Once you decide to invest in cryptocurrencies, the next step is to decide which cryptocurrencies to put your money on. We suggest that you consider the following factors before deciding on the best cryptocurrency for long term investment.
Longevity is how long it has been since the cryptocurrency was introduced. This doesn’t mean new cryptocurrencies have to be ruled out. However, the currency’s time in the market is testimony to how stable it is compared to other cryptocurrencies.
Market capitalization is an indicator of the market value, dominance and popularity of any cryptocurrency. Large-cap cryptocurrencies are considered safe crypto investments, which means that these assets are less volatile than other cryptocurrencies and are backed by many investors in the crypto market.
It would be best if you examined how well the cryptocurrency has performed over the years. You can identify this by looking at the historical price chart of the asset. If you find that the prices are more or less steady, then that’s a good thing. If the value of the currency has been rising significantly over time, that’s even better.
The technology behind the cryptocurrency explains how useful it is to humanity. If the technology is robust and cutting-edge, it will handle a large number of transactions. If not, there are chances that the currency may collapse.
How many investors are trading in cryptocurrency at present? A higher adoption rate means higher liquidity. It makes trading, selling or spending a seamless process.
If you want to know which is the best cryptocurrency to invest in India, here’s an article you can refer to.
Best cryptocurrencies for long term investment (2021)
We have considered the above factors and drawn up a list of the best cryptocurrencies to invest in 2021 for the long term:
Market cap: Over $641 billion
Bitcoin is generally considered the best cryptocurrency for long term hold since it’s been around for the longest time. Its market cap and value are much higher than any other cryptocurrency, making it a leader in the crypto space.
Even with thousands of cryptocurrencies currently in circulation, Bitcoin still dominates with over 40% market share. It is already accepted as currency by many organizations across the world. Many institutional investors have poured in a significant amount into the crypto for long term investment.
The value of Bitcoin has skyrocketed several times since its inception. If you had invested in Bitcoin five years ago, its value would have now risen by nearly 6300%.
Market cap: Over $307 billion
Ethereum’s concept varies from Bitcoin entirely because it is not just a cryptocurrency. Ethereum’s technology supports smart contracts and also enables other cryptocurrencies to be built on its network. It is the second-largest crypto by market cap. Although its value seems to be far behind Bitcoin, it is significantly ahead of the rest of the cryptocurrencies, making it potentially the next best cryptocurrency to invest in the long term.
Ethereum has witnessed tremendous growth since its inception. Five years ago, it was valued at nearly ₹700. Today the value of Ethereum has risen over 22,000% and is priced at ₹1,72,000.
Market cap: Over $62 billion
Tether is a stablecoin – meaning its value is backed by a fiat currency (in this case, USD). It is hypothetically supposed to keep the value equal to the value of USD since its value is stable and is not greatly affected by the volatility of the crypto market.
Tether is the third-largest cryptocurrency by market capitalization. Although its value hasn’t risen dramatically like the other cryptocurrencies, investors consider it crypto for long term investment because of stability.
Market cap: Over $56 billion
The Binance Coin is native to a global cryptocurrency exchange called Binance. It is used to trade and pay fees on the platform. After 2017, its utility has extended beyond just that to booking travel arrangements etc. It can be exchanged or traded with other cryptocurrencies such as Bitcoin and Ethereum.
The cryptocurrency has gained over 350,000% returns in less than five years.
Market cap: Over $51 billion
Cardano is a scaled version of Bitcoin. It makes transactions faster and cheaper and takes less energy than a more extensive network such as Bitcoin. Additionally, it can work like ethereum to enable smart contracts and decentralized applications (DApps) powered by its native coin ADA.
Cardano has also had a significant rise in its value over the long run, with a growth of nearly 7500% since 2017.
Dogecoin was famously created as a joke in 2013, but it is now a hot topic in crypto town. Celebrities and billionaires like Elon Musk back it.
Recently, SpaceX (a company owned by Elon) announced a Dogecoin funded rideshare to the moon, making it the first crypto-funded space trip.
However, unlike other best cryptocurrencies for long term investment, Dogecoin has no cap on the supply limit. Unlimited supply could devalue the currency as supply increases.
Market cap: Over $40 billion
XRP is the native token of Ripple, a company that ties up with banks to offer seamless international transactions. Transfers could take nearly ten days with just a bank, but transfers could happen in seconds with Ripple.
The company has also signed contracts with banks. Since 2017, XRP has shown promising returns of over 36,000%. It is also one of the top ten largest cryptocurrencies by market capitalization.
Market cap: Over $23 billion
Similar to Tether, the USD coin is another stablecoin backed by the US Dollar. It aims to maintain its value to be equal to the value of the US dollar. The ethereum network backs the coin, and you can use USDT for various global transactions.
Market cap: Over $21 billion
Polkadot was created by the founders of Ethereum, who broke away from the company for a better network. Ethereum has a single lane for transactions, but Polkadot has several routes to connect various blockchains at the same time.
This cryptocurrency was designed to reward sincere investors and weed out anyone here for a quick buck. Polkadot was launched in 2020, and since then, it has witnessed a surge in value by 615%.
Market cap: Over $13 billion
Uniswap is an Ethereum based token. This decentralized cryptocurrency exchange allows users to conduct trades without any central facilitator.
Uniswap also has good profits for its holders. Launched in 2020, the currency has risen by 5,025% in just a year.
Now that we have given you a list of cryptocurrencies for long term investment, you may also want to check our cheapest cryptocurrencies blog to know about some cheap yet good cryptocurrencies. We recommend you read cryptocurrency investment tips before investing.
- What is the best long term Cryptocurrency?
No one cryptocurrency is best for long term investment. You can decide which crypto suits you best by considering important factors like technology, longevity, market share etc.
- Which Cryptos will survive long term?
Cryptocurrencies with a good track record and a steady rise in value since their inception have better chances of surviving the long term.
Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.
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