Is Crypto a Long Term Investment?

By Duncan Ferris

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Long term crypto investing could be your way to massive returns, but with digital currencies dealing with a bear market what's the best course of action?

What's the best way to work out your long-term crypto investment, and why is it worth considering the distant future instead of trying to score quick profits?

Some of these digital currencies grow in price by astronomical amounts over a number of years, while others burn brightly for a short time before disappearing into the ether (pun very much intended).

So, why should you consider long-term cryptocurrency investment?

Crypto Investing: Long Term vs. Short Term

For starters, let's establish the difference between long and short-term investing here. Put in simple terms, short-term investors might hold on to their investment for just a couple of weeks, days or even hours before pushing the button on a quick sale with the aim of making themselves a nice tidy profit.

Investors approaching the market in this way are obviously more likely to be hit with more transaction fees, and they might miss out on moments where strong growth is seen over a short period.

Investors using this kind of investing tactic also have to be pretty on the ball, monitoring prices closely so they can pick the right moment to make their profit or duck out of the market to avoid losses.

Then there are long-term investors, who put their money in and then leave their investment alone for a good deal of time, waiting for a point in the distant future when they can collect what might be significant returns.

Their investment won't miss out on any periods of rapid growth in value, but they might also be subject to serious declines in value that short-term investors are more able to avoid. As a long-term investor, you're essentially betting that these dips and jumps will add up to solid profits over time. 

In some cases, they have.

For example, at the time of writing, the value of bitcoin has increased by more than 7,880% over the prior six and a half years. And to think, that's with the currency sitting at its lowest ebb since December 2020. 

So, it's clear that the cryptocurrency space has the potential to provide enormous returns to long-term investors. But which cryptos might make good long-term investments?

Best Crypto for Long-Term Investment

This is the key question and an essential one to get right if you want to be a successful long-term investor in cryptocurrency. It's worth noting here that particularly volatile coins with no real project behind them are an exceptionally risky investment and have not been considered a part of any viable long-term plan.

Instead, it seems more sensible for investors to put their money behind the big guns of the crypto world and invest in projects that bring innovation and profit potential. Here are some cryptos that might be worth looking at:

Bitcoin (BTC)

All these years later, the cryptocurrency that started the hype is still the key digital currency. It's a key barometer of the health of the crypto segment and is thus one of the best ways to invest in the industry itself.

Of course, Bitcoin is currently at its lowest point since December 2020 and has fallen by more than 50% across the year to date. While this might not inspire confidence, Bitcoin's recovery is almost certain to be a part of any crypto recovery that happens in the near future. That's because it simply is THE cryptocurrency.

Ethereum (ETH)

While Bitcoin is still the top crypto player, Ethereum demonstrates another key facet of identifying viable long-term crypto investments.

Ethereum has been slated as Bitcoin's successor, with its predicted overtaking of crypto's top dog's market capitalization known as 'the flippening'. It's anticipated to supersede Bitcoin for a number of reasons, but primarily because the technology behind the digital currency is more friendly toward smart contracts and decentralized finance apps. 

Find out more about Ethereum by reading up on ETH 2.0!

Solana (SOL)

In a similar vein to Ethereum, Solana's technology's potential makes it appear a solid long-term investment. The network boasts high transaction speed and volume capabilities and, like Ethereum, is seen as a friendly platform for blockchain apps.

However, the Solana network has had to deal with outages, with three major mainnet outages registered since March 2022. This shows that the tech is not bulletproof. Even so, with capabilities that can supposedly outgun those of the Ethereum network, Solana looks like it could be a great long-term investment option.

What is Crypto's Long-Term Outlook?

So, what might be on the horizon for the crypto segment as a whole?

  • Crypto Regulation – Expect to see more and more regulation creeping into the world of cryptocurrency. For example, Ashley Alder, Chair of the International Organization of Securities Commissions (IOSCO), indicated in May that a global crypto regulation body was likely to be formed in the next year. This could make institutional investors more willing to invest heavily in the space.

  • Crypto Recovery? – Cryptocurrencies have taken a beating in 2022, largely suffering even worse than equities. With many major currencies reaching multi-year lows, investors wonder when crypto will hit the bottom and see its fortunes turn around. It's possible that digital currencies have just been a flash in the pan, but it seems unlikely that they will never regain some of their former strength.

  • Institutional Investment – Though initially a phenomenon among retail investors, crypto attracted many from the institutional world as well. Companies like MicroStrategy (NASDAQ: MSTR) and Tesla (NASDAQ: TSLA) invested heavily in Bitcoin, for example. If crypto can recover from the poor year it has had so far, it will be interesting to see how quickly the professionals are happy to return to investing on a major scale.

Article updated September 6, 2022

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In this article:

Topics:
Cryptocurrency
Bitcoin
Retail investing

Author: Duncan Ferris

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Duncan Ferris does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.

Duncan Ferris has not been paid to produce this piece by the company or companies mentioned above.

Digitonic Ltd, the owner of ValueTheMarkets.com, does not hold a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Digitonic Ltd, the owner of ValueTheMarkets.com, has not been paid for the production of this piece by the company or companies mentioned above.

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