Are you ready to start investing in cryptocurrency? With so many crypto tokens out there, it can be overwhelming to decide which one is the best investment for you. We’ve put together our list of the 7 best cryptos for a long-term hold. Please note, this list reflects our views but it is not official investment advice.
Whether you’re a beginner investor or a seasoned veteran, these tokens offer some of the best potential returns for those who want to take their time and ride out the wave of cryptocurrency growth over the years.
What Is Considered Long-Term Crypto Investing?
Long-term crypto investing refers to buying and holding cryptocurrency for an extended period of time – usually years. It involves purchasing a digital asset with the expectation that it will appreciate in value over the long term.
This type of investing is becoming popular in 2023 due to where we are in the crypto market cycle. After a long cryptocurrency bear market, it is widely expected that the market will turn bullish and this means current prices can be very lucrative for long holds. Combine this with the next bitcoin halving coming up in 2024, and you have a very favourable outlook for quality crypto projects.
How to Pick Cryptos for Long-Term Hold?
When deciding to invest in a cryptocurrency, you’ll want to start by researching a coin’s fundamentals. This means looking at factors such as development activity, governance structure, use cases, and community sentiment. You will want to pick tokens that have been around for a while and survived at least one bear market.
Research the team behind any coin you’re interested in investing in. Make sure that they have a track record of success and that they have plans for increasing the adoption and use of their coin. If possible, try to speak directly with members of the team or connect with them on social media before investing so that you can get a better idea of their vision and roadmap for success.
Then, consider these two primary factors: volatility and liquidity. Volatility refers to how much the price of a coin fluctuates over time; coins with higher volatility are more likely to experience greater price swings than those with lower volatility. Liquidity refers to how easy it is to buy and sell a coin. Coins with higher liquidity tend to have larger trading volumes and more active markets, making them easier to trade.
Finally, it’s essential to be aware of any potential risks associated with investing in crypto. Take the time to study up on regulations and taxation related to crypto investments as well as any potential security vulnerabilities or other issues that could impact your investment over time.
Investing in cryptocurrencies for the long term requires patience and knowledge about market trends and dynamics. Make sure you are well-informed about your chosen investments before committing funds – this will help you make smarter decisions when it comes time to spend your hard-earned money.
The Benefits Of Long-Term Crypto Investing
One of the main advantages of long-term crypto investing is the potential for higher returns. Crypto assets tend to have more volatile price movements than traditional assets, meaning that those who can tolerate the risk can often enjoy bigger returns over the longer term. This makes it an attractive prospect for investors who are looking to maximize their profits and make their money work harder for them.
Another benefit of this type of investment is that it requires less time commitment once you have made your purchase. If you are still working a full-time job or have a busy schedule otherwise, keeping up with the short-term fluctuations of the crypto markets can be incredibly exhausting and stressful. This market is 24/7 on a global scale and prices can swing wildly in the short run.
Finally, crypto investments also offer greater liquidity compared to other investment options. As most cryptocurrencies are traded on open exchanges, investors have the ability to buy and sell quickly on these markets without having to wait for approval from a third party or broker. This means that even long-term investors can easily access their funds when needed without incurring any additional costs or waiting times associated with many other investments such as real estate.
The Best Cryptos to Buy and Hold for Long-Term
The best long-term crypto investments could look different for everyone, but generally, investors are looking for more mature, safe digital assets in this portfolio.
Bitcoin (BTC)
Bitcoin is a truly ground-breaking technology and its success has made it the highest market cap cryptocurrency for a long time. As the pioneering crypto asset, it has earned itself a place as a reliable store of value across crypto markets. For investors who are looking to invest in cryptocurrency for the long term, Bitcoin can be regarded as a reserve currency much like how the US dollar dominates global stock markets.
As the largest and most popular cryptocurrency on the market, Bitcoin’s performance has a serious influence on how the overall crypto asset class behaves. When BTC increases or decreases in price, this can have an impact on most other cryptocurrencies. If Bitcoin experiences an upturn, then other coins tend to benefit from this bullish market movement. Conversely, if there is a drop in BTC’s price then this bearish news will typically impact the whole crypto space.
Given that BTC can be subject to wild swings in price, investing in it for the long term may require a certain amount of risk tolerance – but those with patience can ride out the wave of volatility over time and make considerable gains.
Ethereum (ETH)
Ethereum is the world’s second-largest cryptocurrency by market capitalization and its blockchain platform has become a go-to choice for developers of decentralized apps (dApps). Its token, ETH, can be used as a store of value which makes it an attractive asset for investors. Ethereum has been well-regarded due to its support for dApps running on smart contracts – which have the potential to automate processes and revolutionize industries such as decentralized finance.
Recently, Ethereum has made a major upgrade in the form of ‘The Merge’. This transition from proof-of-work to proof-of-stake was designed to bolster the scalability, security and sustainability of the network. This upgrade is expected to bring major benefits to users of Ethereum – such as more reliable and faster transactions with lower fees – so it is definitely worth keeping an eye on this project moving forward.
Cardano (ADA)
Cardano is a proof-of-stake blockchain platform, designed to provide increased security and sustainability for decentralized applications, systems and societies through a revolutionary approach to research and engineering. It has seen strong growth since its launch in 2021, with recent upgrades boosting the smart contract functionality and improving the speed of transactions without compromising its security. It’s currently within the top 10 cryptos by market cap.
It was reported that following Cardano’s recent upgrade to its protocol, over 100 smart contracts have been deployed on the network during the first day alone. While Ethereum has also recently made an upgrade to a proof-of-stake protocol, Cardano’s popularity among developers could help keep demand up for its native token ADA as well as other coins related to it. This cryptocurrency is certainly worth considering in your long-term crypto investment portfolio if you’re looking for a reliable token with a strong team and community.
Polygon (MATIC)
Polygon is a Layer 2 blockchain protocol that helps Ethereum improve scalability, allowing developers to access faster transaction speeds and lower costs than if they were to use the Ethereum blockchain alone. It acts as an express train running parallel to Ethereum, connecting different Ethereum-based projects via the main chain while still allowing them the benefits of security, interoperability and structure.
The native token MATIC is an ERC-20 token and is used to govern and secure the Polygon network, as well as pay for network transaction fees. The platform has seen increasing interest recently with its involvement in Disney’s 2022 Accelerator – which focuses on new types of tech including augmented reality, NFTs (non-fungible tokens) and AI for future storytelling projects. This has been further bolstered by Meta using Polygon for testing digital collectibles and showcasing NFTs on its Instagram platform. Many investors have high hopes for this project in their long-term crypto portfolio.
Polkadot (DOT)
Polkadot is a blockchain network and cryptocurrency designed to allow multiple blockchains to communicate and transact without the need for a trusted third party. Its native cryptocurrency DOT was launched in 2020 and has since become one of the best cryptocurrencies to buy for long-term investments.
Polkadot allows developers to build innovative decentralized systems, integrating individual blockchains into an interconnected network while providing easy access to its proof-of-stake validation of security and transactions. More recently, an update has made it easier for communication and asset transfers between Polkadot para chains, creating opportunities for new use cases.
As a competitor to Ethereum and Cardano, Polkadot’s early entry into the world of smart contracts gives it an advantage that some analysts believe will be maintained as time progresses. Investing in this cryptocurrency should give insight into what the future of distributed ledger technology might look like. If you believe in this future, DOT could be a good addition to your long-term crypto investments.
Monero (XMR)
Monero (XMR) is a privacy-focused cryptocurrency that launched in 2014 and has since been enhanced with features to make it a truly unique project in the cryptocurrency markets.
At the heart of Monero lies RingCT, Stealth Addresses and Ring Signatures technologies, which are used to completely hide the transaction amounts and addresses involved in any given transaction. Additionally, the Proof-of-Work consensus algorithm employed by XMR is extremely efficient for large-scale participation, making it possible to mine with consumer-grade hardware such as CPUs and GPUs. This makes the network more resistant to takeover attempts due to its widely distributed nature.
Controversy has surrounded Monero over its potential usage for illicit activities due to its strong privacy features. However, users seeking freedom from government oversight can also find great use in XMR as a powerful tool for private transactions.
While Monero is currently the smallest market capitalization token on our list, it is likely going to be around for a long time thanks to its straightforward use-case of secure payments. Its track record suggests that it will stay relevant regardless of industry trends, although regulatory risk needs to be observed as some countries have been pressuring exchanges into delisting privacy coins like Monero. All things considered, Monero could be a good buy for long-term investments.
Chainlink (LINK)
Chainlink is a decentralized oracle network built on Ethereum, launched in 2014 with the aim of providing real-time off-chain data to on-chain smart contracts through nodes and oracles. It’s an important piece of blockchain technology that can drive blockchain expansion.
Chainlink 2.0 upgrade will use staking – providing nodes with strong economic incentives – to increase security, as well as build off-chain networks on top of oracles to reduce the strain on the Ethereum main net.
The native token LINK facilitates transactions on the Chainlink network and has been rising in popularity since its launch. With the promise of increased demand for Chainlink services due to its new upgrades, many investors are betting on LINK as one of their long-term investments in 2023 and beyond.
Storing Your Long-Term Crypto Investments
Storing your tokens safely is paramount. Let’s cover crypto wallets briefly.
The most basic form of storage is a hot wallet, which is connected to the internet and can be used for day-to-day transactions. Hot wallets are convenient but not very secure since they’re vulnerable to hacks. There are two main types of hot wallets, custodial and non-custodial.
The wallet your crypto exchange provides you when you buy your coins is an example of a custodial wallet since your funds are stored on the exchange’s servers. This means you are not in full control of your tokens and this is why we don’t recommend keeping large amounts of tokens on crypto exchanges.
Non-custodial wallets are those that you control yourself, such as desktop, mobile and hardware wallets. You should always move your crypto to a non-custodial wallet that you control as soon as possible.
For long-term storage, it’s best to use a cold wallet that stores your crypto assets in an offline device such as a USB drive or hardware wallet. This type of storage provides much more security than a hot wallet, as it eliminates the risk posed by malicious actors trying to access your funds online.
No matter what type of wallet you choose, make sure you take all necessary precautions when storing your crypto assets for the long term. Keep backups of private keys so that you can recover funds if needed, and never share them with anyone else unless absolutely necessary.
Tax Considerations For Long-Term Crypto Investments
It’s critical to understand how taxation works for your crypto investments, as it can have a significant impact on your overall return. This is especially true for those investing large sums of money, as the best long-term crypto investments can rack up some serious gains.
Some countries consider cryptocurrency investments to be property and not a currency or security. This means that capital gains taxes apply when you sell or trade your digital assets. The tax rate you pay will depend on the type of asset and how long you held it before selling or trading it. For instance, if you hold an asset for over a year before selling it, you may qualify for more favorable long-term capital gains rates than if you sold after holding the asset for less than a year.
In addition to capital gains taxes, other taxes may also be applicable to your cryptocurrency investments – such as income tax or sales tax in certain jurisdictions. You’ll need to research the local laws in whatever jurisdiction you live in in order to ensure that you’re compliant with all applicable regulations when it comes to the taxation of your crypto assets.
It’s important to keep track of all your cryptocurrency trades and transactions so that you can accurately report them when filing your taxes each year. It’s always best to consult with an experienced accountant or tax attorney who can help ensure that all of your cryptocurrency investments are properly recorded and taxed accordingly.
Frequently Asked Questions
What Is the Best Way to Track the Performance of My Cryptocurrency Investments?
One option is to use online resources like websites, apps, or tools that track the prices of different cryptocurrencies. This can be a great way to stay up-to-date on changes in value and get an overall picture of how your portfolio is doing in real-time. Some platforms offer additional features like tracking portfolio volatility or providing news to help keep investors informed.
Another option for tracking your investments is by using a specialized software program designed specifically for managing cryptocurrency portfolios. These programs provide users with detailed reports on their performance and allow them to customize how they track their investments. They also make it easier to manage multiple portfolios at once, as well as set up automated alerts so that you’re notified when there are significant changes in value.
What Is the Ideal Length of Time for Long-Term Crypto Investments?
The ideal length of time for long-term crypto investment will depend on several factors, including your risk tolerance, your overall financial plan, and the projected performance of the individual cryptocurrency. Generally speaking, however, investors should be prepared to hold onto their assets for at least three years or more in order to maximize their returns. Cryptocurrencies can be notoriously volatile, so it’s important that investors take a long view when investing in them.
On the other hand, some people may want to invest in cryptocurrencies with a shorter timeline due to other commitments or plans they have in place. If that’s the case, there are certain strategies that investors can use to make sure they don’t miss out on any potential profits from their investments without having to commit too much time or money.
For example, investors could consider diversifying their portfolio by investing in multiple coins with different price points and holding periods. This way they can hedge their bets and get exposure to both short-term and long-term crypto projects without taking on too much risk or committing too much capital.
In short, there is no one-size-fits-all answer when it comes to determining the best length of time for a long-term crypto investment. Investors should carefully assess their individual goals and risk tolerance before committing funds to any type of cryptocurrency investment strategy so that they can make an informed decision about what works best for them.
How Can I Ensure My Crypto Exchange Is Secure?
The first step is to choose a legitimate and reputable crypto exchange. Make sure that the platform is fully licensed and regulated by government authorities before using it. Look for user reviews and read up on customer experiences with the exchange before signing up. This will help you get an idea of what other investors think about it.
Next, make sure that your crypto exchange has two-factor authentication (2FA). This will add an extra layer of security by requiring two forms of verification when accessing your account or making trades. By taking these precautions, you can protect yourself from potential risks associated with crypto investments.
Some of the largest and most recommended centralized exchanges include Binance, Coinbase, Kraken and Huobi.
Be sure to research the cryptocurrency exchanges thoroughly before committing your funds and take steps to ensure that your account remains secure at all times. With proper due diligence and careful planning, you can maximize the potential returns on your investments while minimizing any potential risks associated with them.
