Cryptocurrencies are mostly seen as speculative assets owing to their volatility, which is impacted by many factors, like the supply and demand dynamic, government regulations, media hype, etc.
However, as risky as they can be, their volatility appeals to many investors as it creates the possibility for high returns.
Most also seek a reliable, long-term store of value, a requirement that crypto meets.
They can bring high returns, and there are more investment strategies to adopt, depending on the type of asset and investors’ expectations, risk tolerance, and dedication.
Aside from these, timing plays a significant role in the equation. The current Ethereum price differs from the future one, so arm yourself with patience when you venture into the crypto world and only invest what you can afford to lose.
Another positive aspect of digital currencies is that most have a finite supply restricted by mathematical calculations, unlike fiat money.
This prevents any political body or government agency from diluting their value through inflation.
However, decentralization and a lack of institutional oversight or regulation also mean that there’s no consumer protection.
From Bitcoin and Ethereum to Avalanche and Cardano, there are dozens of cryptocurrencies, making it difficult to get started in the digital currency world.
There are over 12.000 cryptocurrencies in the market, so once you have a clear impression of cryptocurrencies, we can move on to discover five tokens that make a wise long-term investment choice this year.
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Bitcoin (BTC)
Cryptocurrency is an incredibly nascent asset, with 2009 marking the year of its inception.
As 2022 showed, there’s no point in making price predictions. Extreme volatility is expected, so investors should protect their funds against collapses and stick to more established projects.
Bitcoin is the first digital currency and the largest by market cap, with a value of $451 billion at the moment of writing, or almost 40% of the whole crypto market.
It has the most widespread acceptance, with several publicly traded instruments tracking its performance and publicly listed equities like Tesla Inc. and MicroStrategy. Inc., among others, that hold Bitcoin on their balance sheets.
Be prepared – Bitcoin’s value fluctuates wildly.
Ethereum (ETH)
Ethereum’s overwhelming performance has attracted institutional and traditional investors alike.
It, alongside other digital currencies, offers many advantages, like lower inflation risks.
The blockchain system is infinite, so you don’t have to worry about your cryptocurrency being deflated.
Ethereum may play a part in the future of global computing systems and monetary exchange.
Still, it’s equally crucial to be aware of the concerns surrounding crypto investing, like price fluctuations.
The coin’s market capitalisation is over $190 billion and makes for ~19% of the whole crypto market.
Unlike Bitcoin, Ethereum’s underlying network is more than just a peer-to-peer payment tool.
It’s custom-made for decentralized finance tools and smart contracts, as well as for so-called Web3, apps, and the NFTs trading.
In 2022, ETH lost over half of its value, but it also has significant usefulness as the native token of a massively popular network.
Plus, its transition from energy-consuming Proof-of-Work to the much more efficient Proof-of-Stake offers a competitive advantage over BTC.
Binance Coin (BNB)
Binance Coin is the native token on Binance, the world’s largest cryptocurrency exchange.
It has proven to be one of the more stable investment options owing to its performance over time.
However, despite its success in Binance sub-projects and extensive functionality, it’s still a volatile investment.
Binance burns or destroys currencies quarterly, with the most recent burn being reported on Jan. 17, which cut the coin supply by over 2 million tokens.
This has no immediate effect on prices, but limiting the number of tokens can have a long-term positive impact by creating scarcity.
It’s worth mentioning that, according to CNBC, the platform has taken the lead in stabilizing the crypto market after the collapse of the FTX exchange by devoting $1 billion to a recovery fund meant to keep struggling players afloat. BNB’s market cap is approaching $50 billion.
Avalanche (AVAX)
When investing in cryptocurrency, it’s critical to realize that there are perceived tiers of digital asset quality.
The oldest ones – Bitcoin and Ethereum – are usually regarded as the two most secure and established crypto available.
While the cryptocurrencies that follow can offer potential, they come with risks. Asides from Avalanche, it seems.
This new cryptocurrency that sprung up in 2020 has gained much ground as an alternative for Ethereum developers, becoming increasingly popular among Ethereum projects, as U.S News reported.
It has become one of the larger digital currencies, with a market capitalisation of approximately $6.3 billion.
AVAX doesn’t have a track record for comparison, which can make the currency a riskier investment for potential purchasers.
Cardano (ADA)
Cardano (ADA) was launched in 2017 and is one of the cryptos that has managed to rank among the top ten in terms of market capitalisation, with a market cap of ~13.5 billion.
Last year, it proved to be a highly active and busy cryptocurrency, making it an investment option worth considering.
This comes as a surprise since the token started at just 0.02 USD. Investors regard it as both a short-term and long-term investment, expecting the price to rise in the future.
The token shares similarities in design and use with Ethereum, and both cryptocurrencies were co-founded by the same developer.
Its development began in 2015, and at the moment of its launch, in 2017, it was the largest cryptocurrency to use a PoS blockchain.
Generally speaking, ADA is a fundamentally safe investment. But it’s volatile and risky, just like any other cryptocurrency, so don’t be caught up in the hype and make mindful decisions.
Nothing can determine which cryptocurrency will perform well and which will fall, so research and patience are paramount. If you want more alternatives, the following cryptocurrencies are also worth noting:
- Polygon (MATIC)
- Terra 2.0 (LUNA)
- Chainlink (LINK)
