One of the most common questions people ask when they enter the crypto space is about which assets they should buy today for the long term. Naturally, this industry is filled with people who are looking to improve their financial situation, and so there is a widespread focus on achieving the best returns.
However, unsurprisingly, there is no easy answer to this question, as trading is as much an art as it is a science. That being said, there are some assets that look appealing in the market, and could lead to some significant gains in the long run. Let’s see which cryptocurrencies these are, and take a look at how Ledn can help increase financial security for people.
It should be noted that this is essentially an opinion-piece, and should not be taken as investment advice. When it comes to this industry, you should never listen to just one voice, but rather research and consume as much information as you can, so that you can form your own nuanced and unique perspective. The intention here is to just add to the overarching discourse in the sector.
What Are The Best Cryptocurrencies To Buy For Long Term Profits?
Here are four of the best cryptocurrencies to buy and hold if you are looking for long-term gains.
Bitcoin (BTC)
It should come as no surprise to see Bitcoin at the top of our list. This is the gold standard of the crypto industry. Not only is it the first asset in this space, but it is arguably the most architecturally sound project in the market. Its blockchain is older than practically every other cryptocurrency out there, its legacy means it is extremely decentralized, and it has global name recognition.
Bitcoin is typically considered to be the economic barometer of the crypto sector. If BTC rises, there is a chance other assets will. If it falls, they will likely do the same. There are definitely some outlier situations that have occurred where the market did not coincide with it, but this is typically abnormal.
In previous years, people would hold Bitcoin simply because it has a strong legacy and track record, however, in 2024 there are three new reasons to consider it as a long-term hold.
New Developments on Bitcoin: The Bitcoin development space has been heating up in recent times, with several projects out there looking to add additional functionality to it. In particular, people are working on making smart contracts more compatible with it. This is extremely exciting from a DeFi perspective, as it allows for applications to get built on top of the BTC blockchain. However, even for people who focus on CeFi services (such as Ledn), this is great news as more functionality typically means greater price increases as it makes Bitcoin more capable and usable.
The Halving: At some point in 2024 (most likely in April), Bitcoin miners will experience a halving of their rewards. This means that instead of receiving 6.25 BTC, miners will get 3.125 BTC instead. This is expected to affect the price of Bitcoin because it adds scarcity to the asset, as there will be fewer coins getting released into circulation than there were before. Alongside that, it will also drop Bitcoin’s inflation rate. Some people believe it could push Bitcoin’s price up significantly.
Related Content: What Happens When Bitcoin Halves? The Complete Guide
Bitcoin ETF Approval: Bitcoin ETFs were recently approved by the SEC. An ETF, or exchange traded fund, is a collection of investments that you can buy and sell on the stock market. They can contain many types of assets, like stocks, gold, or bonds, and their prices change throughout the day as it is bought and sold. A Bitcoin ETF is a specific kind of ETF that tracks the price of BTC. Instead of buying Bitcoin directly, you can buy shares of the Bitcoin ETF. This way, you can invest in it through a regular stock exchange, making it easier and more familiar for most people. There has been a massive push for this for several years, and so people are extremely excited now that it has been approved. The general idea is that by making BTC accessible to people who are economically literate, but perhaps not technologically inclined, it will bring more capital to the space.
Related Content: The 6 Best Places to Buy Bitcoin in Canada
Ether (ETH)
Ethereum could be described as the leader of the altcoins. In terms of price, it is squarely in second place compared to Bitcoin. However, the best way to view Ethereum is as the current powerhouse of the DeFi world. The majority of tokens in this sector are built on Ethereum’s architecture, along with most dApps. It is a huge pillar of the industry.
It would be hard to explain in full why Ethereum makes for a strong long-term hold, as there are many fantastic reasons. Although, it can mostly be boiled down to the fact that it has a huge collection of developers around the globe who work on building new tools and services within its ecosystem. There is so much being built on Ethereum that it almost feels like it has its own digital culture.
With that being said, some people question whether Ethereum can stay relevant in the future, as there are other networks out there with speedier and arguably more robust blockchains. The question you need to ask yourself is whether you believe the main ETH dev team can make the right updates at the right time, and whether you believe the community it has built is strong enough to keep it going. Many people say yes to this, but you should definitely research it yourself and see where you land on the debate.
US Digital Coin (USDC)
It will likely come as a shock to see a stablecoin on this list. As the term suggests, it is an asset that is not known to rise in value. In fact, its value largely comes from its lack of movement. However, you actually can hold it for gains. These would not come from simply having some in your wallet, but rather by placing them in a savings or Growth account, which gives interest.
For instance, if you use one of Ledn’s Growth Accounts, you can currently earn up to 10% APY on your USDC. This means you can make consistent returns, even if the asset itself is stable and non-moving. USDC is a great choice for these accounts as there is a decent amount of interest out there on offer. Plus, Circle, the company behind it, has a good reputation for being transparent about its reserves, meaning it is largely considered to be trustworthy.
What is a Long-Term Cryptocurrency Holding?
A long-term cryptocurrency holding is typically where you buy a digital asset and hold onto it for a long period of time. What counts as “long” will depend on your own definitions, but in traditional finance, it is usually 3-5 years or more. However, some people consider 6-12 months to be long in the crypto space because the market is perceived as moving much faster.
What are The Benefits of Long-Term Crypto Holdings?
There are many benefits that come with long-term holds. Let’s look at a few of the big ones.
Less stressful than day-trading: the crypto industry is notoriously volatile. Assets rise and fall tremendously often, sometimes without any obvious reasons. If you are trying to day-trade or time the markets, then you might get extremely uncomfortable when watching the charts. To avoid this, many people choose to simply buy a cryptocurrency and hold onto it– a process that provides more peace of mind, whilst still being a potentially sensible holding strategy.
Earn interest on your holdings: If you are holding cryptocurrency for the long-term, then you have the option of earning interest on it within a savings of Growth account, yield-farming protocol, or even via staking (depending on the asset). For instance, you can earn interest on BTC, ETH, USDC and USDT via Ledn’s Growth Accounts. For Bitcoin and Ethereum, this allows you to make additional gains whilst also benefiting from any long-term price increases.
Be part of a community: This might sound like a strange benefit, but the crypto industry does not function in the same way as traditional finance. Many people support assets because they both believe in the project, and because they enjoy the community-spirit that is attached to it. There is a collective comradery that comes with being involved in a certain coin or token, where you can connect with other individuals going through the same rises and falls as you, and can share tips, ideas, and insights. Despite being a highly distributed and decentralized space, the industry is actually extremely social. Look no further than Twitter, Reddit, or even the newly launched Farcaster to see this for yourself.
How to Choose The Best Long-Term Cryptocurrency Holdings
There is no easy answer to this question, as it is deeply personal and specific to an individual’s financial situation and the strategies they might be interested in. But with that in mind, let’s see what elements to consider.
Understand how risk works: Everybody reacts differently to risk, with some people being more tolerant than others. When it comes to crypto holdings, there is always some level of risk involved (even with stablecoins). You need to be aware of what types of risk might be lurking, and think hard about what your own mental state is like when it comes to this. While holding long-term is typically less stressful than day-trading, there is no form of crypto holding that is for the faint of heart.
Understand where the value comes from: The crypto space is highly varied, and so no two assets derive their value from the same place. For whatever assets you add to your portfolio, be sure to look into why exactly people favour them, and what their worth comes from. There is a common statement you can find in tradFi circles where people will say Bitcoin has no underlying value, but this is a misconception. Bitcoin absolutely has legitimate reasons for its value. In particular, the ability to create a financial system with no hierarchy or centralized core is its defining feature. However, for something like Ethereum, its value is also brought about by its ecosystem and utility as a network that allows for decentralized applications and tokens to be built upon it.
Research as much as you can: You should be consuming as much media as you can about the asset you are considering. This is not just in terms of its financial history or what economists think its future will be– it includes understanding the types of problems it is trying to solve, why people support it, what credentials its team has, and what its future goals are. This might sound like a lot but it is only the start. Your research endeavors should never cease. Arguably, you need to be more clued up about crypto assets than you do with traditional assets because they are much newer and more experimental. Therefore, you need to be as clear on your understanding of them as possible.
Risks of Holding Cryptocurrency
Let’s see what the risks of long-term holds are.
You may miss your chance to cash out: While holding is less stressful than day-trading, there is always a risk that you will miss out on your chance to cash out when the asset is at its peak. Some altcoins have peaked in the past, only to never reach that state again. If you are holding onto an asset for too long, you could lose out. For top cryptocurrencies like Bitcoin and Ethereum, this idea is less commonly discussed as people have faith that they will continue to rise for many years. However, nobody knows for sure, so it is a good idea to pay attention to the markets to some extent, even if you plan to hold for a considerable period.
Cryptocurrencies Might Break or Malfunction: While it is unlikely for the top assets out there, it is always theoretically possible for a cryptocurrency to malfunction or get hacked in some way. If this happens when you are holding them you could be left in a financially worrisome position. If, for instance, somebody figured out how to hack BTC, then it would likely tarnish its reputation, and its price alongside it.
Personal Hacks or Theft: You need to be extremely careful when it comes to holding your cryptocurrency. There are two options: custodial, or non-custodial. Both of which come with their own drawbacks. If you choose the non-custodial route, then you will be looking after your assets wholeheartedly, meaning you have the private keys for the address they are in. Many people prefer to do this as it gives peace of mind and autonomy. However, when you are fully in control of your own money, you need to be extremely vigilant about hacks or thefts of any sort. Some web wallets have been broken into in the past, and if you engage in DeFi activities, then you are somewhat at risk of hacks. Cold storage wallets are typically viewed as the best method for safety.
On the flipside, custodial wallets are where an external third party holds onto your assets. This can be good on one hand as it means your money is the responsibility of another organization who might be well-versed in safety protocols. However, there is also the risk that the project will collapse or choose to withhold your own assets from you. This has happened in the past, with FTX and BlockFi being two big examples. Therefore, you need to be very aware and cautious when going through this route.
Should You Hold Cryptocurrency?
Nobody can answer this question but you. However, many people view crypto holdings as a smart option for improving their economic situation. Consider the risks, the benefits, your own mindset, and your own finances to see if it is a smart idea.
Related Content: The Comprehensive Guide To Cryptocurrency in Estate Planning
How to Get The Best Return On Your Crypto Holdings
To get the best returns on a long-term crypto hold, you should look into methods of earning interest. This could be via staking (if the asset allows it), yield farming via DeFi tools, or savings or Growth accounts. For example, with the latter option, you can earn interest via a Ledn’s Growth Account by simply holding your assets in it and letting them increase in value over time. This is possible with Bitcoin, Ethereum, USDT, and USDC.
Conclusion
There are tons of options to choose from when it comes to holding cryptocurrencies in the long-term. However, Bitcoin, Ethereum, and USDC are three top choices for many people. If you are looking to increase your finances during your holding period, then make sure to take a look at Ledn’s Growth Accounts, as these can help improve your situation even more, and maximize your returns.
Sponsored by 21 Technologies Inc. and its affiliates (“Ledn”). All reviews and opinions expressed are based on my personal views. There are risks involved with buying, selling, or holding digital assets as explained in Ledn’s Risk Disclosure Statement, which can be accessed here.
