Cryptocurrencies are considered the most promising of the currently existing ways of investing. Against the backdrop of a general market decline in 2022, even the most cautious forecasts of crypto-optimists looked extremely doubtful. And yet they were right. Bitcoin won back about a third of the fall and it seems that it does not intend to stop yet. Following the flagship of the market, popular altcoins are also pulling up. Long-term investments are almost guaranteed to be profitable.
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Crypto investment options
Long-term investment involves storing the purchased asset for several years. The investor will have to be patient, as during this time the market will alternate between bearish and bullish stages of the cycle. Based on these considerations, it is better to invest “extra” money, that is, those that you will not need in the foreseeable future. If you count on a guaranteed quick profit, the market can present an extremely unpleasant surprise.
If you convert a large amount of USDT to ETH in the long run, this is a winning strategy. It is possible to get additional profit with a small starting capital, but this will require more effort.
However, in both cases, it is important to choose the type of currency and assess the risks. For long-term storage, it is recommended to choose fundamental coins. Very young and especially hype assets are not suitable for these purposes.
Distinctive features of cryptocurrencies
Describing cryptocurrencies as a financial asset, it is worth mentioning their specific features:
The existence and functioning of digital assets is based on transformative technology. Over time, it will revolutionize many areas.
Digital coins do not physically exist. They are impossible to print and extremely difficult to confiscate from the owner.
At the moment, all cryptocurrencies are classified as highly speculative assets, which implies the possibility of super profits and equally extreme risks.
When purchasing digital coins, you need to follow complex security protocols.
Together, these features determine the attractiveness of cryptocurrencies as an investment tool. Some investors consider virtual assets to be a good hedge against inflation.
No matter what your reasons for buying cryptocurrencies are, you need an investment plan. In addition, you need to choose a reliable exchange and create a crypto wallet.
Short-term investments are considered to be for a period of up to one year. They are usually based on expectations from the market and are more justified in a period of growth. Properly allocating resources, you can earn good money
Trading is sometimes referred to as short-term investment strategies, although this is very conditional. Classic trading still implies a much greater involvement in the process.
What coin to buy?
The choice of coins on the market is huge, but not every coin is suitable for long-term investment. In addition to really worthwhile assets, there are non-viable, dubious and obviously fraudulent coins in circulation, and it is better not to mess with them, especially if you are taking your first steps in the crypto world.
Usually, assets from the TOP-10 by market capitalization are considered the most preferable, but there are nuances here too. For example, USDT and USDC are dollar-pegged stablecoins. They are suitable for accumulation, but it is clearly not worth expecting an increase in their price. DOGE, the longest-lived meme-coin, is also not the best choice, but for different reasons. It was created as a joke and in fact no one can vouch for its future fate.
In fact, the most popular and reliable assets are still the same: Bitcoin, Ethereum and Litecoin.
Bitcoin is the most influential cryptocurrency with the highest liquidity ratios. There is an opinion that it is already close to becoming the gold standard of investing.
Ethereum has been actively developing since its inception. The Ethereum ecosystem laid the foundations for a new type of economy. After a series of large-scale updates, the price of the coin received another impulse to grow.
Litecoin, although it did not stay in the TOP-10, does not lose its relevance as an investment tool, since this coin is convenient for making payments. The Litecoin blockchain is faster and the network fees are much lower compared to Bitcoin.
Another argument in favor of including these coins in a portfolio is the possibility of direct conversion. Swap ETH to BTC is supported by almost all crypto exchanges.
Low liquid and young altcoins are a good but very risky option for aggressive short-term investment and trading strategies. Large players can quite easily manipulate the price of an asset and small investors end up with nothing.