Image source: Getty Images
When it comes to crypto assets, trading is almost as famous as long-term investing — probably even more so. The main reason is the volatility of the crypto assets, which makes trading more exhilarating, even practical. But that doesn’t negate the fact that the long-term investment approach cannot be applied to crypto assets.
However, you cannot assess the long-term crypto investments quite the same way you assess stocks. The speculative nature of cryptocurrencies and the fact there is little tangible behind those assets make them a little difficult to comprehend. But even that statement is not valid for all crypto assets. Mainstream cryptos like Ethereum (CRYPTO:ETH) have billions of mining assets tied to them and billions more in secondary markets like NFTs.
That’s an important perspective to have when you are choosing crypto investments for the long term.
The second-largest cryptocurrency
Ethereum is almost as well known as Bitcoin, and it’s one of the few cryptocurrencies that are being mined as vigorously, even by publicly traded miners. But it’s well known for much more than just a volatile investment asset. It garnered a significant segment of the smart contracts market early on, and this is one use of blockchain that might outlive the cryptocurrency hype.
Ethereum is also widely used to create Decentralized Finance (or DeFi) applications, which is tied to the true purpose of the cryptocurrencies — financial freedom and accessibility to everyone, without going through financial institutions (conventional banks). Ethereum also controls the bulk of the NFT market, which is blowing up right now, and the potential of similar derivative markets in the future is quite bright.
With all these uses, crypto is likely to stay relevant for decades to come. So, buy the dip and hold on to it.
An Ethereum alternative
Due to its versatility, Ethereum has triggered the creation of a lot of similar blockchain and their native cryptocurrencies, one of which is Cardano (CRYPTO:ADA). It’s giving Ethereum serious competition in many avenues, including smart contracts, where the blockchain aims to become even more accessible and user friendly than Ethereum.
It’s also being used to create DeFi apps, and there is a high probability that it may get ahead given enough time, beating Ethereum’s early bird advantage. It’s also different from Ethereum in two significant ways: it has a different consensus mechanism (proof of stake), and it has two different layers: one dedicated to intelligent contracts and one to transactions, so one doesn’t weigh down the other.
Cardano is currently trading at a 68% discount from its peak, and from its trajectory, it seems that the crypto might fall further for a while before recovering. Even if it just reaches the current peak, it would grow your capital by over 300% if you buy now. And if it goes beyond that point, your capital appreciation can be phenomenal, much higher than the relatively heavier Ethereum and much heavier Bitcoin.
If you are unsure about crypto assets themselves, many crypto-oriented tech stocks can be healthy alternatives. Many of them offer relatively broader exposures, and even the direct crypto miners can offer more growth than the underlying cryptos can.