Best Long Term Crypto Investments – Forbes Advisor

Almost every asset class has been crushed in 2022 so far. Shares and bonds are down sharply, and gold is reduced by around 10%. Only cash equivalents have had a positive return.

None of these have seen more pain than cryptocurrency. In November 2021, Bitcoin (BTC) was close to $69,000 – today it is around $20,700, a drop of almost 70%. Ethereum (ETH) is down 58%.

Altcoins are no better, with Cardano (ADA) and Solana (SOL) losing more than 70% and 55% of their value so far this year, respectively.

So is there any place in crypto to invest right now?

Beware of the Crypto Bear Market

This year’s draw is just the latest in a long line of bear cycles in this highly cyclical industry. So why does this time feel so strong for cryptocurrency?

It’s worth remembering that crypto wasn’t around during the Great Recession and Financial Crisis of 2008. Both events actually inspired Satoshi Nakomoto to launch Bitcoin in the first place in 2009.

Between then and the end of 2021, the US stock market enjoyed one of the longest bull runs in history.

Cryptocurrency has grown tremendously from past times, so it is difficult to extrapolate past price data to now.

What we know from previous crypto winters is that some cryptocurrencies will cease to exist, and it is unlikely that crypto will rise significantly until the stock market has recovered.

The coins to invest in are therefore those with the strongest fundamentals, mainly real use cases. These cryptos will most likely survive an extended period of subdued buying.

Cryptocurrencies that rely on marketing and community, such as meme coins, can only benefit from bull market hysteria, with limited survival during downturns.

Even in the less terrifying crypto winters of days gone by, many coins failed to recover from previous records. Others, of course, are gone forever, and this time will be no different.

Large-Cap Cryptos are safest

Like blue-chip stocks, the biggest cryptocurrencies are likely to weather the storm best. These coins are the closest thing to an established record.

• Bitcoin. There is nothing surprising in saying that Bitcoin, the world’s largest crypto, is the safest bet in the current bear market. It still has a market cap of $396 billion and is held on the balance sheet of public companies. Institutional adoption has been scaled up and has given itself a role in the mainstream financial markets.
• Ethereum. ETH has established itself as the leading smart contract blockchain, the base layer of the decentralized economy. Ethereum and Bitcoin represent almost 60% of the market – extremely volatile and risky, but the most established.
• USD coin (USDC). With markets plunging everywhere, this stablecoin has been one of the main crypto-refugees this year, based as it is on the US dollar, the ultimate safe haven. “We’ve seen a tremendous increase in the dollar,” Matt Forester, chief investment officer at Lockwood Advisors at BNY Mellon Pershing, told Forbes Advisor. “There is a spectacular spectrum in the middle of all securities transactions and payments around the world.”

Note that owning fiat-based stablecoins is a way for crypto investors to secure their wealth in dollars without leaving the crypto market.

It can also allow investors to benefit from returns within decentralized finance protocols (DeFi). These DeFi protocols support financial products and services built on top of blockchain technology.

How to invest in crypto for the long term

Crypto investments should be viewed through a long-term lens. In the short term, crypto is subject to huge fluctuations in value.

Speculators who do not have a long-term time horizon are taking on huge risks from the increased volatility of the crypto markets. If an investor can hold onto their crypto for long periods of time, they can weather the storm of short-term price drops as long as the underlying asset is valuable and will survive a bear market.

With short-term trading, the possibility of profit (and loss) is far greater. For some observers, the difference comes down to gambling versus investing. The former offers greater potential for gains in the short term, but is much further out on the risk spectrum. Of course, with greater upside comes greater risk.

Right now, it’s important to remember that the vast majority of cryptocurrency investors are deep in the red for the year.