Investor interest is increasing at a rapid rate despite the fact that there are more than 22,000 distinct coins and tokens available for purchase. But selecting the optimal combination of assets to maximize your long-term returns can be challenging even under the best of circumstances; attempting to do so during a bear market for cryptocurrencies, also known as “crypto winter,” can be extremely stressful.
Continue reading if you are interested in finding out which cryptocurrencies are the best ones to invest in for the long term this year.
The 5 Most Promising Cryptocurrencies for the Long Term
The following are the top five cryptocurrencies that have the potential to be invested in for the long term:
- Bitcoin (BTC) (BTC)
- Ethereum (ETH) (ETH)
- Cardano (ADA) (ADA)
- Polkadot (DOT) (DOT)
- Chainlink (LINK) (LINK)
BTC (Bitcoin) (BTC)
According to the total market capitalization of all cryptocurrencies, Bitcoin is the most valuable one. You can put it to use to buy things offline and online, but if you’re like the majority of people who invest in bitcoin, you’ll probably think of it more as a buy-and-hold asset for your investment portfolio. You should consider including it in your long-term cryptocurrency portfolio because it has evolved into more of a secure investment than a currency in recent years.
Elon Musk, the CEO of Tesla, provided a boost to the value of bitcoin in 2021 when he announced that the company had purchased $1.5 billion worth of bitcoins and, later, that it would accept bitcoin as payment for its vehicles.
Musk ultimately liquidated the majority of Tesla’s bitcoin holdings and retracted his statement shortly thereafter, citing environmental concerns as his motivation. However, a large number of other businesses, such as Microsoft and PayPal, as well as Rakuten and The Home Depot, accept bitcoin as a form of payment, albeit in some cases in an indirect manner.
Various other companies are beginning to invest in bitcoin as part of their portfolios. In addition, Colorado became the first state to accept bitcoin as a payment method for state taxes in September of 2022.
After reaching a high of $48,086.84 just one year ago, the price of bitcoin has recently fallen to below $16,000, indicating that it is a highly volatile asset to track on a day-to-day basis. However, at one point in late 2021, it was the investment asset that had performed the best over the preceding 10 years, and Goldman Sachs reports that it is the investment asset that has performed the best thus far in 2023.
The platform will become more useful as a result of a recent upgrade to the network that added functionality, which may cause the coin’s value to increase. Because the value of any cryptocurrency can change at any time, it makes sense, if you want to invest for the long term, to focus on the cryptocurrency that was the first and is still the most valuable.
The total market capitalization of all cryptocurrencies places Ethereum in the number two spot. The native cryptocurrency of the Ethereum blockchain platform bears the same name as the Ethereum blockchain platform itself. The token can be used as a store of value, which is one of bitcoin’s strengths; however, Ethereum has also emerged as one of the best platforms for decentralized applications, which are also referred to as dApps.
In point of fact, due to its support for applications such as smart contracts, which are designed to automatically carry out a function when particular conditions are satisfied, it has emerged as a platform that is rapidly becoming a favorite among developers.
Proof-of-work was recently replaced with proof-of-stake as the underlying consensus mechanism for the Ethereum network as part of an upgrade that was recently completed and is commonly referred to as “The Merge.” According to the information provided on the Ethereum website, it is anticipated that the upgrade will improve the scalability, security, and sustainability of the network.
In spite of a buying frenzy earlier in the summer that drove the price up more than 50% over the course of a week, Finbold reported at the time that ETH actually dropped in the days following the upgrade. This was despite the fact that some analysts believed The Merge would have a bullish effect on ETH. On the other hand, excessive optimism almost certainly played a role in that surge, which in turn made a correction unavoidable.
As ETH mining becomes a thing of the past, staked coins are yielding approximately 5%, which prompted Citi® to declare that ether has become a yield-bearing instrument, according to a report that CoinDesk published. Additionally, there is a possibility that coins will become harder to find. For example, on the first day of The Merge, the network burned more in fees than it issued to validators, which led to a decrease in the total coin supply. This occurred because the network burned more coins than it issued.
Goldman Sachs has taken note of the significant interest that investors have shown in ETH. It plans to allow trading in ethereum options in the same way that it allows trading in bitcoin options. It already provides access to derivatives linked to Ethereum.
Another cryptocurrency that offers excellent potential for long-term investment is Cardano. Despite the fact that the performance of the coin in bear markets has been terrible — Cardano’s founder Charles Hoskinson tweeted that “Cardano could cure cancer… and we’d still fall” — the platform managed to gain a solid foothold while it had one major advantage over Ethereum: a proof-of-stake protocol.
Cardano’s proof-of-stake protocol served a similar function, but it was faster, cheaper, and more energy-efficient than Ethereum’s older proof-of-work protocol, which was used for verifying transactions and protecting the integrity of the network prior to The Merge. Ethereum’s proof-of-work protocol was used before The Merge.
Cardano’s popularity among developers of decentralized applications may keep demand high for its ADA token even if Ethereum upgrades to proof-of-stake, which may level the playing field but also flood the market with proof-of-stake assets.
According to CoinMarketCap, in the first twenty-four hours after Cardano’s recent “hard fork,” also known as a change to its protocol, more than one hundred smart contracts were deployed on the network. Since then, the network has experienced exponential growth. According to CoinDesk, an upgrade that took place on September 22, 2022, improved the network’s programmability and made it possible to achieve faster speeds without compromising security.
Since its introduction in 2020, polkadot has developed into one of the most advantageous cryptocurrencies to invest in for the long term. As of the 31st of January, its market cap was over $7.24 billion. Not only is it a cryptocurrency, but it’s also a blockchain network where developers can create new decentralized applications.
Polkadot is designed to connect multiple separate blockchains into a single unified network and even to create new chains from scratch. The integration enables users to access the network’s proof-of-stake validation of security and transactions, and it also makes it simpler to transfer digital assets such as apps and tokens between different blockchains.
A recent update makes it easier for Polkadot parachains to communicate with one another and transfer assets, which opens the door for new applications of the network.
Polkadot is going to have to compete with Ethereum and Cardano, but the fact that it was one of the first cryptocurrencies to support smart contracts gives it an advantage that analysts believe it will be able to keep.
When considering a cryptocurrency investment for the long term, Chainlink is currently ranked as the fifth-best option. Chainlink is a decentralized network built on Ethereum that went live in 2014 and provides real-time data from off-blockchain to on-blockchain smart contracts through the use of nodes and oracles. According to Securities.io, the company’s objective is to build the very first blockchain oracle network in the world.
Oracles are the people who developed some of the most significant blockchain technology and are essential to the progression of blockchain.
According to Benzinga, the Chainlink 2.0 upgrade will build off-chain networks on top of oracles to reduce the computational strain on the Ethereum mainnet. This upgrade was described in a white paper that was published in 2021. According to the white paper, the upgrade will also include the implementation of staking, which will increase network security by providing individual nodes with “strong economic incentives to behave reliably and correctly.”
Transactions on the network can be facilitated with the use of the LINK token, which trades under the symbol CHAINLINK.
As of the 31st of January, it had a market capitalization of $3.55 billion, placing it among the top 25 largest cryptocurrencies.