Can Cryptocurrencies be Considered a Long-term Investment?

Can Cryptocurrencies be Considered a Long-term Investment

Cryptocurrencies refer to digital currencies that are generally traded on a blockchain, which is a decentralized distributed ledger containing information that is available and accessible publicly. Cryptocurrencies are generally used either as a currency to buy access or things or as a utility token designed for a particular purpose such as granting access to a specific platform.

Cryptocurrencies are generally considered a good investment option to make quick returns. This is because these digital currencies are highly volatile and their values change very abruptly. So, investors/traders can make great profits in a very short time. However, there is a significant risk involved with crypto trading because the price may also drop significantly and abruptly, which means investors can lose all their money in an instant. You can consider it like intraday trading in the stock market.

Investing in cryptocurrencies

There are two ways to invest in cryptocurrencies – short-term and long-term.

Short-term investing in cryptocurrencies is also called trading, where the investment horizon is generally a day or so, and the investor wants to make as much profit as they can in a short period of time. As one can imagine, this type of crypto investment is full of risks and may not be suitable for everyone.

Then comes long-term investing in crypto, where the investment horizon is a minimum of one year or so. Cryptocurrencies generally have a higher long-term investing horizon because they are more volatile than any regulated currency or an asset like stocks.

However, people often wonder whether it is actually a good idea to invest in crypto for the long term. Can you make similar or better profits from crypto in the long term? We think so. Here’s why.

Why are cryptocurrencies a good long-term investment?

The process of investing in cryptocurrencies for the long term, which is commonly referred to as holding or HODLing in crypto slang, involves buying and holding cryptocurrencies for at least one year before you could sell them, hopefully for a profit. The idea is that over the long term, the market ups and downs get even and there is a good chance to end up in profit. In other words, it’s a good way to reduce the risk involved in the trading of cryptocurrencies. There are other benefits as well.

If you check the historical data of stocks and cryptocurrencies, the average annual returns in the case of cryptocurrencies are much higher, about 30-40% per year as compared to 11-12% returns of market-linked equities.

Another benefit of long-term investing in crypto is that you can save huge on trading fees. Since you will not be trading or making transactions very frequently when investing for the long term, you need not pay trading fees to exchanges. At the same time, long-term investing removes the emotional factor, which happens to be a major reason for the loss in trading markets.

Lastly, there are some really good cryptocurrencies and projects that can give maximum benefits and returns only when you stay invested for the long term. For example, the Greeny token is a utility token backed by the Green Uni Network project, which aims to make it affordable and accessible for everyone to get genuine European diplomas irrespective of their financial status. The project is under development and will take at least a year to show actual progress, but the tokens are already in the market and can be purchased right now under the offer price (with a special bonus offer in the presale). In a year or so, investors of the Greeny token will see really amazing profits once the project is launched in the market.


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