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As investors seek long-term opportunities in the digital assets world, many focus on top tier cryptocurrencies, sorting their list by market capitalization.
Such a starting point certainly makes sense, given the relative stability a long-term track record and growth metrics provide prospective investors. On this list of digital assets worth holding for the long haul are three relatively large-cap cryptos. I think they remain the gold standard in the world of Decentralized finance (DeFi).
Of course, investors can focus on plenty of sub-sectors in the crypto realm. DeFi represents one of a myriad of opportunities in this space. But personally, I think long-term investors looking five to ten years out would be best-served focusing their energy on assessing projects in this space. That’s the direction the sector is headed — investors and users want to see utility generation. These projects provide plenty.
Let’s dive into three of the best options for long-term investors who are looking to diversify into crypto right now.
Ethereum (ETH-USD) really requires no introduction. The largest player in the decentralized finance economy, Ethereum is well-known for its innovative smart contract platform. It’s considered one of the top cryptocurrencies due to its role in shaping the crypto landscape. ETH achieved this through the widely adopted ERC-20 standard with over 280,000 tokens built on top of its network.
Ethereum, an eight-year-old pioneer in Layer-1 blockchains, outshines rivals (including the two next picks on this list). That’s largely due to the scale and reach its network provides. Ethereum retains significant value from being a first-mover in the world of smart contracts and DeFi applications. Investing in Ethereum is essentially akin to investing in innovation, given this project’s historical track record of consistent and meaningful improvements. The network’s recent upgrades have signaled to many in the crypto space that Ethereum is far from done creating.
Ethereum’s smart contract leadership and developer support position it as a prime blockchain investment. Its transition to proof-of-stake brings eco-friendly benefits and long-term potential. Token burning and layer 2 solutions will further drive Ethereum adoption.
Solana (SOL-USD) made waves in 2021, surging by over 700% to reach a peak of $260 in November. Its innovative proof of history technology enables lightning-fast transaction processing, with a potential capacity of 65,000 transactions per second under ideal conditions. However, it also experienced a significant drop. It lost over 90% of its all-time high value during the late 2021 and early 2022 crypto market downturns.
Despite recent regulatory challenges, Solana’s cryptocurrency is trading above its June highs. Its DeFi ecosystem has shown resilience, with Total Value Locked (TVL) in DeFi app smart contracts on the Solana blockchain reaching nearly $1.1 billion. This represents its highest level since November 2022, according to DeFi Llama.
In recent SOL news, the company’s co-creator Anatoly Yakovenko aims to distribute seven million SOL tokens from FTX reserves to former customers. This move could revamp FTX and give a boost to Solana by compensating FTX customers and enhancing Solana’s growth and decentralization.
Avalanche (AVAX-USD) is a cutting-edge blockchain with DeFi focus. It has key partnerships, transaction growth, and innovation. AVAX serves multiple roles within the network. Unlike Solana, it emphasizes decentralized exchanges, setting it apart.
AVAX’s journey in the crypto world has been a rollercoaster, unlike more steady performers like Bitcoin (BTC-USD) and Ethereum. Surprisingly, it’s down 8% this year. This highlights crypto’s volatile nature. Moreover, AVAX’s unique performance stands out in the crypto market, as it’s down 8% while others like Bitcoin and Ethereum are surging. These low-correlation returns are worth noting.
Over the long term, I think each of these three tokens have their place in the market. In my view, a well-diversified portfolio of digital assets probably includes one, two, or all three of these holdings.
On the date of publication, Chris MacDonald has a LONG position in ETH, SOL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines