Did you miss the Shiba Inu? My 3 best cryptocurrencies to buy and keep
Over the past year, Shiba inu (CRYPTO: SHIB) has skyrocketed to 68,000,000%, at a rate that could turn relatively small sums of money into millions of dollars. While impressive, Shiba Inu lacks real utility, and these gains were only motivated by the hype. This leaves a big void in the long-term investment thesis, especially when other cryptocurrencies have been adopted by the general public.
For example, PayPal funds last year launched the ability to buy, sell and spend cryptocurrency on its mobile apps, choosing to support just four assets: Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH), Litecoin (CRYPTO: LTC), and Bitcoin Cash. And last week AMC Entertainment Holdings made a similar move, allowing moviegoers to make payments online with the same four digital assets.
These are just two examples of the change in sentiment regarding cryptocurrency, but there is good reason to believe that more institutions will follow suit. For this reason, Bitcoin, Ethereum, and Litecoin look like long-term smart investments. Here’s what you need to know.
Bitcoin was the first widely adopted cryptocurrency, and it remains the most popular and valuable. Not surprisingly, institutional adoption is on the rise. This includes companies like MicroStrategy and You’re here, governments like Bulgaria and Ukraine, and asset managers like Grayscale Investments, owner of Bitcoin Trust in Grayscale. Collectively, institutions held 5.8% of all Bitcoin as of January 2021, but that figure now sits at 7.1%. And this trend is set to continue.
In September 2021, Fidelity released a digital asset study focused on institutional investors. Based on a survey of 1,100 respondents, Fidelity reported a year-over-year increase in “perception and attractiveness, current exposure and propensity to invest in the future.” “. In fact, 52% of those surveyed said they owned digital assets, and the three most common holdings were Bitcoin (37%), Ethereum (20%), and Litecoin (12%).
Fund manager Cathie Wood shares this sentiment, but she goes even further. Wood believes institutional investors will allocate 5% of their total funds to Bitcoin over the next five years, raising its price to $ 500,000 by 2026. Of course, no one knows the future, but it seems the thesis de Wood is already playing out, given the increase in institutional adoption so far in 2021.
Ethereum is a programmable blockchain, which means it can support smart contracts and decentralized applications (dApps), including decentralized finance services (DeFi). DeFi services are products that allow you to save, borrow, lend or invest money without going through an intermediary such as a bank. And by cutting out middlemen, DeFi products promise to reduce costs and expand access to financial services.
On that note, around $ 172 billion is currently stuck in Ethereum DeFi apps, making it by far the most popular DeFi ecosystem. More importantly, these services require computing power, which means they aren’t free. Users pay transaction fees using the native blockchain cryptocurrency. This means that the price of Ethereum is expected to continue to rise as DeFi products are adopted more and more.
Additionally, as noted above, Ethereum is the second most widely held digital asset among institutional investors. Assuming this pattern continues, it’s not hard to imagine that more institutions will branch out into Ethereum alongside Bitcoin in the years to come. And as this happens, the price of Ethereum is expected to rise.
Litecoin is very similar to Bitcoin. In fact, it was created from a modified version of Bitcoin’s source code, and these modifications give the blockchain some remarkable qualities. Specifically, Litecoin is designed to be four times faster and four times more abundant.
While Bitcoin’s supply is capped at 21 million coins and new blocks of transactions are validated every 10 minutes, Litecoin’s supply is capped at 84 million coins and new blocks are validated every 2, 5 minutes. For this reason, Litecoin is often compared to digital money, just as Bitcoin is often compared to digital gold. In other words, Bitcoin is rarer than Litecoin, but both are finite assets. And as long as the demand persists, this quality should make them more valuable over time.
Finally, as mentioned, Litecoin is the third most common cryptocurrency among institutional investors. Going forward, with more companies and asset managers diversifying their treasuries with crypto, the popularity of Litecoin is expected to translate into demand, pushing the price higher. This is why this cryptocurrency seems to be a profitable investment.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.