There are many cryptocurrencies – thousands, in fact. Each has passionate advocates who claim it will bring life-changing results and be the next big thing. But the reality is that only a small minority can actually be considered a wise long-term investment.
For those looking for less risky options and gains that only cryptocurrencies can offer, three particularly stand out.
Let’s take a closer look Aave (CRYPTO: AAVE), Ethereum (CRYPTO: ETH)And Bitcoin (CRYPTO:BTC) — three cryptocurrencies with strong fundamentals and compelling future prospects.
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1. Aave: The backbone of the DeFi economy
Aave is a decentralized finance (DeFi) protocol that has quickly become a cornerstone of the growing digital economy. Simply put, Aave works like a bank. It allows users to contribute their crypto assets to earn returns and also allows them to borrow against these assets. This dual functionality has made Aave a key player in decentralized finance, which aims to eliminate the need for traditional financial institutions like banks and lenders.
To date, Aave has secured over $20 billion in assets, an impressive milestone that reflects the trust it has gained in the DeFi space. This success has propelled Aave to the forefront of the DeFi movement, generating significantly more revenue than any other protocol over the last year. And things could get even better for Aave token holders.
There is the introduction of a “fee change” in the works, which would distribute a portion of the protocol’s revenue to Aave token holders. This could provide additional value to investors and increase the attractiveness of holding Aave tokens over the long term.
2. Ethereum: a dormant blue token with big potential
Ethereum may not seem like a surprise on this list, but its performance over the past year has lagged behind some of its peers. Despite this, Ethereum remains the most liquid, active and widely used blockchain in the entire cryptocurrency space. Several tailwinds on the horizon could provide a significant boost to its price and long-term value.
In the short term, Ethereum should benefit from the same DeFi resurgence that could revive Aave. More than half of all DeFi activity takes place on the Ethereum blockchain. This means that if there is an increase in DeFi activity, Ethereum will naturally be one of the biggest beneficiaries.
But DeFi isn’t the only one that can drive Ethereum’s growth. Ethereum has several long-term catalysts that could push its price higher. One is the tokenization of real-world assets. Whether it’s real estate, art, or even company shares, tokenization has the potential to move billions of dollars of assets onto the blockchain. Ethereum’s established network and smart contract capabilities make it the ideal platform for this transformation.
Additionally, Ethereum’s track record of successful upgrades and well-defined roadmap for improving scalability make it well-positioned for future growth. Although its price has faced recent challenges, long-term investors could see this as a great opportunity to invest in one of crypto’s premier assets before the next wave of adoption accelerates .
3. Bitcoin: the ultimate safe haven asset
Originality may not win it any points, but Bitcoin remains a top choice for investors looking for long-term growth. In fact, the path forward for Bitcoin is perhaps the clearest of all cryptocurrencies. Its established position as the original and most valuable cryptocurrency gives it a significant advantage as it continues to evolve and grow.
Several near-term factors could fuel Bitcoin’s growth. One of them is the recent halving, which reduced Bitcoin’s inflation rate below 1%. This supply shock usually leads to an increase in prices, as has been the case in previous halving cycles. Additionally, growing interest in spot Bitcoin exchange-traded funds (ETFs) has increased buying pressure, with institutional investors eager to gain exposure to Bitcoin.
Additionally, Bitcoin’s best performances often occur towards the end of the year, so it could see another strong finish this year.
However, in the longer term, it is the long-term macroeconomic factors such as rising public debt, rising inflation and geopolitical uncertainty that make Bitcoin such an attractive asset. As fiat currencies continue to lose purchasing power, more investors will seek to preserve their wealth and Bitcoin will likely become the ultimate hedge against economic instability.
With the price of Bitcoin currently hovering around $60,000, it’s not hard to imagine it hitting six figures in the near future. Some experts even believe that Bitcoin could one day reach seven figures as its role as a safe haven asset becomes more important. With its supply limited to 21 million coins, Bitcoin is able to continue its historic journey for years to come.
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RJ Fulton holds positions in Aave, Bitcoin and Ethereum. The Motley Fool posts and recommends Aave, Bitcoin and Ethereum. The Motley Fool has a disclosure policy.
