It can be difficult to navigate the crypto market when it seems like a new project comes up every week promising to fix or solve an existing problem.
The promise of new cryptocurrencies rarely translates into tangible results. This is why simplicity is often the best investment strategy.
Cryptocurrencies are understandably riskier due to lack of government oversight, 24/7 leveraged trading, and simply being a new asset class trying to find its appropriate value. Instead of taking even more risk and betting on the next meme coin that will inevitably drop to zero, there are more reliable strategies.
It’s not always glamorous or exciting, but every crypto investor should hold a significant amount of Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) in their wallet.
The king of crypto
Bitcoin is the most valuable cryptocurrency on the market, and for good reason. It pioneered the trail that all other cryptocurrencies have since followed.
Bitcoin has risen to the top because it is highly decentralized and extremely secure. Although not as fast as newer cryptocurrencies, Bitcoin holders can be sure that their investment is on one of the most innovative blockchains ever created.
Additionally, Bitcoin has proven that when held for the long term, its owners reap consistent profits. On average, Bitcoin has tripled every year for the past 11 years. There have been important retreats, like the one we are in now. But by averaging all the ups and downs, those who hold are rewarded.
To further quantify the benefits enjoyed by long-term holders, a report by BitcoinEconomics.io in 2019 calculated that, on average, holders make a 100% profit after holding Bitcoin for 1,235 days, or 3.38 years. .
Now, that’s just an average, and nothing’s set in stone, but it does show that those who survive market turnarounds like the one we’re seeing now are being handsomely rewarded. And compared to the rest of the cryptos out there, Bitcoin has the longest track record, which makes these kinds of stats much more meaningful.
The King of DeFi
While there are other cryptocurrencies that have been around longer than Ethereum, few have had as much of an impact on the trajectory and development of crypto as Ethereum.
Without Ethereum, DeFi probably wouldn’t even exist. Ethereum is unique because of its programmable smart contracts. These smart contracts make DeFi work. Smart contracts are the basis of decentralized exchanges, lending, borrowing, and all sorts of DeFi applications.
Since DeFi took off, many competitors have emerged to challenge Ethereum. Cryptocurrencies like avalanche, Solana, Binance Smart Chainand Spotted have all created blockchains that embed smart contracts in hopes of stealing market share.
Yet their attempts were in vain, and Ethereum still holds more than half of the entire DeFi market on its blockchain.
Ethereum’s hold on DeFi doesn’t seem to be going anytime soon. On the horizon, Ethereum could further cement its dominance over DeFi as the blockchain transitions from proof-of-work to less energy-intensive proof-of-stake. Known as “The Merge”, the change is slated for August and will bring a set of much-needed upgrades to make transactions cheaper and faster.
Whether you’re new to crypto or you’re an industry veteran, there are really only two cryptocurrencies that should be in every wallet. Few cryptocurrencies have marked the sector like Bitcoin and Ethereum. Exposure to these two is a must for any long term holder. Keep it simple, ignore short-term fluctuations, and stay consistent.