Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

2 Top Cryptocurrencies to Buy and Hold Forever

By Will Ebiefung - Nov 25, 2021 at 9:47AM

Key Points

  • Cryptocurrency valuations are softening in the near term. But the future is still bright.
  • Investors should bet on assets with brand recognition and compelling use cases.
  • The two tokens below have what it takes to meet these criteria.

Motley Fool Issues Rare “All In” Buy Alert

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Ethereum and Aave can hold their own in this increasingly uncertain economy.

Cryptocurrency assets are flashing signs of weakness in the latter half of November, with the market's total valuation dropping around 10% to $2.5 trillion in the last 15 days. But the sector's long-term outlook is still strong as investors look for an alternative to fiat currencies amid rising inflation and low interest rates in developed economies.

Let's explore how Ethereum ( ETH 1.76% ) and Aave ( AAVE 2.45% ) can benefit from these favorable long-term trends. 

1. Ethereum 

Ethereum is the first blockchain network designed to create self-executing programs called decentralized applications (dApps). These dApps expand the potential of cryptocurrency outside of just storing and transmitting value. With a first-mover advantage and scalability upgrades on the horizon, Ethereum is still an excellent bet for investors. 

Stock chart moving up, in front of a dollar bill.

Image source: Getty Images.

In a loosely regulated industry like cryptocurrency, trust is everything. And Ethereum's six-year history and $500 billion market cap (20% of the entire market) make it the crypto equivalent of a blue-chip company. This brand recognition helps it stay relevant, even as rivals like Solana (capable of handling 50,000 transactions per second, compared to Ethereum's 15) surpass it in scalability.

But Ethereum isn't resting on its laurels. Its blockchain aims to transition from its current proof-of-work (miners solve puzzles to verify transactions) to a proof-of-stake (PoS) system wherein transactions are verified using existing tokens. Ethereum founder Vitalik Buterin claims that the upgrades, dubbed Ethereum 2.0, could send the network's transaction capacity as high as 100,000 per second.

It is unclear when Ethereum 2.0 will go live, but the developers are making progress. In October, the network completed its Altair update, which is designed to help introduce a PoS system.

2. Aave

Unlike Ethereum, which is an independent blockchain, Aave is a dApp programmed on Ethereum. It offers crypto-related financial services without a centralized intermediary. And it looks poised for long-term success because of its utility for cryptocurrency investors. 

Passive income is hard to find in this economy. According to the FDIC, the average annual percentage yield (APY) on savings accounts is just 0.06%. And many public companies prefer to reinvest their profits or repurchase shares instead of paying a meaningful dividend. This lack of generous yields creates an opportunity for Aave, allowing users to earn interest (undertaking exchange-rate risk) on their cryptocurrency holdings by lending them to other users through liquidity pools -- a "bank" of digital assets from which the borrowers can draw.

Aave's deposit yields can hit double digits for less-liquid assets. But popular stablecoins (cryptocurrencies pegged to fiat currency) like DAI and Gemini Dollar boast APYs of 2% to 3%. As an Ethereum-based dApp, Aave faces the same challenges as Ethereum with transaction capacity and fees. But investors should expect the platform to get a boost as the Ethereum 2.0 upgrades go live. 

Investing for the long term 

Cryptocurrencies are notoriously volatile. But Ethereum and Aave look likely to outperform over the long term because of their strong fundamentals. In addition, both assets have early-mover advantages and will benefit from the Ethereum 2.0 upgrades, making them top choices for investors will a long-term horizon. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Ethereum Stock Quote
Ethereum
ETH
$4,711.82 (1.76%) $81.51
Dai Stock Quote
Dai
DAI
$1.00 (-0.01%) $0.00
Solana Stock Quote
Solana
SOL
$222.86 (6.81%) $14.21
Aave Stock Quote
Aave
AAVE
$263.37 (2.45%) $6.29
Gemini Dollar Stock Quote
Gemini Dollar
GUSD

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
673%
 
S&P 500 Returns
142%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/01/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.