Building the Best Long-Term Crypto Portfolio: Low-Risk Options

Are you interested in creating a cryptocurrency portfolio with a long-term perspective while minimizing risks? The crypto market can be daunting, but with the right strategy, you can build a robust portfolio that stands the test of time.

Investing in cryptocurrencies can be a real bummer if you do it at the wrong time where you can suffer some serious damage to your investment capital. For example, Cardano(ADA) was for a long time one of the best investments in 2024 where it gained more than 900% in value ($0.35 in January, $2.75 in September).

Ultimately, if you decided to invest some of your capital or savings into Cardano(ADA) when the price was around $2.70 you timed the market very badly. Additionally, until the time of writing, the price of ADA went continuously downwards which leaves you with a 90% loss 😮

For this reason, is there another way to enter these volatile markets? Are there any low-risk cryptocurrencies available to buy? In this article, I’ll explore the best low-risk cryptocurrencies for long-term investments.

Finally, before taking off, I want to mention that I’m not a financial expert and you should do some research as well before investing any of your capital. So, let’s go 👍

Are there any Low-Risk Cryptocurrencies?

First of all, what does a low-risk cryptocurrency actually mean? For example, is a cryptocurrency with a low price automatically less risky? Of course, this doesn’t have to be the case! When you buy crypto at a low level at price it can still go down by 50% or even more.

I think to define a low-risk cryptocurrency you can define this into two parts: price and value. In other words, every cryptocurrency is given a certain price($) at a certain point in time. Also, you can value a cryptocurrency project for its innovative concept and continuity over time.

Bitcoin and Ethereum are some of the eldest and most highly-priced cryptos that have proven to give value to the world. Consequently, if you follow the price charts of these cryptos you can see a rising trend in price over time. As a result, you can say there is a rising demand which makes them one of the most trusted cryptocurrencies.

What Makes a Cryptocurrency Low-Risk for the Long Term?

When building a long-term crypto portfolio, it’s essential to consider cryptocurrencies that offer stability and have a track record of reliability. Let’s explore the best options:

Bitcoin (BTC): The Gold Standard of Cryptocurrency

Bitcoin, often referred to as digital gold, is the pioneer of the crypto world. With over a decade of existence, Bitcoin has established itself as a store of value. Consequently, this makes it an ideal choice for long-term investments. Its limited supply and widespread adoption contribute to its low-risk profile.

Ethereum (ETH): The Smart Contract Innovator

Ethereum’s smart contract platform has transformed the blockchain landscape. While it may not have the same history as Bitcoin, Ethereum’s innovation and significant growth make it a compelling option for long-term investors. Its role as the foundation for decentralized applications (DApps) ensures its relevance in the crypto space.

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Stablecoins: The Pillars of Stability

For a long-term crypto portfolio, stablecoins are essential to mitigate volatility. These cryptocurrencies are pegged to stable assets like the US dollar, offering price stability. While they won’t provide substantial gains, they act as a safety net during market downturns.

Examples of Stablecoins:

• USDT (Tether): Pegged 1:1 to the US dollar, USDT provides stability and is widely used for value transfer between blockchain networks.
• USDC (USD Coin): Similar to USDT, USDC maintains a 1:1 peg to the USD and is issued by regulated financial institutions.
• BUSD (Binance USD): BUSD is regulated by the New York State Department of Financial Services and offers stability for various transactions, including those in DeFi.

Low-Risk Cryptocurrency Comparisons

The cryptos mentioned earlier are divided into several statistics. In addition, data is based on price, market cap, type of coin, and age(time in the market). Remember that the data is accurate at the time of writing but can be subject to change over time.

🏷️Name	💵Price	💵Market Cap	❓Type	✔️Age
Bitcoin(BTC)	$26100,-	$509 Billion	coin	>10y
Ethereum(ETH)	$1602,-	$190 Billion	coin	8y
Litecoin(LTC)	$62,-	$4.5 Billion	coin	10y
USDT	$1,-	$58 Billion	stablecoin	7y
USDC	$1,-	$48 Billion	stablecoin	4y
BUSD	$1,-	$14 Billion	stablecoin	4y

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Bitcoin

Bitcoin, the founder of all cryptocurrencies, is the first decentralized cryptocurrency. Originally described in a 2008 whitepaper by a person, or group of people, using the alias Satoshi Nakamoto. It was launched soon after, in January 2009.

Particularly, Bitcoin is a peer-to-peer online currency, meaning that all transactions happen directly between equal, independent network participants. All this without the need for any intermediary to permit or facilitate them. Bitcoin was created, according to Nakamoto’s own words, to allow “online payments to be sent directly from one party to another without going through a financial institution.”

Some concepts for a similar type of decentralized electronic currency precede BTC. However, Bitcoin holds the distinction of being the first-ever cryptocurrency to come into actual use.

Starting to invest in Bitcoin can be considered as low risk if you decide to hold for a long period of time(HODL). In addition, Bitcoin(BTC) can be traded or bought on a global scale where Binance and Coinbase are the most popular platforms to buy.

Ethereum

Ethereum is a decentralized open-source blockchain system that features its own cryptocurrency, Ether(ETH). ETH works as a platform for numerous other cryptocurrencies, as well as for the execution of decentralized smart contracts.

Initially, Ethereum was described in a 2013 whitepaper by Vitalik Buterin who is the main developer and founder. Buterin, along with other co-founders, secured funding for the project in an online public crowd sale in the summer of 2014. The project team managed to raise $18.3 million in Bitcoin, and Ethereum’s price in the Initial Coin Offering (ICO) was $0.311, with over 60 million ETH sold. Taking Ethereum’s price now, puts the return on investment (ROI) at an annualized rate of over 270%, essentially almost quadrupling your investment every year since the summer of 2014.

Ethereum has pioneered the concept of a blockchain smart contract platform. To sum up, smart contracts are computer programs that automatically execute the actions necessary to fulfill an agreement between several parties on the internet. Similarly, they are like digital agreements that help people do business directly with each other, without needing someone else to make sure everything is fair. This makes transactions cheaper and more dependable.

Nowadays, many other blockchain networks are reusing the technology of Ethereum for their own projects. Good places to buy ETH are Binance, Kraken, Coinbase, or Kucoin.

Litecoin

Litecoin (LTC) is a cryptocurrency that was designed to provide fast, secure, and low-cost payments by leveraging the unique properties of blockchain technology.

The cryptocurrency was created based on the Bitcoin (BTC) protocol, but it differs in terms of the hashing algorithm used, hard cap, block transaction times, and a few other factors. Litecoin has a block time of just 2.5 minutes and extremely low transaction fees, making it suitable for micro-transactions and point-of-sale payments.

Indeed, because of the fast processing times of transactions and higher coin supply(84 Million), Litecoin was called the ‘silver of cryptocurrency‘. Meaning, that Bitcoin acted as gold with a total supply of just 21 Million coins.

Furthermore, Litecoin was released via an open-source client on GitHub on Oct. 7, 2011, and the Litecoin Network went live five days later on Oct. 13, 2011. Since then, it has exploded in both usage and acceptance among merchants. Finally, it has counted among the top ten cryptocurrencies by market capitalization for most of its existence.

USDT(Tether)

Another cryptocurrency token that can be classified as low-risk crypto is USDT. Additionally, it is a stablecoin (stable-value cryptocurrency) that mirrors the price of the U.S. dollar. It is issued by a Hong Kong-based company Tether. Moreover, pegging exactly 1 Tether to 1 USD is achieved via maintaining a sum of commercial paper, fiduciary deposits, cash, reserve repo notes, and treasury bills in reserves. All these are equal in USD value to the number of USDT in circulation.

Originally launched in July 2014 as Realcoin, a second-layer cryptocurrency token built on top of Bitcoin’s blockchain through the use of the Omni platform. Later it was renamed to USTether, and then, finally, to USDT. In addition to Bitcoin, USDT was later updated to work on the Ethereum, EOS, Tron, Algorand, and OMG blockchains.

In general, the purpose of USDT is to combine the unrestricted nature of cryptocurrencies — which can be sent between users without a trusted third-party intermediary — with the stable value of the US dollar.

Finally, in the current blockchain space, the Tether(USDT) stablecoin can be used differently to acquire profits: lend it out, earn interest, or provide liquidity in DeFi. All these options are at low risk and a good alternative to investing in regular cryptos.

>> Earn 12% APY with USDT on Nexo here

USDC

USD Coin (known by its ticker USDC) is another stablecoin that is pegged to the U.S. dollar on a 1:1 basis. Particularly, every unit of this cryptocurrency in circulation is backed up by $1 that is held in reserve. Particularly, in a mix of cash and short-term U.S. Treasury bonds. The Centre consortium, which is behind this asset, says USDC is issued by regulated financial institutions.

The stablecoin was originally launched on a limited basis in September 2018. Put simply, USD Coin’s mantra is “digital money for the digital age”. Furthermore, the stablecoin is designed for a world where cashless transactions are becoming more common.

Also, Coinbase, one of the biggest exchanges in the world, is one of the founders of this stablecoin. Overall, the goal of this stablecoin is to be launched on as many wallets, exchanges with other service providers, or Dapps as possible.

To acquire USDC you can do this best at Coinbase. Finally, in the current blockchain space, the USDC stablecoin can be used differently to acquire profits: lend it out, earn interest, or provide liquidity in DeFi. All these options make it a low-risk crypto and a good alternative to investing in regular cryptos.

>> Earn 12% APY with USDC on Nexo here

BUSD

Binance USD (BUSD) is a 1:1 USD-backed stablecoin issued by Binance (in partnership with Paxos). In addition, BUSD is approved and regulated by the New York State Department of Financial Services (NYDFS), The BUSD Monthly Audit Report can be viewed from the official website.

Launched on 5 Sep 2019, BUSD was primarily focused on the Binance trading platform. This platform also functions as a reliable place for this stablecoin. In particular, BUSD is a digital fiat currency, issued as ERC-20 and supports BEP-2.

On the Binance platform, this BUSD stablecoin plays an important role in transactions, payments and settlement, and Decentralised Finance (DeFi). As a result, many traders on Binance consider BUSD a low-risk crypto that can be used to park profits when there is market turbulence.

Finally, top wallets like Metamask, Trust Wallet, Trezor, Zapper, and many more allow users to hold BUSD now. Also, platforms and services, like travel booking site Travala, and payment gateways like Moonpay and Banxa.

Crafting the Best Long-Term Crypto Portfolio

Overall, it’s time to build a decent portfolio that acts as a solid base in the volatile crypto markets. When constructing a long-term crypto portfolio, diversification is key. Consider allocating a portion of your portfolio to Bitcoin and Ethereum for stability and growth potential. Supplement these core holdings with stablecoins to mitigate risk during market turbulence.

Sample Long-Term Crypto Portfolio:

1. Bitcoin(40%)
2. Ethereum(30%)
3. USDT(20%)
4. USDC(10%)

This diversified approach ensures that you have exposure to potential long-term gains while safeguarding your capital with stable assets. On top of that the crypto markets allow you to earn passive income over stablecoins. Meaning, that you can earn additional cryptocurrencies even if the market goes sideways.

Related: Low-risk Crypto Trading: Play it Safe with These Strategies

Conclusion: Building a Reliable Long-Term Crypto Portfolio

In the volatile world of cryptocurrencies, constructing a low-risk, long-term portfolio is a wise approach. While these investments may not offer rapid, astronomical gains, they provide stability and a hedge against market turbulence. Finally, when you construct your best long-term crypto portfolio, make sure to keep following the latest market developments.