Three letters summarize the general state of the cryptocurrency market: UGH. Some use the term "cryptocurrency winter" to describe the dark cloud that hovers over many cryptocurrencies.
Gone are the days when you could buy almost any digital token and see them skyrocket on platforms like Bitcoin Pro. What is the best cryptocurrency to invest in right now?
Think short term
It is much easier to answer this question if we only focus on the short term. Not all cryptocurrencies are sinking like a brick. One type of cryptocurrency has held up quite well. I am referring, of course, to stablecoins.
As stablecoins try to anchor their value to an underlying asset, they tend to be much less volatile than other cryptocurrencies. It is possible for stablecoins to lose their anchors (as in the case of the TerraUSD and Terra fiasco). However, many of the major stablecoins have not experienced such a drama.
For example, the price of Tether has hardly changed in the past 12 months. Tether is the largest stablecoin by market capitalization.
Likewise, the second largest stablecoin - USD Coin - has only moved a fraction of $ 0,01 in the past year. Both Tether and USD Coin are pegged to the US dollar.
To make money by investing in stable coins, however, you need to stake your own coins. The best rates I've seen recently for holding Tether and USD Coin are around 12%. It's not a dizzying return, but it's far better than the losses many cryptocurrencies have experienced this year.
Think long term
If you prefer to think long term, there are several factors to consider. The current sell-off could represent a great opportunity to buy cryptocurrencies that are likely to thrive over the next decade and beyond.
Bitcoin is currently the most popular cryptocurrency. Its nearly $ 400 billion market cap is much larger than any other digital currency. Many argue that Bitcoin is the most likely cryptocurrency in the long run.
However, Ethereum offers some clear advantages over Bitcoin. Its blockchain is widely used. More than 40 of the largest cryptocurrencies by market capitalization are built on the Ethereum platform.
On the other hand, there is a long list of smaller digital tokens that are trying to oust Bitcoin and Ethereum. Many of them have faster blockchains, higher capacity and lower transaction fees.
The best answer
Probably the best answer to what is the best cryptocurrency to buy right now is… it depends. More precisely, it depends on your investment style.
If you are risk averse, you better avoid cryptocurrencies altogether. We may not have seen the worst yet. Cryptocurrencies could sink even further and take years to recover. Maybe they will never fully recover. Stacking stablecoins could be a better alternative than buying other cryptocurrencies. However, this option carries some risks.
If you are more aggressive, but still don't feel comfortable seeing your investments drop in the short term, buying and staking a stablecoin is probably more suitable for you. My choice in this scenario is USD Coin for its stability and transparency on the underlying reserves.
But if you don't worry about temporary losses and remain optimistic about the long-term future of cryptocurrencies, I believe Ethereum may be your best bet. Sure, some rivals could gain ground in the coming years. However, I believe that Ethereum will maintain its leadership with the imminent merger of the Ethereum mainnet with the Beacon proof-of-stake chain and subsequent updates.