If you’re looking to allocate $1,000 to a cryptocurrency, there’s no reason to throw your money away. That means you’ll need to exercise just a bit of restraint and place your funds in an investment that’s more likely to gain in value over the long term than to be a flash in the pan.
Temptations are absolutely everywhere right now. So let’s dive in and nail down which cryptocurrency is worth buying and holding today, and which very popular one is practically guaranteed to light your cash on fire.
XRP (CRYPTO: XRP) is worth an investment of $1,000 because it’s the coin with one of the strongest investment theses in crypto right now.
XRP is issued by Ripple, a cryptocurrency business. XRP’s business model is to generate a tiny portion of fees for every transaction made on its blockchain. Users are incentivized to make transactions using XRP because it’s fast and cheap, and also because it’s becoming significantly integrated into the global financial system by way of banks and currency exchange houses holding it and using it.
Put simply, if a bank in one country wants to transfer funds to a bank in another country, using XRP eliminates currency exchange fees, which can range from 1% to 5% of the total amount being transferred, and international money transfer fees, which can be as pricey as $50 per transaction. Compared to legacy transfer systems like SWIFT, XRP’s transactions close within seconds rather than days. Big differences like these make the coin a no-brainer for companies that can get any kind of return on their capital across that time period, which drives demand for the coin.
The more financial institutions that use XRP, the greater its utility becomes, as there’s less need for banks to swap their tokens for their native fiat currencies. Plus, with the advent of stablecoins on the chain, users of XRP can even avoid some or all of the market risk associated with holding a volatile cryptocurrency. As if that weren’t enough, there are ongoing efforts to launch exchange-traded funds (ETFs) that hold XRP. These would give investors in the traditional financial sector the opportunity to buy and hold it, thereby driving its price upward.
There are even more reasons to buy XRP and hold it for the long term, if you’re so inclined to learn them. But compared to the next coin we’ll discuss, there isn’t much of a contest, so let’s move on.
The Official Trump meme coin, which is hosted on Solana with the ticker $TRUMP, is one cryptocurrency to avoid forever — even if it is very tempting to buy it, and even if it might have an edge or two over certain other meme coins.
As of Feb. 18, the president’s coin has a market cap of $3.2 billion. Near its peak, about 30 days prior, its market cap was $14.8 billion. Now, ask yourself: What is the mechanism by which the price of this coin will ever recover its past heights?
There isn’t one. And the longer a timeframe you consider, the bleaker the picture gets.
The fantasy that many of the coin’s holders tell themselves is that the president or his team will perform a marketing campaign designed to get more investors to buy it. Alternatively, there is a narrative that if the president can continue to draw attention to himself and to the cryptocurrency bearing his name, new investors will be drawn to buy and hold the coin for the long term as a way of demonstrating their support, or in hopes of offloading their tokens to a “greater fool” somewhere down the line. Buying the coin based on these ideas is not real investing, nor are the odds for success as favorable as simply going to the casino and literally gambling.
Compared to a coin with a real investment thesis, like XRP, the case for buying Trump’s coin is nonexistent. So don’t lose your money. Don’t buy this coin — buy XRP and hold it for at least a few years, instead.
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Alex Carchidi has positions in Solana. The Motley Fool has positions in and recommends Solana and XRP. The Motley Fool has a disclosure policy.
1 Cryptocurrency to Buy Right Now With $1,000, and 1 to Avoid Forever was originally published by The Motley Fool
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