Got $1,000? 2 Cryptocurrencies to Buy and Hold for Decades

Key Points

• Cryptocurrencies are dramatically outperforming U.S. equity markets.

• Bitcoin and XRP have an exciting combination of institutional interest and brand recognition.

• 10 stocks we like better than Bitcoin ›

Investing in the stock market is an excellent way to build wealth. But investors face the risk of fiat currency devaluation, which happens when their currency's purchasing power falls relative to other currencies. The dollar index is down almost 10% year to date, and this has completely erased the S&P 500's 6.6% gain over the same period. The Trump administration's erratic trade policy and deficit spending could make this problem worse.

The good news is that the cryptocurrency industry allows investors to diversify their portfolios into assets that aren't directly affected by dollar devaluation, helping to protect their purchasing power. Let's explore why Bitcoin (CRYPTO: BTC) and XRP (CRYPTO: XRP) could be excellent places to invest $1,000 for the long haul.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Bitcoin

Trust and name recognition are essential if an asset is to be considered a store of value. And as the first cryptocurrency, Bitcoin has a first-mover advantage that allows it to stay relevant, even against newer and more advanced blockchain networks. With prices up about 28% this year, it is trouncing the broader market. And this trend looks set to continue because of government policy and macroeconomic factors.

The Trump administration has proven to be a huge boon for crypto, both directly and indirectly. Under Trump, the U.S. government has committed to a less punitive regulatory stance toward the industry, dropping multiple lawsuits and even establishing a Bitcoin strategic reserve, which gives the asset more legitimacy. That said, Trump's unpredictable economic policy may be an even bigger advantage.

Morningstar suggests that Trump's pressure on the Federal Reserve, along with constant tariff threats, could be making international investors skeptical about holding the dollar. When the dollar weakens, Bitcoin's value may go up.

While these macroeconomic factors will likely boost the cryptocurrency industry as a whole, Bitcoin also enjoys asset-specific tailwinds. Institutional investors are piling into its exchange-traded funds (ETFs), likely because of uncertainty surrounding U.S. fiscal and monetary policy. And while Bitcoin has no intrinsic value, its brand recognition seems to be helping it outperform less well-known alternatives.

XRP (Ripple)

Like Bitcoin, XRP was an early mover in the cryptocurrency industry. The blockchain was created in 2012 (three years after Bitcoin) and improved upon the shortcomings of its predecessor with faster transaction speeds. It also enjoys strong brand recognition, and easing legal overhang may encourage much-needed institutional adoption.

In March, XRP's developer, Ripple Labs, won an encouraging regulatory win when the Securities and Exchange Commission (SEC) dropped its lawsuit against the organization. The lawsuit claimed that $1.3 billion worth of Ripple's XRP sales to institutional investors were unregistered security sales. Now that this issue seems to be settled in Ripple's favor, it may open the door for new XRP-based financial products.

Image source: Getty Images.

And according to Fortune magazine, experts expect a flood of new ETFs related to XRP and other cryptocurrencies because of the loosening regulatory environment. And this can benefit XRP by giving more risk-averse institutional investors direct exposure to the tokens on open exchanges without having to deal with blockchain-specific complexities like cryptocurrency wallets and digital storage.

Ripple Labs has also created a dollar-pegged stablecoin called RLUSD. While this asset is separate from XRP, it operates on the Ripple ledger, and XRP will be used to pay transaction fees, potentially increasing demand.

XRP prices have jumped an encouraging 40% year to date to $2.92 per token. But investors shouldn't let the low price fool them. The crypto has a market cap of $173 billion, making it the third-largest cryptocurrency behind Bitcoin and Ethereum. Although XRP can continue growing at a double-digit percentage rate, it isn't an explosive meme coin.

Should you invest $1,000 in Bitcoin right now?

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Will Ebiefung has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and XRP. The Motley Fool has a disclosure policy.