It’s been more than ten years since the most well-known cryptocurrency Bitcoin was launched. Now there is a multitude of digital tokens available for traders like you and me to choose from. So, you might be asking yourself which are the best cryptocurrencies to invest in 2021? Are you going to go for the big boys like Ethereum or Litecoin? Will you take on a new but potentially revolutionary project like Uniswap? Or do you take the safer, more secure option such as say - Bitcoin?
We’re going to help guide you through this confusing torrent of different projects and assist in separating the quality from the noise. In this article, we are going to give an overview of the latest news and developments from some of the industry’s most promising projects to help you decide which cryptocurrency to invest in.
Why you should think about investing in cryptocurrencies in 2021
A lot of people think that cryptocurrencies and the technology behind them are the way forward for the world of finance and it’s not too far-fetched to have that belief as there are innumerable examples of big banks teaming up with blockchain startups to improve or expand on their products. Digital currencies are superior to traditional fiat currencies in many ways such as quick transaction speeds, transparency and much lower fees.
As an investor, there are just five main reasons to keep in mind when wondering if you should invest in cryptocurrencies:
- Low minimum investment barrier: Cryptocurrencies are very divisible, which means that you can buy smaller fractions. This allows for a very low investment barrier meaning anyone can get involved and you can have a very diverse portfolio
- Liquidity: Cryptocurrency exchanges and brokers are open 24 hours a day so you can buy, trade and sell your assets any time
- Transparency: All blockchain transactions are available and visible to everyone on the planet. This allows an omniscient level of knowledge to everyone involved in that project
- Diversity of assets: Investors can lower or mitigate risks by diversifying through the vast selection of different cryptocurrencies
- Fees: Compared with stock trading or other legacy asset classes, cryptocurrencies offer significantly lower fees
So, which cryptocurrencies to invest in?
There are new cryptocurrencies rising and falling every day in this market. Bitcoin ($BTC), however, is still the investor favorite.
Developed in 2011 by the pseudonymous Satoshi Nakamoto, Bitcoin needs no special introduction and no cryptocurrency ranking out there is complete without the original which holds about 65% of the market cap.
$BTC dipped below $5000 in March 2020 but went on to rally in anticipation of the Halving event along with general investor optimism. After the Halving in May, Bitcoin was already trading between $9000 and $10,000 before having a crazy Summer with highs of up to $12,000+.
By the beginning of September though, BTC began to lose value quickly dropping to $9000 but not for long as a very bullish rally over the next couple of months led to a high of past $14,000 (its highest price since the bull run of 2018). This is naturally very bullish and one of the major reasons why we’re sticking Bitcoin on the top of this list.
Bitcoin will most likely continue to command the cryptocurrency market and as it does, traders will consistently benefit from high liquidity no matter the health of the market. Yes, it’s volatile but unlike many other projects, Bitcoin demonstrates consistent growth.
So Bitcoin is definitely the most popular amongst investors but it’s not the most influential - that award goes to Ethereum. The reason for that is that Ethereum allows anyone to build on its blockchain, anyone can build their own decentralized app (or dApp) with Ethereum and they have.
Ethereum, which was founded in 2014, today finds itself at the helm of the DeFi (decentralized finance) revolution. If this popular and growing trend continues to bubble into 2021 then we will definitely see the interests of institutional and retail investors grow. That is bullish for $ETH.
By the end of September 2020, Ethereum’s market cap skyrocketed by 60% from $25 billion to $40 billion and at one stage, one token was worth $483 before sliding down to $358. In the weeks after, Ethereum shocked investors when it reached $410 and continued to rally alongside Bitcoin to its price of $459 as of November 12th 2020.
With such a low price, Ethereum is a very viable investment option for those just getting started in the cryptocurrency market. The strength of the $ETH token is pretty correlated with the scale of the network so that means the more dApps and projects are launched on the network, the more strength the token will have.
The rise in popularity of DeFi products alongside a successful deployment of the Ethereum 2.0 network upgrade should indicate a very positive signal for Ethereum’s price in the coming months. We wrote a whole article dedicated to the price analysis of Ethereum and where we think it's going here - have a read!
Ripple’s XRP token used to be the third-largest cryptocurrency before it was usurped by Tether ($USDT) but what does that actually mean from an investment standpoint and is it as lucrative as it once was?
In unison with every other token on the market, $XRP also lost a lot of value in the wider crash at the beginning of the year. Since then, like most, it has risen from $0.15 to a more healthy $0.25.
Despite having dropped one place to become the fourth biggest cryptocurrency in the market, $XRP is still very relevant as the fuel for the open-source platform developed to facilitate quick and dirt-cheap transactions, Ripple. Over the years, this company has garnered the trust of a number of traditional financial giants including JP Morgan, HSBC, Moneygram and many others.
Finance goliath MoneyGram made an $11,000,000 deal with Ripple to use its blockchain to offer a faster payment solution
“MoneyGram continued to expand its strategic partnership with Ripple as the first money transfer company to scale the use of blockchain capabilities,” the company announced via its official blog.
This means that MoneyGram will depend heavily on Ripple’s ‘On-Demand Liquidity’ which is a service that uses $XRP to run and the main reason why people are so bullish on Ripple right now.
Azimo, another money-transfer company also revealed that it will partner up with Ripple for a similar deal leading to even more speculation that Ripple will boom.
As development continues, Ripple has already revealed information that it plans to expand into lending, enabling low-cost, cross-border financing. The service is available to customers who use ‘On Demand Liquidity’ on RippleNet.
A lot of cryptocurrency investors will tell you that a global transition from the traditional financial system to one on a blockchain is imminent and because Ripple offers to facilitate this transition on an institutional level, the token could definitely be one of the best cryptocurrencies to invest in 2021.
It is certainly one of the tokens on this list with the most potential. It has solid technology and a rapidly-expanding network which opens new doors in international banking and payment networks,
More and more companies will join the list of those partnering with Ripple and as they do, experts expect the price to increase significantly. Read our full and complete $XRP price prediction in its own article here.
Chainlink is a token that gives its users access to a ‘DON’ (Decentralized Oracle Network’ which enables trustless data streams which can help trigger smart contracts. Smart contracts are agreements between two parties with the transactions being recorded on the blockchain and you might already know that they are core to the powerful Ethereum network. The issue is that smart contracts can only be properly executed through the use of real-world data when specific conditions are met.
Chainlink has come up with a great system that pays data providers $LINK for ensuring the validity of the data which is provided to trigger these smart contracts. This method ensures confidence in the Chainlink platform and as with others mentioned in this list, the rising trend in DeFi will aid $LINK in becoming a hot contender for 2021.
Uniswap is an Ethereum-based DeFi exchange that allows anyone to exchange any ERC20 token freely. The protocol was developed by founder Hayden Adams who says he was inspired by Vitalik Buterin, creator of Ethereum.
In the Summer of 2020, Uniswap launched its own initial token $UNI which many in the industry saw as a potential ‘pump and dump,’ but the price continued to rise after launch. The project is interesting for investors as it stands in the front line of the decentralized finance trend. Many investors liken it to Ethereum in its ICO times but others think it could just be hype.
According to the Uniswap team, there is no official roadmap however they say they will continue working on the path to an even more decentralized platform and that we can soon expect the launch of Uniswap V3 which promises improvements to tangibility and capital efficiency on the platform.
Whatever you think, as of the end of 2020, $UNI is continuing to rise alongside the cryptocurrency market overall and should this trend continue - Uniswap is in a prime position to pop in 2021.
Cardano is another more-established and reputable project on the list and was announced in 2014. Its goal is to become the go-to for large-scope financial apps. Its decentralized ecosystem is powered by $ADA - the native cryptocurrency.
Speed and reliability are two of Cardano’s focal points but as these are common features of most projects, this is not what sets Cardano apart. Cardano’s network is layered which makes it extremely flexible when updating. This feature is attractive to decentralized app developers and many crypto enthusiasts believe that a lot of services will flower in Cardano’s $ADA ecosystem and consequently push the value of the token higher.
Cardano depends on its tight community of tech-oriented developers with partnerships springing up with many educational facilities such as the University of Malta which adds to its credibility.
Cardano is trading at $0.107 after a healthy summer with highs of $0.15 and its potential is growing as it continues down the path to having its own blockchain. Cardano recently transitioned to Shelley which was the second part of its roadmap and that stimulated the price greatly so investors expect many highs to come in 2021. Specifically, many $ADA investors are expecting a 2000% increase in the network so there are certainly worse ways to invest at the moment.
We’re not talking about the 80s movie, $TRON is a cryptocurrency which was founded by the TRON foundation and is currently one of the most hyped projects in the space. The CEO is Justin Sun who was added to ‘Forbes 30 Under 30 in 2017.’
TRON aims to construct a costless, worldwide digital entertainment network that allows users to distribute and share content in an effortless and cheap manner. It probably seems unnecessary but when you consider other solutions like Netflix then you begin to understand the niche that TRON wants to fill. Netflix promises to curate, concentrate and display your content to millions of people but all that comes at a large cost for the content creator.
TRON removes the need for a mediator and enables everyone and anyone to put their content on its ecosystem which is built on a blockchain. For the publishers, this gives them a special opportunity to bring down the price of their distribution channels. For others, the content consumers like you and me this might imply lower fees to access that content. $TRX is the token that makes this whole system go around.
More and more organizations are beginning to integrate TRON into their platforms and as they do, the price continues to grow. Unbelievably, TRON hosts more dApps than Ethereum which has led many investors to speculate that TRON is going to be a lucrative option for investment in 2021.
After Bitcoin, there was Litecoin ($LTC) and because of that, this altcoin has many similarities to its older sibling. The network is way cheaper and easier to keep up, however, which means it’s also significantly less resource-intensive. Like Bitcoin, its supply is capped and there will only ever be 84 million Litecoins and as of November 2020 miners have mined approximately 65 million of those.
Litecoin touts great usability and speed being 4x faster than Bitcoin which makes sending and receiving payments as quick as sending a Whatsapp message. Litecoin has very low fees too and is in many cases cheaper than what a credit card company would charge.
The price as of November 2020 is $64 after rallying from a sluggish $46 in the overall Autumn crypto surge so it’s not the most bullish option but with a market cap of more than $3bn and big growth on the horizon, you should definitely consider adding this to your portfolio in 2021. If history is set to repeat itself in the next bull run then $LTC will perform well as in 2017, Litecoin showed an impressive performance and grew more than 8000%.
Despite the fact some see Litecoin as Bitcoin Lite and some kind of spinoff, it should not be completely dismissed as such. As we mentioned before, not only is the cryptocurrency a lot quicker than Bitcoin - it has also revealed some pretty interesting news throughout 2020.
The RPG ‘LiteBringer’ was launched which led to a massive wave of new transactions of $LTC. The Litecoin Foundation said that the launch of the game caused transactions to triple in less than a week and more than three-quarters of those were from the game. This movement was so encouraging to some investors that estimates for $LTC’s price in 2021 are as high as $600 according to CoinSwitch. Keep your eyes on Litecoin and have a good read through our dedicated Litecoin price prediction article.
Bitcoin Cash ($BCH)
In 2017, there was a big debate in the Bitcoin community around the topic of scalability which eventually led to a new blockchain-based on the original protocol. The new blockchain would increase its block size to increase the number of transactions possible on the ledger. This new blockchain and its cryptocurrency are today called Bitcoin Cash. Fans of the token talk about on-chain scaling solutions while more traditional Bitcoiners prefer off-chain solutions such as the Lightning Network.
As soon as the split occurred, Bitcoin Cash or $BCH quickly rose to prominence and became desirable for all sorts of cryptocurrency investors. It is now the world’s fifth-largest cryptocurrency when looking at market capitalization with $4.72bn.
Like most cryptocurrency price forecasts, predictions for Bitcoin Cash differ wildly but the cryptocurrency traders blog StormGain has estimated that it could rise to $500 in five years from 2021. This could be good news for $BCH investors in the next few years.
This cryptocurrency takes its inspiration from Bitcoin’s codebase and was launched in 2016 as a ‘privacy token.’ In other words, a cryptocurrency that masks transactions from outside parties. It sits at number 33 in the list of largest cryptocurrencies by market cap at the time of writing.
A couple of long-term $ZEC forecasts expect the price to decrease in a couple of years after spikes throughout 2021 which means that there is a lot of potential in this asset if you know what you are doing.
$ZEC could be a great option for a seasoned investor but perhaps a little too volatile for those who are just getting started. Whatever you do, remember that in the cryptocurrency trading world, timing comes before all else - grabbing some Zcash when its price is down and selling it off during the spikes of high growth is not a bad plan.
Apart from its robust privacy focus, Zcash isn’t too different from other cryptocurrencies and just like Bitcoin, it has a fixed supply of 21,000,000.
$ZEC’s price, like most altcoins, is also intrinsically tied to the general market performance and in 2019, the price peaked alongside Bitcoin’s rally with a value of $112 so with that in mind and the recent bullish trend - you can expect Zcash to follow.
Ready to invest in cryptocurrencies?
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Disclaimer: The above article is merely an opinion piece and does not represent any kind of trading advice or suggestions on how to invest, how to trade or in which assets to invest in! Always do your own research before investing and always (!) only invest what you can afford to lose!
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