The Most Promising Cryptocurrency 2021: What to Invest In
Want to discourage experienced analysts? Ask them about the most promising crypto and predictions for 2021.
This year has already become a landmark for the crypto market, as it was able to overcome the $1 trillion mark. And after the first few months of 2021, the crypto market capitalization almost doubled.
No one knows whether the crypto market will continue its wave-like growth throughout 2021 or soon we will see deep correction as after 2017.
The same applies to selecting the best cryptocurrency for 2021. There are more than 9,000 different cryptocurrencies on the market which have their own set of features and adoption level. So the choice mostly depends on the investor’s priorities and investment strategy.
If “the most promising crypto” for you is the one with the best performance at the end of the year, then it is worth noticing one thing. In most cases, such cryptocurrencies are altcoins with nascent popularity. However, investing in these projects is quite risky, because such coins have extremely high volatility.
Every year some little-known coins experience explosive growth that few would expect. For example, in 2020 ZAP and AAVE skyrocketed by more than 6000% and 5000% respectively. But finding such gems can be more about luck than analysis. So, it is also worth paying attention to established cryptocurrencies that have already proven to be a great way to invest in the long term.
Here are some cryptocurrencies that have already shown explosive growth in 2021 and may show even better performance by the end of the year.
Bitcoin is the most famous cryptocurrency that continues to be a beacon for the market. For many investors, the crypto market is associated with Bitcoin only, and this is not surprising since BTC dominance is more than 50%. It is one of the reasons why other cryptocurrencies quite often move in the wake of Bitcoin.
As history shows, the Bitcoin price has a kind of cyclicality, experiencing growth within 1-1.5 years after the halving. The last halving took place in May 2020. So, Bitcoin still has a chance to reach new highs with periodic corrections.
Also, Bitcoin has the highest level of acceptance among institutional investors. It can be found on any cryptocurrency exchange, and it has relatively high liquidity compared to other coins, making it less volatile. Due to its deflationary nature, Bitcoin is already being used as a store of value and an asset to hedge against inflation. This makes Bitcoin a promising asset for long-term investment.
Ethereum is different from Bitcoin because it is not only a cryptocurrency. It’s also a network for smart contracts that allows developers to create their own cryptocurrencies and decentralized applications. A lot of projects and coins are Ethereum-based and this creates support and demand for ETH.
For example, the DeFi sector which soared during 2020-2021. If in March 2020 the total value locked in DeFi was around $500 million, then in March 2021 it was more than $40 billion. NFT hype in 2021 benefited Ethereum as well. All of this increased the demand for ETH and helped the price update its all-time high.
Besides, the Ethereum network is currently going through a number of important changes, including the transition from Proof-of-Work to Proof-of-Stake. This update aims to increase network scalability, and this could open up new growth and development potential for Ethereum.
If Bitcoin is called digital gold, then Litecoin is often considered digital silver. Litecoin’s network is outspeeding Bitcoin by almost four times when it comes to transaction throughput. This makes Litecoin more suited to daily transactions than its older brother.
Litecoin price correlates quite strongly with Bitcoin price, so it also experienced a rally over the past six months. But unlike Bitcoin, Litecoin is just beginning to increase its adoption. The Litecoin Foundation is investing heavily in brand awareness right now by sponsoring the UFC and NFL. This could increase the demand for digital silver because more people will use and buy Litecoin online.
Traditional companies have also become more willing to add Litecoin to their platforms lately. For example, Litecoin is one of 4 cryptocurrencies that Paypal has added to its platform. The rise in Litecoin adoption could support the coin’s price in 2021.
In 2021, Cardano (ADA) achieved unprecedented results. The cryptocurrency was able to temporarily become the third-largest cryptocurrency by market capitalization, although before that it had not even entered the top 10 for several years. The reason for this surge was a recent update that brought smart contract functionality to the Cardano blockchain.
Adding smart contracts to Cardano’s Proof-of-Stake network makes it one of the most technologically promising cryptocurrencies. In a sense, Cardano has already achieved what Ethereum is aiming for with its Ethereum 2.0 update. This makes Cardano a serious competitor to Ethereum in the field of decentralized applications.
Cardano has a fast-scalable network with low fees and a commitment to full decentralization. Also, the ADA price at the moment is only $1, which makes the cryptocurrency attractive for investing.
Since its creation, Stellar’s goal has been to become the most popular cryptocurrency for international transactions. For this, it has developed a system that allows processing payments almost instantly. That is, Stellar wants to achieve what Ripple does. That is why they are often called competitors. However, while Ripple has focused on providing its services to the banking sector, Stellar has targeted unbanked people.
Stellar has already managed to surprise both investors and analysts in 2021, surging 200% in the first week of January. And since then, Stellar has continued to conquer new maximums. Ripple faced regulatory issues and Stellar quickly started filling the void.
In the Stellar Development Foundation (SDF) roadmap for 2021, strategic pillars and goals were presented, aiming to improve usability, reliability, and developing sustainable blockchain use cases. All of this creates space for XLM to grow further and increase its adoption.