5 Most Profitable Cryptocurrencies to Invest in Now
|Cryptocurrency. Photo: Predictive Analytics Lab|
The majority of 2020 has been very kind to the cryptocurrency sector, unlike the previous few years when considerable gains were rarely seen and prices typically kept dropping.
However, 2021 saw the crypto market explode anew. Even though we are currently still only two weeks in, the sector has seen massive growth, even breaching $1tr (£732bn, €821bn) in total market cap.
Advances were seen in many different areas of the industry: Bitcoin (BTC) reached a brand-new all-time high (ATH) that is more than twice the size of its 2017 $20,000 milestone; plenty of altcoins are also well on their way to their past ATHs, and the DeFi sector has also hit a new ATH in terms of total value locked (TVL).
The altcoin market is currently performing weaker than Bitcoin itself, as even Ethereum (ETH) – the world’s second-largest coin – is still some distance away from its ATH. This clearly indicates that the time of the altcoins has not yet arrived.
However, it would not be accurate to say that this sector of the industry has been ignored or forgotten. Altcoins have performed very well thus far, too. Just not as well as they can, and certainly not as strongly as BTC itself. With that in mind, we wanted to review some of the coins that have already shown their strength so far in 2021, and potentially give traders some ideas about what crypto to invest in January, according to Capital.
5 of the Best Cryptocurrencies to Invest in Now
|Bitcoin (BTC). Photo: Bitradez|
The closest thing you'll get to a blue-chip cryptocurrency, Bitcoin has dominated the market since the first bitcoins were mined in January 2009 – but that doesn't mean it has always been smooth sailing. Bitcoin prices hit a high of around $20,000 in December 2017 before collapsing in 2018, reaching a bottom at $3,234 by the end of that year. Since then, however, Bitcoin has enjoyed a comeback as prices surged to more than $40,000 in January 2021 for a market cap of more than $1 trillion – meaning bitcoins accounted for more than 69% of the cryptocurrency market. Bitcoin has its fair share of volatility, as prices have pulled back since hitting this high, but being the biggest name in crypto gives it a worldwide acceptance that lesser-known rivals don't have, arguably making it the best cryptocurrency to buy for investors new to the asset class.
Bitcoin Cash (BCH)
Bitcoin Cash (BCH) holds an important place in the history of altcoins because it is one of the earliest and most successful hard forks of the original Bitcoin. In the cryptocurrency world, a fork takes place as the result of debates and arguments between developers and miners. Due to the decentralized nature of digital currencies, wholesale changes to the code underlying the token or coin at hand must be made due to general consensus; the mechanism for this process varies according to the particular cryptocurrency.
When different factions can’t come to an agreement, sometimes the digital currency is split, with the original chain remaining true to its original code and the new chain beginning life as a new version of the prior coin, complete with changes to its code.
BCH began its life in August of 2017 as a result of one of these splits. The debate that led to the creation of BCH had to do with the issue of scalability; the Bitcoin network has a limit on the size of blocks: one megabyte (MB). BCH increases the block size from one MB to eight MB, with the idea being that larger blocks can hold more transactions within them, and therefore the transaction speed would be increased. It also makes other changes, including the removal of the Segregated Witness protocol which impacts block space. As of January 2021, BCH had a market cap of $8.9 billion and a value per token of $513.45.
Litecoin has demonstrated excellent performance recently. It even managed to climb to the fourth place on the list of the largest coins by market cap, overtaking Ripple’s XRP for some time. Of course, XRP quickly regained this position, although it is believed that this has happened due to Asian traders’ sudden involvement, which came in fear of missing out (FOMO). However, this will likely not last for long, as XRP is in serious trouble with the US Securities and Exchange Commission (SEC).
Litecoin, on the other hand, reached a two-year high several days ago after hitting $185. This is still quite a way off its all-time high of $375, which the coin hit alongside BTC in 2017. However, given the fact that the coin started at the price of $80 on December 16, and that it doubled its price in less than a month, it is safe to say that LTC is among the best performers among the top five cryptocurrencies.
Ethereum is the second-largest cryptocurrency by market capitalization. It is an open-source, distributed computing platform that is best known for its smart contract functionality. Ethereum network allows developers to program their decentralized applications inside the network. For example, both Tether and Augur run on the Ethereum network.
Independent of the public Ethereum chain, customised networks are being tested globally, including by Microsoft (MSFT), IBM (IBM) and JP Morgan (JPM). The long-term potential of the Ethereum network is based on its ability to execute smart contracts in any field, from energy grids to home mortgages, and verify digital ownership of assets.
In the short term, the Ethereum network is set to transition from Proof of Work (PoW) to Proof of Stake (PoS), creating Ethereum 2.0. A PoS network effectively eliminates the energy-intensive mining process and is more cost-efficient. The launch is now set for July 2020 and a successful upgrade is likely to drive increased adoption and support the price of ETH.
Binance Coin (BNB)
Like Ethereum, Binance Coin is much more than a cryptocurrency – as a matter of fact, Binance Coin was originally hosted on Ethereum until the Binance decentralized exchange, or DEX, went online in 2017. The Binance DEX is a platform much like Ethereum, albeit with a different mission. The Binance DEX is a decentralized platform where users can not only buy and sell binance coins but also use BNB to convert other cryptocurrencies from one to another. This has made the Binance DEX the biggest cryptocurrency exchange on the planet by volume and has helped fuel the popularity of the digital asset. Most importantly, the Binance DEX offers a discount to users who pay transaction fees on the exchange with BNB – a smart strategy that keeps users on the platform and helps sustain Binance Coin's growth.
What to expect later in 2021?
As for the future of these and other coins and their prices, it just remains to be seen. Several prominent investors and analysts remain bullish on cryptocurrencies due to the massive amount of institutional interest. Bitcoin predictions are as varied as always, but many agree that the coin does have realistic chances to climb up to $50,000, $80,000, $90,000, with some even predicting $100,000 by the end of the year.
Of course, this is likely only in the best-case scenario, and it is entirely possible that the bears might take over as they did in 2018. However, there are several things that are different this time. For example, this rally feels a lot more genuine than the one in 2017, which is now believed to have happened due to price manipulation.
In addition, there is massive institutional demand for Bitcoin now, while the supply is rather low, which has been driving the coin’s price up. The rising prices also continue to raise awareness and drive adoption as a result, so chances are that 2021 will be a bullish year for the crypto industry.
Looking for the way to capitalize on the market’s volatility? Then you may want to consider trading cryptocurrencies with contracts for difference (CFDs) at Capital.com.
Trading CFDs offers investors the opportunity to try to benefit from both bullish and bearish price action. You can either hold a long position, speculating that the price will rise, or a short position, speculating that the price will fall.
However, note that CFDs are a leveraged product, therefore losses, as well as profits, are magnified.
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