What Is the Next Big Cryptocurrency To Explode in 2021?
Cryptocurrency might have started out as a Wild West of investing dominated by mavericks, but it’s now firmly in the financial mainstream. Institutional investors and big banks treat it as a serious asset, even during a year marked by volatility and regulatory crackdowns in China and elsewhere.
If you need evidence of how volatile, consider this: As of late September, the world’s largest crypto, Bitcoin, had seen its price range from a 52-week high of nearly $65,000 to a 52-week low of less than $10,400.
Despite that volatility, many crypto investors remain on the lookout for the next big payoff. Keep reading to learn which cryptocurrencies might explode in 2021.
How to Spot The Next Big Cryptocurrency
Before figuring out which crypto might be the next big winner, it helps to understand why so many investors are gravitating toward cryptocurrency in the first place. Much of it has to do with a fundamental change in how digital assets are perceived, said Jeff Dorman, chief investment officer at Arca, a financial services firm that specializes in digital assets.
“I believe we are in the early stages of a multi-decade secular shift towards digital assets, as the evolution from an analog to digital world has been transformed forever due to COVID-19,” Dorman told GOBankingRates in an email.
He says this asset class “has now evolved far beyond cryptocurrencies” to decentralized finance, non-fungible tokens and other investment vehicles.
Profit and Gains from Crypto
But much of the public attention remains focused on crypto — largely because of the huge potential profits. When trying to identify the next big cryptocurrency, two things to keep an eye on are similar to what a stock investor would keep an eye on: market capitalization and price.
Market cap works for crypto because it shows how much has been invested in a specific network. As a general rule, the larger the market cap, the more stable the asset–though it also means the coin has less room to grow. It’s also important to keep an eye on the price to determine whether investors are bullish or bearish on the crypto.
Other Key Metrics:
- Volatility: This is one thing any crypto investor is probably aware of because it measures the often wild price movements of a particular coin. The less volatile the price, the better for the crypto’s value to remain stable.
- Volume 24hr: As the name suggests, Volume 24hr is the total dollar value of all transactions over the past 24 hours. It can help you determine a coin’s liquidity.
- Speed: In the world of cryptocurrency, “speed” refers to the rate at which a coin is exchanged. You calculate it by dividing 24-hour volume by the circulating supply.
- Supply: This refers to the estimated number of coins in supply. Checking the supply can help ensure you’re not being influenced by unit price bias, in which there might be a large supply of a particular token because its price is so low.
How Do I Buy Cryptocurrency?
To buy cryptocurrency, you’ll need to a broker or crypto exchange. Your decision to go with one or the other largely depends on your level of experience.
1. Choose a Cryptocurrency Exchange
A cryptocurrency exchange is a platform where both buyers and sellers meet to trade crypto. Popular exchanges include Coinbase, Binance.US and Gemini. Exchanges typically have low fees, but also feature complicated interfaces with multiple trade types and advanced performance charts. They are better suited for experienced crypto investors.
In contrast, cryptocurrency brokers feature much simpler interfaces that interact with exchanges for you. The downside is that some brokers charge higher fees than exchanges. You might also face certain restrictions, including restrictions on your ability to move crypto holdings off the platform. Well-known crypto brokers include Robinhood and SoFi.
2. Open the Account
After you’ve settled on a broker or exchange, you’ll need to open an account and, in some cases, verify your identity. The next step is to deposit money into your crypto account by linking your bank account, authorizing a wire transfer, or making a payment with a debit or credit card. Just keep in mind that credit card companies usually treat crypto purchases as cash advances, which carry much higher fees and interest rates than regular purchases.
3. Place Your Crypto Order
The final step is placing your crypto order. This might involve entering a ticker symbol, such as BTC for Bitcoin. You will also need to indicate how many coins you’d like to purchase. Most exchanges and brokers let you purchase fractional shares of cryptocurrency.
Which Cryptocurrency Is Set To Explode?
So now that you’re ready to start buying cryptocurrency, the question is: Which crypto will bring the biggest potential return? Although Bitcoin might be the obvious choice, it’s not necessarily the best one in 2021. Your chances of having a big payoff might be better with a smaller coin that hasn’t already been pumped up by institutional investors, the way Bitcoin has.
Here are six cryptos that still have a high ceiling.
1. Ethereum (ETH)
Ethereum, commonly known as Ether, is the world’s second-largest cryptocurrency behind Bitcoin. Over the summer it instituted a major upgrade that included reducing the supply of Ether. The upgrade also will allow the Ethereum network to handle more transactions per second, improve the platform’s scalability and lower transaction fees. Because the upgrade will occur before the end of 2021, Ether holds considerable upside.
2. Binance Coin (BNB)
Binance is one of the most successful crypto exchanges in terms of trading volumes. Like Bitcoin, Binance Coin keeps a hard limit on the number of tokens in circulation — in its case, 200 million BNB tokens. This has helped the token price increase exponentially in 2021. In addition, Binance puts about one-fifth of its profits each quarter into getting rid of or “burning” BNB tokens, which raises the value of the remaining tokens.
4. Tether (USDT)
Tether is a type of “stablecoin” designed to provide a less volatile alternative to Bitcoin because it is linked to another asset. In Tether’s case, that asset is the U.S. dollar. In valuation terms, Tether has a 1-to-1 ratio with the dollar, meaning it is less speculative than cryptos such as Bitcoin and Ethereum. The big advantage of Tether is that it lets you make transactions in traditional currencies rather than having to dive into complex digital currencies.
5. Monero (XMR)
One reason Monero might be a good bet is that it’s designed to keep users anonymous through ring signatures and stealth addresses. This helps hide the identities of both the sender and the receiver. The feature isn’t for everyone, but it is popular with many crypto investors who prefer to remain anonymous and has helped push Monero’s price higher in 2021.
6. Algorand (ALGO)
ALGO, founded by noted computer scientist Silvio Micali, has positioned itself as a competitor to Ethereum. It got a huge lift this year when El Salvador said it would establish its blockchain infrastructure using Algorand. One of ALGO’s biggest advantages is its “proof-of-stake” algorithm, which requires less electricity than Bitcoin and other platforms. This feature will only grow in importance as cryptocurrencies face more criticism — and possible regulation — for their massive energy consumption.
GOBankingRates’ Crypto Guides
- What Is Cardano? (ADA)
- What is Bitcoin Cash? (BCH)
- What Is Chainlink? (LINK)
- What Is Dogecoin? (DOGE)
- What is Litecoin (LTC)
- What is Polkadot? (DOT)
- What is Ripple? (XRP)
- What is Stellar (XLM)
- What is Tether? (USDT)
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- Forbes. 2021. "How To Buy Cryptocurrency."
- Nasdaq. 2021. "Looking for the Next Big Crypto to Explode in 2021? Try These 5 Coins."
- Yahoo Finance. "Monero USD (XMR-USD) Price, News, Quote and History."