Bitcoin and several other cryptocurrencies have rallied significantly over the past five months, garnering unprecedented demand and institutional adoption. While Bitcoin is mainly driving the current bull cycle, several other altcoins are poised to move upward in 2021 and promise massive potential returns.
Investors are actively looking for the next Bitcoin. It's not often that we come across an asset that surges from six cents to over $65,000 in a little over a decade. However, this does not mean that Bitcoin is the only asset that can skyrocket the way it did.
Currently, there are over 4000 cryptocurrencies in the market that are vying for investment potential. How do investors understand the best cryptocurrency to invest in when there is such a broad range of options available? Let's find out.
Crypto analysts adopt various approaches to evaluate tokens other than Bitcoin. For instance, it is common for analysts to attribute importance to the ranking of digital assets relative to one another in terms of market cap.
Considering key factors such as supply, market cap, network updates, etc., we have compiled a list of three cryptocurrencies worth watching: Ether (ETH), Cardano (ADA), and Binance Coin (BNB).
Three Cryptocurrencies to Watch out For: A Brief Guide
Cryptocurrencies, as an asset class, recently surpassed the market capitalization of $2.208 trillion. Out of 4000+ available tokens, less than 100 have market caps above $1 billion. Bitcoin, the leading digital asset, boasts a market capitalization of over $1.175 trillion market cap. This is followed by Ethereum (ETH), which is the only other token that has a valuation of over $85 billion. At the time of writing, Ethereum's market cap stands at $290 billion.
Finding assets that are likely to rally similar to Bitcoin can get a bit tricky. Capital appreciation for serious crypto investors depends on survival. As the markets mature, the strongest assets are most likely to survive and grow over the coming months and years.
However, it is crucial to remember that the higher these tokens rise in parabolic moves, the greater the chances of a harsh correction.
For new investors, speculating on low-priced tokens with small market caps with a long-term buy and hold strategy in mind could be risky as the odds of success are low. Traders looking to get in and out of positions are generally advised to consider tokens with market caps of over $1 billion.
3 Cryptocurrencies Worth Watching
1. Ethereum (ETH)
The Ethereum network aims to create a suite of decentralized financial products accessible to anyone in the world. Since its launch in 2015, ETH has come a long way. The asset, widely considered a Bitcoin alternative, is currently trading at all-time highs.
ETH price movement, Source: Coinmarketcap
The market cap of $290 billion puts Ethereum second only to Bitcoin. The Ethereum platform has become wildly popular as a host for other digital assets. In other words, investors profit from one of the best cryptocurrencies out there and from the broader use cases of the blockchain network itself.
Some of the main advantages that Ether offers when compared to traditional investments include:
- Liquidity - Ether is one of the most liquid assets because of the worldwide establishment of exchanges, trading platforms, and online brokerages. Investors can easily trade ETH for cash or assets such as gold instantly with low fees.
- Lower inflation risks - Unlike fiat currencies backed by the governments, Ethereum has a transparent inflation plan and is subject to fewer risks.
Check Out: Should You Buy Ethereum?
2. Cardano (ADA) Taking over the Crypto World One Step at a Time
Cardano (ADA) is an "Ouroboros Proof-of-Stake" digital asset created through a research-based approach by engineers, cryptography experts, and mathematicians.
Cardano has managed to stand out among its proof-of-stake rivals in addition to other large-cap cryptocurrencies. The crypto community has also widely referred to the platform as the "Ethereum killer" as its technology is said to be capable of more.
Cardano's supply is capped at 45,000,000,000 ADA, with a circulating supply of 31,948,309,441. In 2020, Cardano had a massive breakout with the rest of the crypto industry and is now placed in the top ten cryptocurrencies by market cap.
ADA price movement, Source: Coinmarketcap
Cardano strives to be the global financial operating system by establishing decentralized financial products similar to Ethereum. It is also working to provide solutions for chain interoperability, voter fraud, among other things.
Don't Miss: Cardano Price Prediction
3. Binance Coin (BNB) Offers Potential Upside
Binance Coin (BNB) is a digital utility asset that serves as a payment method for the fees associated with trading and transacting on the Binance Exchange.
Customers using BNB as a means of payment with Binance can trade at a discount. BNB's blockchain is also the platform that Binance's decentralized exchange (DEX) operates on.
The Binance DEX is a decentralized platform where customers can buy and sell BNB tokens in addition to using BNB to convert other digital assets from one to another. This has turned the Binance DEX into one of the biggest cryptocurrency exchanges in the world by volume and has helped fuel the popularity of the token.
BNB was initially an ERC-20 token, which operated on the Ethereum blockchain. It later went on to have its own mainnet launch. The network currently uses a Proof-of-Stake (PoS) consensus model. BNB has an $86,709,013,505 market capitalization at the time of writing, with one BNB valued at $571.
BNB price movement, Source: Coinmarketcap
Read More: Should You Buy Binance Coin?
Top 3 Cryptos to Watch: The Bottom Line
There's no denying that cryptocurrencies have proved themselves as a worthy asset class. While various digital assets carry massive potential returns, it is essential to remember that some of these assets can be very volatile.
Trading requires liquidity. Investors are advised to look for virtual currencies with robust market caps that support buying and selling on multiple platforms.
Tokens such as ETH, ADA, and BNB boast incredibly high market caps in addition to offering a suite of features and advanced functionalities, which make them the top three cryptocurrencies to follow.
Read Also: How To Choose Winning Altcoins?
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Virtual currencies are highly volatile. Your capital is at risk.