How to choose a cryptocurrency to invest in 2021

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In 2021, interest in cryptocurrency is growing rapidly, as is its popularity as an investment tool. A fundamental feature of the industry is resilience to government exploitation and control, a fact that attracts both retail and institutional investors. Many well-known companies, including Samsung, Microstrategy, PayPal, Deutsche Bank, have already included cryptocurrencies in their long-term strategic plans.

For those planning to follow their example, the Btcnewsweb.com editors have compiled an analysis of which cryptocurrency can be invested in in 2021. The article is not a recommendation, the materials are based on the opinions of experts and the current market situation.

The best cryptocurrencies by capitalization

The most capitalized cryptocurrencies to invest according to CoinGecko

Market capitalization is the value of all coins currently in circulation. Consequently, two parameters are used to calculate it: the market rate and the number of units issued. It is the market capitalization (market cap) that is considered the main indicator of the demand and prospects of a particular currency. It is more important than the exchange rate, since often new currencies rise by thousands of percent in a few hours, and then fall sharply by the same amount; the rate is also strongly influenced by the news background.

Capitalization, on the other hand, shows how many coins in circulation are held in users’ wallets, and how much they are naturally priced in the market. Experts advise when investing to pay attention to the most capitalized cryptocurrencies, since they have the most powerful prerequisites for the growth of the rate in the long term.

Top 10 cryptocurrencies by market capitalization as of April 2021 (excluding stablecoins):

  • Bitcoin. Market cap – $ 1,076,427,799,038. Course – $ 57 637. The first and most famous cryptocurrency. It began as a technical experiment, but today it has the status of a serious investment and protective asset, making it a serious competitor to gold. This is confirmed by the opinion of large corporations who choose it to protect their capital from inflation.
  • Ethereum. Market cap – $ 237 740 240 396. Course – $ 2060. The blockchain to which this coin belongs is focused primarily on developers involved in the development of decentralized applications. It is much faster than Bitcoin, although not the fastest today. The cryptocurrency ETH is the main asset that powers the network, and its price is growing along with the growing popularity of DeFi.
  • Binance Coin. Market cap – $ 61,711,309,925. Course – $ 398. Binance exchange token and the backbone of its ecosystem. Powered by Binance Chain and Binance Smart Chain blockchains. Since the crypto exchange is popular among users and is the leader in terms of trading volume, its native token is also highly valued. An additional tool for the growth of the rate is the periodic burning of BNB in ​​order to reduce the total emission.
  • XRP. Market cap – $ 44 777 085 508. The course is $ 0.97. The coin is sometimes called the “killer of SWIFT” and other traditional payment systems. It is focused on high speed and low cost of transactions. With a relatively low exchange rate, Ripple has long been confidently occupying high positions in terms of capitalization – there are more than 45 billion units in circulation, they are actively used not only by ordinary participants, but also by banks and large companies.
  • Polkadot. Market cap – $ 40 518 902 014. Course – $ 41.29. The Polkadot project is a tool for combining different blockchains into one whole. In this way, developers of new projects can connect to the highly efficient Polkadot network and enjoy all of its security and scalability-focused features. The DOT token is used to connect parachains and other functions on the network.
  • Cardano. Market cap – $ 39,600,009,099. The course is $ 1.24. The Cardano blockchain platform is being developed by scientists and engineers with the aim of achieving the highest possible speed and security. Its native ADA cryptocurrency has recently become very popular as a means of making payments, and at the same time as a promising investment. In addition, ADA is used as a staking and network maintenance tool.
  • Uniswap. Market cap – 15 563 032 947 $. Course – $ 30. Uniswap is the most popular of the decentralized exchanges with an automated market maker; more importantly, it allows you to make money on profitable farming by contributing cryptocurrencies to trading pools and receiving passive income in UNI tokens. The system runs on the Ethereum blockchain. Soon the third version of the protocol will be launched, as a result of which the capitalization is actively growing.
  • Litecoin. Market cap – $ 15 267 478 402. Course – $ 228. One of the earliest forks of bitcoin, which has the same principle of operation, but also several important differences. The mining algorithms differ (Scrypt versus SHA-256), the block generation speed (2.5 minutes versus 10 minutes) and, therefore, the speed of transactions. Now the cryptocurrency is far from at the peak of the rate, but it has a certain number of supporters who believe in it.
  • Chainlink. Market cap – $ 13,777,590,027. Course – $ 33. The Chainlink oracle network is a leader of its kind; allows multiple external applications to work with decentralized oracles – tools that collect various data from external sources, such as exchange rates or the results of sports events. LINK is a token on the Ethereum blockchain that allows you to perform transactions within the network, pay for the work of operators to collect data.
  • Theta Network. Market cap – $ 13 570 092 242. Course – $ 13.55. Theta blockchain platform aims to improve technology solutions for streaming video. The THETA cryptocurrency encourages users to create and distribute quality content. The system provides several levels of security, a pool for comfortable micropayments, and an advanced multi-signature system.

Most of the listed cryptocurrencies are actively developing, being introduced into new projects or used by well-known companies. Therefore, it is assumed that in the near future, as well as in the long term, their value will grow.

New promising cryptocurrencies and tokens

The creation of new blockchain projects does not stop for a single day, but on the contrary, it becomes more and more active. Some of them are destined to be forgotten, while others generate really strong interest among investors. A few examples of new cryptocurrencies in 2021 that can show good growth:

Many of these coins are backed by the Binance crypto exchange, which is eager to promote promising startups through token sales and airdrops on its platform. It is noticed that in most cases, access to Binance has a good effect on the demand for an asset, since, firstly, it immediately receives more liquidity, and secondly, millions of users learn about it at the same time, and thirdly, the reputation of the Binance exchange automatically confirms the quality of the project …

Investment asset selection factors

Recommendations for choosing a cryptocurrency for investment from the EXMO exchange:

Choosing which cryptocurrency is better to invest in is not easy – there are a lot of evaluation criteria, and the task is even more complicated due to the fact that the state of the market changes every day, it is difficult to say with confidence which coin will grow and which will fall. Nevertheless, if you pay attention to several basic parameters, you can reduce the chance of error:

  • Time of existence. If a coin has been around for several years and has been in demand all this time, this is a good sign – it means that it really has value to users.
  • Long-term course change. Check how much the cryptocurrency was worth a month, six months, a year ago. If, despite short-term volatility, in the end the rate still grows, then such an asset is trustworthy.
  • Technological solutions – how the coin is protected, how safe is it to use, how quickly the transactions are carried out and what fees will have to be paid for them.
  • Liquidity. It makes no sense to keep such a cryptocurrency that you cannot easily sell at any time. It is better to choose assets that are listed on popular exchanges and have a good trading volume.

It is also important to understand that you cannot invest all your savings in one coin. In this case, if it suddenly drops in value, you will lose a lot. Always follow the principle of diversification, and then, even if there is a loss from one asset, the profit from others will balance the situation.

An example of diversifying a cryptocurrency portfolio

What cryptocurrencies are better to invest in in 2021: expert opinions

Most analysts believe that Bitcoin is still the best choice for investment. So, Coindesk analyst Omkar Godbowl examined the changes in the coin’s rate for 2017, drew an analogy and suggested that in the near future we expect a significant increase in the price. However, it may not be long-term, but quickly provoke a correction.

Other top 10 cryptocurrencies by market capitalization are also worth considering. So, Ethereum has an extremely strong community and high versatility, and given the upcoming version of Eth 2.0, it has all the prerequisites for continued growth. Litecoin has a positive reputation and, according to many users, also tends to grow in demand due to fast transactions.

You can track the appearance of tokens of new projects, for example, on Binance – but there are higher risks here, since not all projects are “shooting”.

Bitcoin forecast for 2021 from Currency.com exchange analysts:

How to build an investment portfolio

The investment idea that is relevant for 2021 belongs to Nikita Zuborev from Bestchange. Such a portfolio can provide maximum returns. However, no one gives guarantees, so the use of the advice is possible solely at your own peril and risk. Zuborev believes that it is necessary to invest in the DeFi sector and pay great attention to diversification. For example:

  • 20% – ETH
  • 20% – BNB
  • 15% – DOT
  • 15% – TRX
  • 10% – ADA
  • 10% – LINK
  • 5% – VET
  • 5% – NEO

If the percentage of these assets is slightly reduced, then the remaining funds can be invested in BTC. The demand for native DeFi platform tokens is growing along with the growth of the sector itself, as they are used to pay for network transactions. There are also the standard downside risks if a bear market occurs.

How to invest in cryptocurrency

Having decided which cryptocurrency to invest in, you need to choose a way to do it. There are a lot of such ways:

The choice of the appropriate option depends on what platforms and services the asset is supported on, as well as on personal preference.

Conclusion

There is no doubt that cryptocurrencies have come to this world for a long time and with the most serious intentions. Therefore, it is impossible not to take advantage of the opportunity to increase your capital when the market situation has it. When choosing which cryptocurrency to invest in, pay attention only to projects with a good reputation and a strong technical idea behind them. Short-term investing in new, rumored coins is an option for quick but risky profits; long-term investments mean choosing assets that have stood the test of time.

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