If 2020 has been an exceptional year for Bitcoin and the crypto ecosystem, 2021 has already started very well. The sharp fall in prices related to the coronavirus is already forgotten, and the main digital assets are breaking valuation records in 2021. But between the fundamentals of Bitcoin, decentralized finance or NFTs (non-fungible tokens), it is not always easy to know which cryptocurrency to invest in. Coinhouse offers you a selection based on the research of its experts to help you make the right choices in 2021.Interest in cryptocurrencies continues to grow
The beginning of the year was marked by a sharp rise in the prices of the main digital assets. At the same time, the interest of individuals has been confirmed, with Google searches again on the rise. But this new bullish cycle sees above all a massive arrival of professional investors and other investment funds.
In this context, it is important to identify the “leader” projects in each sector of the exciting and complex world of cryptocurrencies. If competition is useful for technological development, it is likely that many projects will disappear and only a small number will be able to impose themselves in a particular area. We have therefore chosen different themes and about twenty crypto projects on which we believe it will be necessary to count in 2021. What to help you know which cryptocurrency to buy in 2021.Digital assets to invest in priority
Despite the plethora of crypto projects that come out every month, some stocks remain essential in the constitution of a well-balanced portfolio. Bitcoin and Ethereum remain the best-known and most valuable assets on the market. Even if they are not free of challenges in the coming years, it is strategic to own them in 2021.Bitcoin remains the undisputed king
Bitcoin is increasingly establishing itself as an investment vector for institutional investors. With Tesla’s announcements and recent news from banks offering more and more services for professional investors, the price is on a long-term uptrend. The value of Bitcoin has already doubled since January 1, and the uncertain economic situation is working in its favor. Slowly but surely, Bitcoin’s characteristics allow it to establish itself as a legitimate investment vehicle. The evolution of regulation will remain to be monitored but the asset has already proven its resilience in the past. Ethereum, the project with the most active development
Ether, the native asset of the Ethereum network, has great potential in 2021. The asset appreciated less than Bitcoin in 2020. And yet, projects and developments are much more numerous, uses more and more extensive and are also beginning to interest institutional actors. Above all, the Ethereum blockchain is at the origin of two phenomena very fashionable in 2021: decentralized finance applications (DeFi), whose disruptive potential throughout the finance ecosystem is increasingly recognized, and NFT technology (for non-fungible tokens) which makes it possible to make digital objects unique and non-reproducible. In addition, a version 2.0 of Ethereum, currently being deployed, will make the use of the network more efficient and cheaper. In our opinion, you should definitely have ethers in your wallet in 2021.The major cryptocurrencies to consider
A handful of cryptocurrencies manage in 2021 to exceed 10 billion in capitalization. Among them, more or less young projects, which have real potential but which are also open to criticism. We do not advise you to devote a larger share of your wallet to it than those granted to Bitcoin and Ethereum. In addition, based on your own opinion and your own research, you will be able to judge whether or not you want to invest a share of your capital in these projects. Ripple, the cryptocurrency of the banks?
After a difficult end of 2020 for Ripple, marked by a lawsuit from the SEC, the regulator of the American markets, the company that issues the XRP token remains under the threat of seeing it requalified as a security, a type of asset more strictly regulated than a cryptocurrency. From a technical point of view, the price of the asset often experiences brutal movements, which make long-term investment very risky. On the news side: the arrival of Spark, a sidechain that could allow Ripple to have its own smart-contracts, seems to give a second wind to the price of the asset in 2021. In summary, XRP is therefore not the cryptocurrency that we advise to choose as a priority. Since 2017, its performance has often been lower than that of Bitcoin.Polkadot, the project that meets the interconnection needs of blockchains
Polkadot is a recent project, launched at the end of May 2020. It is a network for coordinating different blockchains in a single infrastructure. The interest is important in terms of interoperability, allowing them to communicate with each other while respecting different rules.
Polkadot’s success largely depends on its ability to generate interest and gain traction, as well as the willingness of existing blockchain projects to migrate to its infrastructure. If the founders’ bet comes to fruition, the project has a strong development potential in 2021.Invest in alternative cryptocurrencies to Ethereum?
If Ethereum is today the undisputed leader in smart contract technologies, its competitors have multiplied in recent years. You will find projects like EOS or TRON, which date back to 2017, but today lack traction and do not seem to convince technologically. So we don’t think these are cryptocurrencies to invest in in 2021. On the other hand, other projects could develop and assert themselves as viable alternatives to Ethereum.
Among them, the Tezos project (XTZ) uses proof of stake to validate its transactions, which consumes almost no electricity, and the validation of smart contracts is particularly reinforced by a mechanism called “formal proof”. A growing number of projects and companies are considering its use now, especially in France. It is therefore one of the projects to be considered.
Another highly capitalized project is Cardano (ADA), which is experiencing some traction in terms of its price and benefits from a fairly active community. The project is still in an experimental state but could see concrete developments in 2021. The ADA token performed well in the first quarter of 2021. Investing in Cardano in 2021 can therefore be considered for investors who like to anticipate the possible success of ambitious projects, but there is no guarantee at this stage that this investment will prove fruitful in the long term.
Solana (SOL) is another rather recent crypto project that can be interesting to invest in. Its price has already gained more than 600% since August 2020. The project promises to be able to process more than 50,000 transactions per second, with validation times of less than one second.
Among Ethereum’s competitors who have chances to capture market share, Avalanche (AVAX) is well placed. This young project focuses on the use of multiple channels and fast transactions to attract users. The number of validators and partnerships in this network is only increasing, but it still needs to attract liquidity to become a real strength of the ecosystem.
If the project does not fall too far behind Ethereum 2.0, it can turn out to be a very good investment for 2021.Invest in cryptocurrencies from credit and exchange platforms
The year 2020 saw the explosion of decentralized finance (DeFi). The sector continues to develop in 2021 and now includes several projects on which it may be interesting to invest. Platforms focusing on the provision of credit and those allowing decentralized exchanges between cryptoassets are seeing their valuation and assets under management explode.