Thanks to popular assets like Bitcoin, which has rallied over 100% this year alone, as well as hype from “techno-king” Elon Musk, the market has doubled since February 2021, as retail and institutional investors pile into the space.
As an overall emerging trend, the best performing cryptocurrencies this year tend to be those associated with decentralised applications (DeFi) and smart contracts. DeFi and smart contracts both exist and are distributed by the blockchain network, instead of being controlled by a single computer, program or source.
Related reading: What is blockchain technology?
What are the best cryptocurrencies to invest in in 2021?
With more than 4,000 cryptocurrency in existence it can be hard to decipher which ones will generate the biggest returns for investors. For those new to the space, here some of the top crypto assets by market cap:
- Bitcoin (BTC)
- Ethereum (ETH)
- Binance Coin (BNB)
- Ripple (XRP)
- Tether (USDT)
- Cardano (ADA)
- Litecoin (LTC)
- Bitcoin Cash (BCH)
* 1-year returns are correct as of April 29 2021
Where can you buy cryptocurrencies?
Australian Cryptocurrency Exchanges June 2021
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1-Year Return: 311.52%*
In early April 2021 Bitcoin hit an all-time high of $63,000 but then crashed to a low of $50,000 on April 17 before rebounding to $56,000 on April 20. May proved to be even more interesting with the new high reaching $64,829.14 before crashing to $31,428 at the start of June.
The last two weeks have seen a sharp correction for crypto assets driven by a wave of profit-taking, comments from Tesla CEO Elon Musk on the environmental impact of mining, and a crackdown on crypto assets in China. Nonetheless, bitcoin is still above the level it started in 2021.
As some investors currently view bitcoin as a store of value similar to gold (particularly as a hedge against inflation) others believe that it can be used to diversify investment portfolios in times of economic crisis.
→ Related: How to buy Bitcoin in Australia
1-Year Return: 218.03%*
The world’s second largest cryptocurrency, ether (used to power the Ethereum blockchain) also hit record highs of $2,500 in April 2021. At its all-time high in May, it sat at 4,382.72, experiencing a low of $2,352 after the dip in the same month.
The Ethereum ecosystem has emerged as the first choice for developers launching DeFi applications and non-fungible token (NFT) sales.
Binance Coin (BNB)
1-Year Return: 2,035%*
Binance coin has surged 14-fold in price this year, for a market value of over $53 billion. Elbowing its way past competitors, Binance coin has become the world’s third-largest cryptocurrency, compared to its 10th position in December 2020.
With Binance retaining the 25% trading fee discount for investors using Binance Coins for at least one more year, the demand for the 154.5 million coins currently in circulation could rise as crypto fanatics continue to buy into the market.
Some experts believe that Binance’s recent business moves, including launching a blockchain network to compete with Ethereum for a share of the DeFi market, will help to boost Binance Coin’s future performance prospects.
1-Year Return: 278.51%*
Whilst Ripple has faced a chain of legal challenges from the US Securities and Exchange Commission (SEC) in recent months, XRP still remains popular in the cryptocurrency market, gaining around 150% since the start of the year.
Ripple is typically a cheaper alternative to bitcoin that settles transactions in seconds and aims to enable institutional blockchain utility. XRP currently sits around $0.82.
→ Related: How to buy Cryptocurrency in Australia
1-Year Return: 0.11%*
Known as a faithful stablecoin, Tether converts cash into digital currency, to anchor or ‘tether’ the value to the price of national currencies like the US dollar, the Euro, and the offshore Chinese yuan.
In April, Tether has generated a trading volume of over $157 billion. That’s more than double bitcoin’s volume for the same period at $64 billion. In fact, in February 2021, 57% of all bitcoin trading was executed via Tether.
Tether is widely considered to be the most popular stablecoin in the world, due to its stability, liquidity and cost.
1-Year Return: 720.23%*
Cardano, which is defined as a third-generation cryptocurrency that aims to improve the scaling issues of Bitcoin and the smart contract deployment principles of Ethereum, has now become one of the first peer-reviewed blockchains in existence.
In both February and April 2021, Cardano experienced some of its best performance ever, gaining over 720%.
Slow and steady progress, and a big update led Cardano to shoot up when other altcoins were down. At one point, Cardano momentarily took the third spot as the largest crypto asset by market cap, but now sits comfortably at sixth position at just over $45 billion.
1-Year Return: 287.24%*
Heralded as four times faster than bitcoin (and potentially a faster, cheaper asset for making transactions), Litecoin has demonstrated a greater reward-to-risk ratio compared to other cryptocurrencies because it has further to go to catch up with the rest of the market.
Despite Litecoin failing to reach a new all-time high in 2021, its market cap has risen to over $1.53 billion.
Due to its high liquidity and limited supply, Litecoin has retained strong demand and could remain an altcoin that keeps its standing in 2021.
Bitcoin Cash (BCH)
1-Year Return: 71.78%*
Resulting from a bitcoin hard fork in August 2017, Bitcoin Cash increases the size of blocks, allowing more transactions to be processed and improves scalability. Bitcoin Cash has regained its momentum in 2021, in part due to the recent performance of Bitcoin, as well as interest around the Coinbase IPO.
Often viewed as a proxy for bitcoin, investors frequently look to bitcoin cash as a much cheaper alternative. The cryptocurrency currently has a market cap of over $11.25 billion.