With the crypto asset market value sitting at $1.6 trillion in June 2021, and despite recent Bitcoin dips and market correction, the crypto industry is having an exciting year.
From milestones price movements to increased institutional investment, the industry is no doubt experiencing more adoption by the traditional financial services ecosystem and mainstream retail investors alike.
As retail sentiment continues to boom, many investors are starting to re-adjust their focus solely from Bitcoin, and instead to alternative coins (altcoins). In fact, some younger investors are starting to call bitcoin a “boomer coin” or the “dinosaur of crypto” as they race to find the next biggest altcoin.
If you’re not familiar with altcoins, they are basically any crypto asset alternative to Bitcoin. They also operate on blockchains, which allows for secure peer-to-peer transactions, and build on the success of Bitcoin by slightly changing the rules, economics, or use cases to appeal to different users.
For example, the algorithm that governs Bitcoin’s production will only ever allow 6.25 Bitcoin to be produced every 10 minutes among the over 70,000 crypto mines that operate around the world (however this is expected to lower in four years when the Bitcoin halving occurs), while altcoins such as Litecoin will produce coins every 2.5 minutes. This makes Litecoin superior in that sense as it’s able to process payments faster. Litecoin will also produce 84 million Litecoins, whereas Bitcoin will only produce 21 million Bitcoins.
Recently, eToro revealed new data which detailed increases in the number of crypto assets being held globally during the last Q2 quarter. Interestingly, altcoins were in high demand during this period as investors seek to diversify their portfolios.
Beyond Bitcoin, which took second place on the list, here are the top five altcoins amongst eToro’s 20 million users.
Cardano (ADA)
Leapfrogging bitcoin to the first position, Cardano, which currently has a market capitalisation of over USD$51 billion, has become the most held in the second quarter of 2021, experiencing a 51 per cent increase on the previous quarter.
During this period, Cardano provided a clearer roadmap for its upcoming Alonzo hardfork, which is still in the testing phase. If successful, it will bring smart contract functionality by permitting the writing and deployment of smart contracts for the first time on the Cardano blockchain. This upgrade will enable developers to build projects on the network, helping Cardano to position itself as a real competitor to the likes of Ethereum.
The price of ADA climbed 15 per cent over the last quarter, suggesting investor optimism around the Alonzo hardfork and Cardano’s ability to challenge Ethereum long-term.
Ethereum (ETH)
Ethereum, the world’s second-biggest crypto asset with a market capitalisation of around USD$307 billion, has encountered a 220 per cent price rise so far this year. The altcoin gained in popularity in the second quarter, experiencing a 79 per cent increase in investors holding the asset.
This is ahead of the highly anticipated London hardfork, slated for July 2021, which will see increased functionality added to the network and preparation for the Serenity (ETH 2.0) upgrade slated for 2022, as well as the EIP-1559 update, which will change how gas fees are paid on Ethereum 1.0 going forward.
While many are still skeptical about whether or not ethereum will hit its target price of USD$10,000 by the end of the year, it’s definitely proving its use case. With developers piling into the project, it is little wonder it is gaining so much traction with investors.
Ripple (XRP)
Despite Ripple continuing to wage war with the US Securities and Exchange Commission (SEC), its coin XRP still seems to remain popular amongst investors. With a market capitalisation of over $30 billion, XRP has proven to be one of the most high-value crypto assets as it continues to impress from its 90-day high of $1.96 in April.
Since dropping shortly after, XRP is currently trading 32 per cent above the range low of $0.505. As a cheaper alternative to currencies like bitcoin that settles transactions in seconds, XRP continues to enable institutional blockchain utility.
Dogecoin (DOGE)
Since its rise to fame, Dogecoin has been seen purely as a joke to many investors but has still attracted the masses. Its price exploded in January amid trading restrictions being placed on memestocks, and has since broken into the top ten by value thanks to the support from Tesla’s Elon Musk and other high-profile investors and influencers.
With a few hiccups caused by Musk during a clunky Saturday Night Live appearance, as well as the resurgence of other memestocks such as the new Tiger King coin “$tking” and namesake spinoff “Baby Doge,” Dogecoin’s market capitalisation is still sitting at a cool $54 billion.
Tron (TRX)
Tron made the fifth spot on the list after it recently ranked first in terms of transactions per second eclipsing the likes of ADA and XRP, as well as announced that its network had exceeded 40 million unique addresses.
Over the past four years, Tron has grown tremendously after it traded as high as $0.208 before the market correction. Since this period, Tron has rollercoastered its way through volatility and crypto mining clampdowns, steadily building momentum.
In July 2021, it was announced that the circulating supply of USDC on the Tron blockchain surpassed $108 million in less than a month. This could be a sign that crypto investors are increasingly turning to blockchains that provide cheaper transaction fees with faster speed than bitcoin or Ethereum.
Despite all the excitement that currently surrounds altcoins, retail investors should be mindful of the risks when investing in crypto assets and do their research before investing.
By Josh Gilbert, market analyst at global multi-asset investment platform
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