In the ever-evolving landscape of cryptocurrencies, the quest to identify assets with the most significant potential for value appreciation over the next few years has become a paramount concern for investors and enthusiasts alike.
The future of digital assets is being shaped by a number of variables, including evolving trends, changing regulatory environments, and technology improvements, as the sector continues to evolve.
This article delves into the intricacies of the cryptocurrency market, aiming to decipher which cryptocurrencies are strategically positioned to experience substantial value growth in the coming years.
Through an analysis of critical components such as market mood, technical advancements, and distinctive attributes of individual tokens, we set out to solve the puzzles around What cryptocurrencies are positioned to gain the most value over the next years?
Crafting intelligent and forward-thinking investment strategies becomes crucial as the blockchain ecosystem grows beyond its original limitations. This includes investigating intriguing niches like DeFi and NFTs, as well as comprehending the complex dynamics of key players like Bitcoin and Ethereum.
In general, a cryptocurrency is any digital or virtual currency that is represented by "tokens" or "coins." Collectively referred to as "altcoins," these cryptocurrencies are based on the Bitcoin paradigm and have occasionally made an attempt to pass for upgraded or modified versions of the original coin.
The cryptographic techniques that enable the creation and processing of digital currency are referred to as "crypto" in the context of cryptocurrencies. A shared commitment to being decentralized goes hand in hand with this significant "crypto" aspect.
Teams creating cryptocurrencies usually incorporate regulations and procedures for issuance (which are frequently but only sometimes, accomplished through a process known as mining).
Almost always, the cornerstone of the cryptocurrency sector has been its resistance to government manipulation and control. However, as cryptocurrencies have gained popularity, this fundamental feature has been questioned.
Only since its inception in 2009 has cryptocurrency become an asset class. Extreme volatility is average, as 2022 shown, therefore investors hoping to protect themselves from the possible complete collapse of their investment should stick with more reputable brands.
None is as well-known as Bitcoin, which was the pioneer cryptocurrency and is now the biggest by market capitalization, valued at over $713 billion, or over 51% of the total. Of all the prominent cryptocurrencies, Bitcoin (BTC) has the broadest acceptability.
A number of publicly traded instruments monitor its performance, and publicly listed stocks that hold Bitcoin on their balance sheets include MicroStrategy Inc. (ticker: MSTR) and Tesla Inc. (TSLA). Bitcoin has been making an incredible return in 2023, rising 118.5% as of Nov. 16 after plunging 64% in 2022.
Even though Bitcoin was already performing rather well in the first few months of 2023, increases in the most popular cryptocurrency resumed in March when the government promised that depositors of Silicon Valley Bank would be able to retrieve all of their money at the bank that had failed.
The federal government's move to intervene and provide liquidity guarantees for tech and startup-focused lenders restored public trust in cryptocurrencies as well as the banking industry.
To date, the most profitable asset class in 2023 has been cryptocurrency. As a result of the global financial crisis and the ensuing bank bailouts, assets like Bitcoin have seen an increase in confidence due to a general market rebound and a decline in trust in the banking industry.
The icing on the cake for Bitcoin and other cryptocurrencies has been the trend of positive inflation readings in recent months, which suggest prices are increasing more slowly and may eliminate the need for the Federal Reserve to keep raising interest rates.
The native coin of the widely used Ethereum network, Ether, comes in second by market capitalization. ETH, often known as Ethereum informally, has a market capitalization of over $233 billion, making it roughly 17% of the whole cryptocurrency market. The Ethereum network, which powers Ether, is significantly more versatile than Bitcoin.
It can be used for smart contracts and decentralized finance tools, as well as for Web3 apps and the exchange of non-fungible tokens, or NFTs. Ether has intrinsic worth as the native token of a hugely popular network, in contrast to Bitcoin, which primarily serves as a speculative asset and a store of wealth.
Additionally, Ethereum has an advantage over BTC in the environment thanks to its transition from the energy-inefficient proof-of-work protocol to the far more effective proof-of-stake system. In 2023, ETH is up 63.8%.
Ethereum is the biggest cryptocurrency on the market, with the ability to execute smart contracts, ranking among the most significant assets in the crypto space. Ethereum saw a major update on April 12, 2023, which is referred to as the Ethereum Shanghai Capella.
This update brought about a number of significant enhancements to the Ethereum network, improving its usability, security, and scalability. Above all, however, the Ethereum Shanghai Upgrade brought forth EIP-4895, which at last made it possible for staked ETH coins to be unlocked and added to the Beacon Chain. Since December 2020, Ethereum validators have been able to unstake their PoS chain rewards just now.
The Capella upgrade also addressed a number of technical issues, such as better user experience, increased network speed, and strengthened security measures.
With these developments, Ethereum hopes to maintain its position as the industry leader in smart contract technology and provide developers with increased assurance when creating DApps and implementing smart contracts.
Furthermore, Ethereum recently revealed the Ethereum Cancun Deneb update, the next significant update for the second-largest cryptocurrency by market capitalization. A number of improvements to the Ethereum network's consensus layer (Deneb) and execution layer (Cancun) are included in the Cancun-Deneb (Dencun) Upgrade.
The synchronized changes improve usability, security, and scalability, making the infrastructure for smart contracts and decentralized applications (dApps) stronger. Ethereum's Dencun effort, which lays a solid basis for the next improvements, is positioned to spur innovation and hasten the adoption of blockchain technology.
One of the earliest and most well-known stablecoins (alternative cryptocurrencies that attempt to tie their market value to a currency or other external reference point in order to lessen volatility) was Tether (USDT).
Since the majority of digital currencies, including well-known ones like Bitcoin, have frequently seen spikes in price, Tether and other stablecoins aim to reduce price swings in order to draw in users who would otherwise be hesitant.
Because its creators assert that they own one US dollar for each USDT in circulation, Tether's price is directly correlated with the US dollar. By using this approach, users may move money from other cryptocurrencies to US dollars faster and easier than they could if they converted to fiat money first.
Described as “a blockchain-enabled platform to make it easier to use fiat currency digitally,” Tether was founded in 2014. In essence, this cryptocurrency reduces the volatility and complexity sometimes associated with digital currencies by enabling users to deal in traditional currencies using a blockchain network and related technology.
As of now, Tether has a market capitalization of $83.8 billion, making it the third-largest cryptocurrency. Each token was valued at $1.00.
In 2012, Ripple developed the XRP Ledger and its native coin, XRP, as a means of payment. The XRP Ledger employs the XRP Ledger Consensus Protocol, a consensus method that does not rely on proof-of-work or proof-of-stake for validation and consensus. Instead, transactions are signed and sent to the ledger servers by client apps.
After comparing the transactions, the servers determine which ones should be added to the ledger. The servers subsequently forward the transaction candidates to validators, who record the ledger version and verify that the servers correctly processed the transactions.
Using fiat-collateralized reserves that is, holding an equivalent quantity of fiat money in reserve USD Coin, another stablecoin likewise ties its price to the US dollar. The Centre Consortium, which includes Coinbase and Circle, introduced USD Coin in 2018. As Circle has its headquarters in the United States, it is governed, which makes USDC a regulated stablecoin.
With a valuation of about $7.6 billion, MATIC is now the tenth-largest cryptocurrency by market value when stablecoins are excluded. Polygon still represents less than 1% of the market as a whole, therefore there is still significant space for growth. That being said, the adoption and continued use of the Ethereum network will play a major role in its future development.
That's because Ethereum can someday host an infinite number of decentralized apps, or dApps, according to the Polygon network, a scaling platform designed to enhance Ethereum's capabilities.
MATIC's price declined in 2022, losing 70% of its worth, much like the majority of other tokens. The token profited from the widespread increase in cryptocurrency values up to the beginning of June, with MATIC up almost 20%.
That increase was fleeting, though, as the Securities and Exchange Commission sued Coinbase Global Inc. (COIN), alleging that MATIC and a number of other altcoins were operating as unregistered securities. After being negatively impacted by the news, MATIC has just lately rebounded thanks to the recent slowdown in inflation. The coin has increased by 11.6% year to date.
The price per coin or token multiplied by the total number of coins or tokens in circulation is known as market capitalization.
It's common in the cryptocurrency space to distinguish between "Fully Diluted Market Cap" and "Current Market Cap." The first contains all coins and tokens that are now in circulation. In contrast, the second contains all coins and tokens that are currently locked but will eventually be released through procedures like cryptocurrency mining and staking.
When more tokens (supply) reach the market (demand), the price is likely to decrease in the future if there is a significant disparity between those two numbers.
When evaluating the cost of a single token unit, these figures are sometimes disregarded even though they are most likely THE most crucial component in assessing a profitable investment.
If there are 100.000.000.000.000 tokens in existence, a token with a price of 0,00001€ might nonetheless have a very high market value. This would result in a market capitalization of one trillion euros, or almost the same as Google. However, it is most likely not as valuable as Google, so once people discover that, the price will likely drop soon.
An asset's trade volume, when significant and steady, is usually highly positive. It indicates that more and larger parties are interested, and it's possible that trading is available on several cryptocurrency exchanges.
Higher accessibility to an asset is correlated with high trading volume. Many people believe that Bitcoin is the finest cryptocurrency. During its fall in November 2022, it hit its peak trading volume, transacting over 400 billion dollars in a single day.
Trade volume and liquidity are connected because price changes and trade volume both suggest liquidity in some way. There may be intentional outliers, but generally speaking, high trade volume and minimal price fluctuations translate into high liquidity.
From the perspective of an investor, actual liquidity is a crucial metric, particularly for decentralized exchanges. Liquidity indicates how simple it is to sell your holdings, which is frequently an issue with more recent currencies or tokens.
It will not be feasible to sell that item at the present market price if the liquidity is extremely low let's say less than ten times your investment. Therefore, you should only make investments in low-liquidity assets if you intend to retain them for a longer amount of time and anticipate a rise in liquidity in the future.
Like with every business and its product, there must be a legitimate use case—or at the very least, a promising future one—as well as paying clients who generate revenue.
It is crucial to consider the potential use cases for coins and tokens while examining them, as well as whether it is likely that the product will reach that market eventually.
You may go one step further and determine the level of adoption that is, the number of users who pay for and use the product that will ultimately balance the costs of upkeep; this is the point at which true value is created. A fascinating discovery is frequently made when comparing this to a project's current market valuation.
These two elements, if poorly implemented, have the potential to destroy a project and its value in a matter of seconds, as we have seen time and time again. Security lapses, whether from careless coding or a lack of governance, are almost always human-caused rather than blockchain or tech-related.
The majority of the time, security flaws are not deliberate, but real frauds are. Enough openness improves the likelihood of identifying fraudulent activity at an early stage. Consider this;
- Who is the primary code access person? What would be the worst situation?
- Exists a single point of failure, such as a single individual possessing the private keys necessary to modify a smart contract?
- Exists any information that ought to be clear but isn't?
While it's not always a guarantee, past success is an excellent predictor of future performance. While the market value of successful ventures may be bigger than that of untested ones, the risk may be significantly smaller.
Searching for businesses with a solid track record that have seen a significant decline in token value may be a wonderful approach, especially during downturn markets and difficult times like the ones we are now experiencing.
The team may be a good investment if they have adequate funding and are able to deliver on their product throughout difficult times.
Don't focus only on the asset itself; you also need to keep an eye out for any macroeconomic developments that can have an impact on the market as a whole, such as changes in regulations or interest rates.
The adage "Never keep all your eggs in one basket" is undoubtedly something to remember. A savvy investor has never been harmed by portfolio rebalancing and diversification. Yes, you may lose out on some profits if you don't invest all of your money in a hyped coin, but keep in mind that cryptocurrency prices may drop just as quickly as they can rise.
To monitor the success of your assets, your original investment, and the distribution of your wealth, it is critical to always have a clear picture of them.
With Blockpit's user-friendly design, you can track all of your coins, tokens, NFTs, and more in a helpful dashboard with their free crypto portfolio tracker. All you have to do is use one of our numerous cryptocurrency connectors to connect to an exchange or wallet or import your transactions.
It should go without saying, but even if you are confident that an investment will be successful, fight the urge to incur debt for it. There are too many variables that are outside your control and that, against all odds, might lead to a bad outcome.
Cryptocurrency is inherently volatile. Said, the market is tiny in comparison to the stock or real estate markets. While not always a bad thing, volatility is something to be aware of. Investing with Dollar-Cost-Averaging (DCA), which is purchasing or selling smaller pieces of an asset over a longer time, is a beautiful technique to lower one's exposure to volatility.
There are a lot of news sources available, so it's critical to select one carefully. You may stay up to date with the latest information by following the appropriate users on Twitter or subscribing to the appropriate Subreddits. But exercise caution: Falling in step with the wrong individuals might lead you straight into the traps of con artists.
In a volatile market, identifying high-potential cryptocurrencies helps investors maximize profits and make well-informed decisions.
Key elements influencing the value of cryptocurrencies include developing trends, technical breakthroughs, market attitude, and regulatory changes.
The mood of the market affects investor behavior, which significantly affects how much cryptocurrencies fluctuate in value.
A wide range of investment options is revealed when one investigates which cryptocurrencies are most likely to increase in value over the following years. Prominent competitors with the potential for substantial development include Bitcoin, Ethereum, Cardano, Solana, Polygon, Avalanche, and Chainlink.
These companies provide unique value propositions and cutting-edge technology. Investors must, however, approach the volatile cryptocurrency market cautiously and recognize the hazards that are part of it, such as regulatory uncertainty and market volatility. Investigating thoroughly, keeping up with trends, and taking risk tolerance into account is crucial for navigating this terrain effectively.
Investors need to be alert and adjust their tactics to take advantage of opportunities and overcome obstacles as the cryptocurrency business progresses in terms of technology, acceptance, and laws. "What cryptocurrencies are positioned to gain the most value over the next years?" remains a pivotal question in shaping prudent investment decisions.