For example, in one year, the value of the second largest cryptocurrency, Ethereum , has grown by a staggering 1,200% compared to Bitcoin’s 702%.
When Bitcoin is bullish, so is the crypto market — when Bitcoin is bearish, most of the market will decrease with it.
The second is that specific cryptocurrencies have been able to massively outperform Bitcoin during bull runs, and in some cases continue to maintain their price for some time after Bitcoin experiences a bearish period.
Many of the earliest cryptocurrencies, notably Bitcoin , were designed to act as digital gold and silver respectively.
These are generally called alternative coins, or altcoins, and they serve a number of different purposes.
The explosive growth of Ethereum in 2021 has been driven not just by Bitcoin, but by the explosion of decentralized finance applications.
This rise hasn’t come without its teething problems. The sheer number of applications competing for space on Ethereum’s blockchain has led to rising transaction prices.
If the project is able to successfully complete important milestones of this roll-out, the cryptocurrency will likely continue to experience positive growth.
Despite the fact that the token confers no equity in Binance, BNB appears to be closely tied to the success of the Binance exchange.
The SEC has already targeted Ripple for operating an unregulated security offering unregulated securities, and this level of centralization could leave Binance open to similar problems, which is a major potential risk for BNB investors.
Unlike BNB, Cardano is a heavily decentralized project and consists of early-stage Ethereum founders, scientists and academics.
This means that it could share the same troubles as Ethereum if it fails to make good on its promises.
It is theoretically possible for ETH, BNB, ADA and others to coexist and thrive together.
There are thousands of different DeFi projects but one of the best known is the decentralized exchange, Uniswap .
It is designed to offer a decentralized alternative to exchanges like Binance or Coinbase, and makes it possible for users to trade any pair of cryptocurrency they want to.
Unfortunately, UNI has become a victim of its own success.
While the project is attempting to resolve some of the transaction fee problems itself with its own V3 update, this alone won’t be enough.
Aside from its role as a crypto gateway, the token has had little in the way of fundamentals to recommend it, until Elon Musk became involved.
This spike was further sustained by users seeking to piggy-back onto the Gamestop drama and replicate it with Dogecoin.
It is also important to remember that projects can underperform compared to Bitcoin, and we need look no further than Ripple .
Recently the company has had a number of major wins by its legal team which have helped to improve the price of XRP.
If, however, the SEC is able to prosecute its case, then investors should expect to see the price of XRP decline significantly.
There are limited reports that institutional capital is moving into larger altcoins, like Ethereum, but the volume is nowhere near as significant as that which has flowed into Bitcoin.
This means that investments into altcoin projects, even mature ones, are largely speculative in nature.This is particularly true when looking at easily manipulated assets like Dogecoin.
That being said, in my opinion , altcoins still represent one of the best opportunities on offer for risk-averse investors today.
Over the past several years, he has worked with and covered companies operating on the cutting edge of innovation in AR/VR, cryptocurrency, drone tech, and countless other sectors.
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