As a first-mover in the industry, Bitcoin inherited recognition from early, becoming the dominant cryptocurrency/digital coin to date. Over time, it successfully built its fan base, creating a reputation for itself. Any other coins that came after were referred to as alternative coins, which in short are called Altcoins. Skipped a few years back, some of the most popular altcoins were Litecoin, Ethereum, and Ripple. Since then, other coins have joined the crypto gang, bringing with them their own rules.
The Crypto Market Shift in 2020
In late 2020, Bitcoin rose to the occasion, took the world by surprise, breaking records and reaching all-time highs (ATH) like none have seen before. Crypto exchanges reported a spike in their daily average trading volume with figures doubling the usually average trading volume. Each time Bitcoin attained a new ATH, many industry players and crypto influencers turned to Twitter, tweeting “To the moon” along with a rocket emoji annexed to the tweet. Once again, the concepts of “Bitcoin” and “crypto” were fresh in the minds of those who had long forgotten about them. This time, however, the tables flipped and in a short space of time, these infamous terms received their hall of fame, earning the respect from those who knew nothing about crypto but were prepared to slurp up monetary gains. It also came as no surprise when Google revealed at the beginning of the year that the number of searches for Bitcoin and cryptocurrencies was extremely high at the beginning (Robertson, 2021).
As expected, the high price of Bitcoin was worrying for investors who were unsure as to whether returns on Bitcoin investment were profitable in the long term. Afraid of missing out on an opportunity, some have begun investing wildly – buying various altcoins, hoping that their investment will amount to something in the future. Others have decided to take a much wiser approach by conducting ample research and spending quality time to learn about the industry before diving into deep waters. The unanswered yet raveling question lingering in the minds of many is still – which cryptocurrency to invest in in 2021? Presently, there are a lot of altcoins on the market; some are relatively cheap while others like Ethereum are priced a little higher when compared to newer altcoins. With so many altcoins to choose from, no one knows for sure which one will be the next Bitcoin, the period for it to happen, or if at all it will. It has been speculated that Ethereum could be next in line to follow in the shoes of Bitcoin and perhaps dethrone it, but how certain can one be? The price of Ethereum had also risen a bit, though not to the same degree as Bitcoin. Depending on market situations and world events set for the future, anything is possible. This makes it extremely difficult to predict which of the altcoins is likely to rival or succeed, Bitcoin. Any coin can easily come to the fore, upset the entire industry, and change the game. There is the possibility that those who’ve made random investments could come out being the winners ( Vega, 2019).
Future Concerns of Altcoins
Cryptocurrencies operate just like the stock market and prices may lose momentum from time to time. Such has been the case with the dogecoin. Winning the support from Tesla’s CEO, Elon Musk, Dogecoin so far is one of the popular and demanded coins in 2021. From the outset, exchanges caught on to this trend and made this cryptocurrency available for trading. How long will the dogecoin maintain its status is still a mystery and only time will tell. It must be noted that the volatility of the Dogecoin is quite high and possesses greater risk for users. Nonetheless, the crypto industry is very sensitive; therefore, any media attention attributing negative connotations such as public scandals, issues of compliance, or regulations could severely affect the performance of that currency called into question. For example, the price of Ripple sharply fell after the US Securities Exchange Commission (SEC) opened an investigation on Ripple for allegedly offering XRP a digital asset to US citizens without being registered. Ripple seems to be slightly picking up and some supporters are optimistic about its growth in the upcoming years. Other cryptocurrencies such as AAVE, BNB, VET, ATOM, NEO have also become popular among many traders (Dpa, 2021).
Robertson, H. (2021, 2 16). Bitcoin breaks $50,000 for the first time as record-shattering 2021 rally extends to 74% amid Wall Street adoption. Retrieved from Business Insider: https://markets.businessinsider.com/news/currencies/bitcoin-price-record-high-btc-wall-street-ethereum-institutional-investors-2021-2#:~:text=to%20BI%20Prime-,Bitcoin%20breaks%20%2450%2C000%20for%20the%20first%20time%20as%20record%2Dshattering,74%25%20ami
Vega, N. (2019, 3 16). What a crypto executive wishes investors knew before buying bitcoin for the first time. Retrieved from CNBC: https://www.cnbc.com/2021/03/16/what-a-crypto-executive-wishes-investors-knew-before-buying-bitcoin.html
Dpa, R. (2021). Tweets from Musk send price of Dogecoin soaring. Retrieved from DW: https://www.dw.com/en/tweets-from-musk-send-price-of-dogecoin-soaring/a-56459952