After spending a couple of years in bearish market conditions, cryptocurrencies are once again in the spotlight. While Bitcoin has made a decent recovery over the past months, it is the altcoin market that has positively surprised most investors.
As such, this post will go through some of the best altcoins to invest in. We will explore their backgrounds, as well as some of their key advantages.
By using the information shared in this article, you will be able to make better trading decisions and set more realistic expectations.
Finally, we will briefly touch upon some important things to keep in mind when investing in altcoins. By following our advice, you will be able to hedge risk and avoid common trading mistakes.
10 Best altcoins to invest in
The following 9 cryptocurrencies are, according to our team, the best altcoins to invest in. From massive hype to strong utility, they can all outshine the market in the coming year. Let’s check them out.
Ethereum is a global open-source platform for decentralized applications. It allows anyone to create various financial products, from personalized cryptocurrencies and decentralized exchanges to lending and interest-earning platforms.
Released in 2015, Ethereum saw its popularity and price rise astronomically in a short amount of time during the ICO boom in 2017. It has since established itself as the second-most popular cryptocurrency on the market.
Why is ETH one of the best altcoins to invest in?
Upcoming switch to POS - The Ethereum 2.0 update will move the Ethereum blockchain into a proof-of-stake consensus. This means that users will be rewarded in ETH on a monthly basis, depending on the size of their holdings. Additionally, it will allow for better scaling and security.
Leader in DeFi - Ethereum is by far the most popular platform for decentralized finance projects.
Widespread usage and utility - Although some newer cryptocurrencies are more efficient and cheaper to use, they still can’t compete with Ethereum’s massive adoption. Developers are actively using Ethereum’s smart contracts to create innovative applications in a vast array of fields including healthcare, insurance, government records, etc.
What can we expect from ETH in 2021?
Ethereum has surpassed all expectations in 2020, with more than 170% gains since the beginning of 2020.
The upcoming ETH 2.0 upgrade could act as a trigger to a potential price rally. In addition to this, if DeFi continues its exponential growth, Ethereum could pass the $500 mark and break its previous all-time high within 2021.
Binance Coin (BNB)
BNB was released in 2017, through an ICO, as a means to finance the launch of Binance. While BNB was originally created on the Ethereum blockchain (ERC20), it has since migrated on its own blockchain - the Binance chain.
Binance Coin can be used for many different activities within the trading platform of Binance, including cheaper fees, staking, lending, voting, and IEO participation.
The initial supply of 200 million BNB tokens is continuously reduced through periodic coin burns. This process will continue until 100 million BNB tokens are left, increasing the scarcity of the coin, and therefore, its value.
Why is BNB one of the best altcoins to invest in?
Good performance in bear markets - BNB has behaved very well in the previous bear market, outperforming both BTC and ETH.
Passive income opportunities - BNB provides a large annual percentage yield through flexible savings and staking options on the Binance exchange. These offers are expected to grow in size and available options.
Largest number of Fiat onramps - this feature allows a large number of people from all over the world to enter the market. It also increases the coin's adoption and future price potential.
What can we expect from BNB in 2021?
BNB’s price has been growing steadily since the recent pandemic-related crash (+200%). At this pace, we could see it’s price double within the next year, making BNB one of the best altcoins to invest in within 2021.
Litecoin is the first altcoin to ever be released to the public. It was launched in 2011 as a cheaper and faster version of Bitcoin.
Litecoin can process transactions four times faster than Bitcoin, making a much better choice for daily purchases.
The LTC blockchain aims to become a global P2P payment network, with very low costs and quick transactions. As one of the pioneers in the crypto sphere, according to CoinMarketCap, it has always hovered in the top 10 most popular cryptocurrencies.
Why is LTC one of the best altcoins to invest in?
Three main factors come into play when considering LTC:
Popularity and adoption - Due to its longevity in the market, LTC has developed a loyal, growing community as well as wide acceptance as a payment method.
The MimbleWimble update - this update should add another layer of security for LTC users. But more importantly, MimbleWimble has been created to enable better privacy and fungibility to the network.
Widespread exchange listings - LTC can be bought and sold on most crypto exchanges worldwide, therefore increasing the liquidity of the coin.
What can we expect from LTC in 2021?
Before the COVID-related price drop in March, LTC saw its value triple in less than 3 months within 2020. With things back on track, along with the long-awaited update, analysts are predicting each Litecoin to be worth $70 by the end of the year and will grow over $100 in 2021.
Stellar Lumens (XLM)
Stellar is a payment network that allows cross-border transactions of any asset, focusing on speed and negligible fees. The network also allows anyone to create their own token on the blockchain.
Stellar Lumens, or XLM, is the network’s native cryptocurrency. The coin fuels the activities of the Stellar blockchain and is supported by hundreds of exchanges worldwide.
Why is XLM one of the best altcoins to invest in?
Key Partnerships - with its robust protocol and cheap transactions, Stellar has attracted powerful partners like IBM and a wide array of banks and payment processors.
Low-cost investment - Lumens are affordable, and fundamentally undervalued at the moment of writing.
What can we expect from XLM in 2021?
We believe the coin will reach $0.1 before the end of 2020, once the current consolidation period is over. And considering the success of the project itself, seeing XLM at $0.5 isn’t too far fetched before December 2021.
Polkadot is a relatively new project that seems to have appeared in the top 10 on CoinMarketCap out of the blue. Created by Gavin Wood, one of Ethereum’s co-founders, it allows anyone to create their own blockchain, similar to the way Ethereum allows anyone to create Decentralized Applications
DOT is the native token of Polkadot and has three different use cases within the network:
used for governance of the network
staked for operating the network
bonded to connect a chain to Polkadot as a parachain.
Why is DOT one of the best altcoins to invest in?
Polkadot is a next-generation sharding protocol that aims to solve recurring blockchain problems:
Improves scalability by spreading operations through parallel blockchains.
Easy blockchain innovation - the network provides a “skeleton chain” called the Substrate. This makes building networks and connecting them to other blockchains more manageable.
Active ecosystem - Like Ethereum, Polkadot has an active ecosystem. It already hosts over 100 projects, and that number is expected to grow in the future.
What can we expect from DOT in 2021?
DOT might be one of the best altcoins to invest in at the moment, as it appears to succeed where others have failed. We can expect it to follow a similar path to Ethereum, and increase in value tenfold, with targets of at least $50 per coin in the near future.
Uniswap is the most popular DeFi exchange at the moment, with 2.3 billion dollars locked in its ecosystem. While the project was launched back in 2018, it is only this year that its popularity saw rapid growth.
The platform is the brainchild of Hayden Adams, an ex-Ethereum developer. It aims to provide automated solutions to anyone willing to trade tokens (AMMs). Uniswap’s main purpose is to create liquidity and therefore facilitate trading.
In September 2020, Uniswap created its own governance token, UNI, which was airdropped to millions of users. This “helicopter distribution” of free tokens acted as a great marketing tactic to increase the platform’s popularity. For most, the amount of money was literally life-changing, as the value of the distributed tokens reached more than $3000 shortly after their distribution.
Why is UNI one of the best altcoins to invest in?
Cheap GAS prices - compared to other decentralized exchanges, Uniswap rates are significantly cheaper.
Yield Farming opportunities - The average yearly ROI at the moment of writing is over 25%, making it one of the best altcoins to invest in for passive income.
Explosive popularity - the amount of funds locked in Uniswap has increased by 1000% from August to October, and there’s no sign of the trend slowing down.
What can we expect from UNI in 2021?
In just one month, UNI has entered an after-launch consolidation period. This is a great moment to buy, as the coin’s price is bound to rise once again. In a year’s time, we could see UNI trading at no less than $20, considering the ever-increasing popularity of the platform.
Swipe is a blockchain company that offers a host of cryptocurrency-related services including a digital multi-currency wallet (over 30 options), crypto payment services, but most importantly, cryptocurrency debit cards.
Unlike most other crypto debit cards, the Swipe Visa card lets you make transactions with your crypto balance, without manual conversion.
The SXP token is used to power and secure the Swipe network and convert digital assets into fiat at the point of sale.
80% of the SXP used to pay the network fees are “burned”, which turns the token into a deflationary currency in the process.
Why is SXP one of the best altcoins to invest in?
Binance partnership - In July 2020, Swipe was acquired by Binance. This strategic partnership’s goal is mass adoption and global crypto usage by making crypto accessible to millions of users worldwide.
Staking - Users can stake their SXP to receive network fee rewards, vote on network changes, and gain debit card perks like popular brand discounts and rebates.
What can we expect from SXP in 2021?
After the Binance partnership, SXP’s value soared more than 800%, followed by a 60% pullback. Considering their ambitious roadmap, this coin is undervalued at $1.3 and could realistically reach $10 by the end of 2021.
Founded by former Qualcomm, Intel, and Dropbox engineers in late-2017, Solana is a high-performance single-layer blockchain.
It’s considered to be the first web-scale blockchain, able to process over 50k transactions per second, by using a new, timestamped consensus mechanism called Proof-of-History (PoH).
SOL is the native token of Solana’s blockchain. It has different use cases like staking, governance, and transaction and smart contract fees.
Why is SOL one of the best altcoins to invest in?
Serum is a new high-speed non-custodial spot and derivatives DEX built on Solana.
Binance listing - traders and investors gained global access to SOL tokens, increasing adoption and liquidity.
What can we expect from SOL in 2021?
SOL was first listed on Binance in April 2020 and quickly grew more than 300% in less than 24 hours. It has since experienced steady growth and if this trend keeps up, we should see prices reach up to $8 by mid-2021.
Matic Network (MATIC)
Matic is a scaling solution for the Ethereum network that’s backed by Binance and Coinbase. It aims to provide an ecosystem for large-scale usage of dApps by using a decentralized Plasma operator mechanism.
The MATIC coin was launched through a Binance IEO in April 2019. It has a wide range of purposes, including paying network transaction fees and participating in the network PoS mechanism.
Why is MATIC one of the best altcoins to invest in?
Matic is one of the biggest blockchain projects in India, where cryptocurrency trading was banned from 2018 until recently. The Indian supreme court lifted the ban in March 2020, opening crypto to more than a billion potential users.
However, there are new rumors of a renewed ban that might be voted in parliament once again. This is clearly hindering Matic’s performance, as this kind of uncertainty is unappealing to investors.
What can we expect from MATIC in 2021?
MATIC has been quite consistent since the COVID19 crash in March with +130% profits. Considering this performance, we should be seeing MATIC tokens surpass all-time-highs and trade between $0.07 and $0.1 by the end of 2021.
If the Indian government decides to permanently lift the crypto trading ban, MATIC could surpass all expectations and experience massive growth ($0,2+).
WazirX is the fastest growing Indian cryptocurrency exchange, counting over 400.000 users. It is also part of the Binance ecosystem. Its utility token, the WRX, was launched through a successful Binance IEO in April 2020. It is now being used to fuel all the activities on the WazirX platform.
Why is WRX one of the best altcoins to invest in?
Largest crypto exchange in India - WazrX is one of the first Indian cryptocurrency exchanges and enjoys a “pioneer” status.
Binance partnership - having such a strong player in your corner is a great feat.
DeFi project with Matic - WazirX is partnering with Matic to work on an AMM protocol, joining the DeFi revolution.
What can we expect from WRX in 2021?
WRX’s price will be tied to the popularity of the WazirX exchange. If we draw a parallel to Binance Coin and the millions of Indian customers that could benefit from WazirX, the token should see remarkable growth in the following year.
Prices could easily reach $1 all things considered, making it one of the best altcoins to invest in. And comparatively to MATIC, WRX’s price could blow up exponentially if the crypto ban is permanently dropped in India.
What to remember when investing in altcoins in 2020
Now that we listed 10 of the best altcoins to invest in, there are several criteria to keep in mind when investing in cryptocurrencies. Following these best practices should increase your chances of remaining profitable in your crypto venture.
Learn the basics
Take your time to learn the terms and important metrics like trading volume, total supply, inflation, etc. This also includes basic knowledge on cryptocurrency trading if you plan to follow that road.
Diversify your portfolio
As the saying goes, don’t put your eggs in one basket. There’s no certainty regarding which crypto will be the most profitable in your portfolio. To minimize your risk, spread your funds across several altcoins. Focus on 1 or 2 low cap coins that could make 100x returns, and place the rest in more established projects (like ETH or LTC).
Before making an investment, take your time to learn the project’s fundamentals and overall sentiment. To do this, you should go through this short checklist:
Read the white paper
Explore social media platforms
Check upcoming events
More specifically, try to get a better understanding of fundamental analysis (FA), sentiment analysis (SA), and technical analysis (TA).
Be Patient and avoid emotional trading
Successful trading requires patience and logic. You won’t get rich overnight, so make sure to practice patience and consistency. Emotional intelligence is key to this process, but only a few are able to “tame” their feelings without making any losses.
Follow Bitcoin’s movements closely
Although we are talking about the best altcoins to invest in, you shouldn’t ignore Bitcoin. It will allow you to stay ahead of the game and predict altcoin movements. After all, it is the market leader.
Invest only as much as you can afford to lose
There’s no such thing as a 100% risk-free investment. It would be a huge mistake to put your life savings into any kind of venture, let alone crypto.
Best resources for altcoin opportunities
Here are some invaluable tools that will increase your chances of trading success:
Cryptopanic - this cryptocurrency news aggregator lists all things crypto-related: news, tweets, even forum topics. There’s a neat rating system that shows you how relevant a piece of news might be before even opening it.
Lunarcrush - is a social-listening platform that gathers social media data and interprets it into market sentiment. This helps cryptocurrency investors understand the value of a coin.
TradingView - this website allows you to consult trading charts of most cryptocurrencies. Additionally, you can freely access different technical analysis from some of the top traders in the world.
Twitter and Telegram - Follow official twitter and telegram channels to get the latest updates on blockchain projects.
The Pomp Podcast - this is one of the most popular podcasts in the crypto industry. Anthony “Pomp” Pompliano shares valuable investment knowledge and talks to some of the most influential people in the finance world.
Crypto Research Newsletter at Substack - thorough weekly analysis that goes in-depth on the latest crypto topics.
The cryptocurrency market is ever-changing and new projects are coming into play regularly. With the rising popularity of DeFi, some have become a lot more relevant lately, presenting unmissable investment opportunities.
In this article, we looked at several altcoins and discussed their short and mid-term potential. These are:
Binance Coin (BNB)
Stellar Lumens (XLM)
While this list is rather compact, we believe these altcoins carry a lot of potential for the short term future and the years ahead of us. However, note that the contents of this article do not constitute financial advice and should only be used as an introduction to further research.