After the speculative peak at the start of 2021, cryptocurrencies initiated a fairly healthy correction process with the crash of May 2021. With the Covid-19 crisis, the intense risk aversion of the beginning of 2020 caused a point major low on many cryptocurrencies. The subsequent easing of financial stress, massive injections of liquidity, as well as recent moves towards institutionalization sparked an extremely powerful rally in virtual currencies that ended in a resounding crash in May. But the market recovered very quickly and returned to dazzling growth.
There is no shortage of cryptos showing 3- or 4-digit performance over 1 year. The challenge for the end of 2021 will be to seize any bullish or bearish opportunities, despite medium-term risks due to the global market evolution.
1. BITCOIN: THE REFERENCE CRYPTO CURRENCY
- Capitalization: $600 billion
- Daily volumes at the end of 2021: $20 to 40 billion (5% of capitalization)
- 2020 price variation: + 170%
Bitcoin (BTC) remains the main cryptocurrency and gives a good overview of the trends of all other cryptos. 2020 will have been a year of all records for Bitcoin. Its capitalization has multiplied by more than 2.5 over the year! Bitcoin's capitalization has overtaken that of companies like LVMH or Bank of America.
The rally in Bitcoin can be explained mainly by the injections of liquidity, the drop in financial stress that results, but also the desire to institutionalize cryptocurrencies. 2021 will be a defining year for Bitcoin. The dangers would be those of an abusive speculative dynamic or a powerful return of risk aversion due to economic readjustments.
Conversely, Bitcoin should continue to be fueled by the fall in the dollar index, the continued injections of liquidity, and its future use. However, the risk of corrections could appear in the medium term due to possible strains on liquidity.
2.ETHEREUM: THE MOST USED BITCOIN AND CRYPTO CHALLENGER
- Capitalization: $230 Billion
- Daily volumes at the end of 2021: $15 to 30 billion (10% of capitalization)
- 2020 price variation: + 340%
Ethereum (ETH) is the second largest cryptocurrency in terms of valuation. In annual average performance, ETH ranks among the best large cryptocurrencies. ETH is often considered the most widely used virtual currency. This is because of the presence of many tokens (cryptocurrencies issued by companies) that are based on the use of ETH. ETH may be associated with a stock market index, as the companies that make it up are players in the crypto industry.
However, ETH remains more volatile than Bitcoin. Daily volumes in relation to capitalization are proportionately greater. ETH is interesting to follow in 2021 depending on the extent of democratization among agents and the financial stress on the markets.
3. BINANCE COIN: THE ALTCOIN THAT SURPASS THE BIG CRYPTO
- Capitalization: $ 45 billion
- Daily volumes at the end of 2021: $1 to 3 billion (4.5% of capitalization)
- 2020 price variation: + 110%
For its part, Binance Coin went from nearly $1.7 billion in capitalization to more than $ 3.5billion, which shows the scale of capital flows in 2020 and which suggests quite well the break between the increase of 2017 and that of 2020: investment is no longer just speculative.
Binance Coin, issued by the famous platform of the same name (Binance), is among the 10 largest cryptocurrencies in the world. Binance is one of those giants who are profiting from the democratization of cryptocurrencies in individual savings. A rise in the prices of the main crypto currencies could only benefit the platform. However, due to the correlation between the price of BTC and Binance Coin, special attention should be paid to possible further corrections in 2021.
4. RIPPLE XRP: MUCH MORE THAN A CRYPTO, A PASSPORT TO DECENTRALIZED FINANCE
- Capitalization: $ 30 billion
- Daily volumes at the end of 2021: $2 to 6 billion
- 2020 price variation: + 135%
Among the biggest cryptocurrencies, the ripple stands out in the landscape. The Ripple has indeed benefited less from the return to the levels of late 2017 / early 2018, although its capitalization has multiplied by more than 2.5 in 2020.
Ripple is a start-up that has made no secret of its ambitions this year to set foot in DeFi (decentralized finance). Above all, the company offers its services to institutions in order to make fast and international payments. Although its annual average performance is statistically lower, the importance of ripple makes it an attractive cryptocurrency.
Ripple is a cryptocurrency widely used by many institutions. Nonetheless, its performance is less prominent and steeper than most other digital currencies. Ripple therefore fits into the framework of large virtual currencies, regularly benefiting from bullish phases. Recently, San Francisco-based Ripple was targeted by the SEC for issuing unregulated "securities", which caused the price of Ripple to fall sharply. But the latest news seems to show that the SEC may favorably reconsider his accusations.
5. LITECOIN LTC: THE COMPETITOR OF BITCOIN
- Capitalization: $8 billion
- Daily volumes at the end of 2021: $1.5 billion to $4 billion
- Price variation 2020: + 160%
Litecoin (LTC) is a competitor to Bitcoin. It retains its place in the top 15 capitalization cryptos. Its quantity is ultimately limited to 84 million LTC, against 21 million for BTC. To date, 80% of LTCs are in circulation, compared to 90% for Bitcoin. This cryptocurrency accepted by many agents offers a higher speed in terms of mining (2min and 30 seconds per block).
Litecoin is a cryptocurrency to keep in mind, if only because of the momentum set in motion in 2020. However, unlike BTC, Litecoin is still well below its records. As long as the trend remains strongly bullish across all cryptos, Litecoin could benefit from a relative catch-up effect. Conversely, risks may persist with crypto tensions.
6. CARDANO ADA : A CRYPTO BASED ON A DOUBLE BLOCKCHAIN AND WELL SET IN THE TOP 10
- Capitalization: $35 billion
- Daily volumes at the end of 2021: $1.5 billion to $4 billion (9% of capitalization)
- Price variation 2020: + 350%
Cardano (ADA) is listed in the 5 largest cryptocurrencies to date. Cardano is a blockchain platform that distinguishes itself from its competitors by the existence of a dual blockchain. This allows secure and scalable transfers (capacity to respond to high demand).
Even if Cardano has not returned to its late 2017 / early 2018 levels, the momentum set in motion remains interesting while trading volumes have reached new records, which shows the interest of investors in 2021. The stake will be whether the company will be able to meet its ambitions.
Cardano is one of the virtual currencies that strongly benefited from the boom observed from the fall of 2020, which explains the very strong outperformance of Cardano compared to the crypto market.
7. UNISWAP: THE LITTLE CRYPTO THAT GOES UP
- Capitalization: $10 billion
- Daily volumes 2021: 500 million to 1.4$ billion
UNISWAP is a very recent crypto currency which is already almost in the top 10 of the world's virtual currencies. The goal of UNISWAP is to facilitate the trading of cryptocurrencies. Based on the Ethereum Blockchain, UNISWAP uses a decentralized financial protocol, which makes it one of the leaders in the decentralized finance sector. UNISWAP users can thus benefit from staking by providing liquidity to facilitate trade.
UNISWAP has been listed since September 2020, in particular to reward former users of the platform, launched in 2018. The issuance of UNI tokens is expected to take place over 4 years to eventually issue 1 billion units. To date, 60% of the capitalization is issued. The recent success of UNI shows that the outlook may be more encouraging than other virtual currencies.
8. PAX GOLD: A CRYPTOCURRENCY TO PROTECT YOUR WALLET
- Capitalization: $100 million
- Daily volumes: $10 and 20 million
- 2020 price change: + 18.6%
PAX GOLD is a particular cryptocurrency, which allows you to reduce the risk in your wallet. Issued by the company Paxos, the objective of the cryptocurrency is to reproduce very exactly the variations in the price of gold. Thus, PAXG tokens are issued at 60,000 units, with corresponding reserves via the company Paxos.
This virtual currency could thus be interesting in the coming months in view of the movements of gold to come at the end of 2021 and 2022. The fall in tensions on sovereign rates could indeed favor the stability or the rise of the PAXG. The favorable context for gold, and its low volatility (gold is 3.5 times less volatile than Bitcoin), makes it possible to tend towards more stable performance in its portfolio.
CRYPTOCURRENCIES: WHAT PROSPECTS FOR END 2021?
2020 and early 2021 (until the crash of May 2021) will have been the period of all records for cryptocurrencies. Although the record prices are not everywhere to be seen, the period was mainly marked by the massive influx of capital. This influx is the result of a drop in risk aversion, an injection of liquidity and, above all, a desire for regulation and institutionalization. The fundamental trend is expected to remain strong at the end of 2021, although risks to liquidity and democratization remain. The recent speculative movement, triggered following this fundamental rise, should be among the major risks on prices for the end of 2021.