Since 2017, when several Bitcoin competitors flooded the cryptocurrency market, altcoin demonstrated its potential as an affordable and valuable investment. Many of those competitors became successful stand-alone products that function thanks to unique real-world applications. Not only have altcoins beaten expectations, but they have also created a more competitive crypto space with more opportunities for investors to further diversify their digital portfolios.
Towards the end of this past summer, concern about altcoin crept in thanks to a market-wide decline triggered by Evergrande’s $300 billion debt crisis. A valuation drop that threatened the existence of Tether and other smaller cryptocurrencies. Those fears, however, were calmed thanks to the altcoins which added more than $100 billion to the crypto market cap in a span of 24 hours. Included among those altcoins were Arweave, Avalanche and Cosmos.
Going into 2022, there is reason for optimism that altcoins will enjoy a strong run and, hopefully, build upon their momentum in the cryptocurrency market.
As of October 2021, there are over 12,000 cryptocurrencies available in the market, with close to 60% of the market occupied by altcoins. Given that they are derived from Bitcoin, the most popular and established cryptocurrency, altcoin prices typically mirror that of Bitcoin. However, with cryptocurrency investing maturing and new markets developing, altcoin will make price movements that are independent of Bitcoin’s trading systems. They improve upon any alleged Bitcoin limitations to create a competitive advantage within the crypto space. And, they are ideal vehicles for daily transactions.
The altcoin with the most potential heading into 2022 is arguably the most popular Bitcoin alternative, Ethereum (ETH). It’s the second-largest cryptocurrency in terms of market capitalization, and is worth over $450 million. Additionally, investments using Ethereum at the start of 2021 have reached as high as five times more in current value.
In the latter part of 2021, Ethereum, which is also a leading smart contract provider, has gained market momentum while boosting its value, triggering a trading explosion within the last year. Given that Ethereum is a general-purpose blockchain that processes transactions quicker on its network than Bitcoin, its market potential could lead to even stronger surges in its value in 2022. By the end of 2021, experts project Ethereum to reach an all-time price of just under $5,700, with forecasts expecting that price to more than double by 2024. Meanwhile, Ethereum developers announced that ETH plans to transition to Ethereum 2.0 by next spring, converting the blockchain to a proof-of-stake protocol. Decentralized finance and NFTs are engaging with ETH and there is more room for growth for Bitcoin’s biggest rival in the new year.
Another notable altcoin to pay attention to as the new year approaches is Chainlink. The Ethereum-based token that powers the decentralized oracle network struggled performance-wise in 2021. However, it’s believed that Chainlink has massive upside within the cryptocurrency market given that partnerships are rising monthly, including 84 integrations in September 2021. They have a lot of room to grow going forward thanks to their partnerships with major companies, including Google and Oracle. Additionally, more than 75 blockchains use Chainlink technology. Similarly, Chainlink is also being used by several data feeds, including USD currency pairs. Chainlink could integrate with various decentralized platforms and improve its stronghold within the market.
Uniswap (UNI) is another altcoin that’s steadily growing thanks, in part, to its being the go-to token for the Uniswap DEX. Uniswap also offers a pair of valuable core services for crypto investors to consider. UNI delivers liquidity and utilizes it, adding some variety and depth to one’s investment portfolio. With the increasing belief that De-Fi is the future, Uniswap may be a wise option, especially when you consider that you can lend it to liquidity pools to earn rewards.
Speaking for De-Fi being the future, there are a couple of appealing decentralized options that could spring to life in 2022. Stellar is a decentralized protocol that unites banking systems worldwide, using blockchain technology to deliver inexpensive transactions in emerging regions. Lumens, Stellar’s cryptocurrency, has been one of the best performing altcoins in 2021, with a market cap exceeding $8 billion. It has triumphed in the face of fierce competition from XRP.
Solana is another decentralized platform that launched in 2019, enabling people to use decentralized apps to deploy smart contracts, leading to its perception as a serious potential threat to Ethereum. Its price increased by over 500% between August and September 2021 while achieving an all-time price high during the year, making it one of the best performing digital assets around. Going forward, it’s another viable portfolio builder that crypto participants should keep an eye on.
The future of altcoins seems bright as more alternatives are being offered to diversify the crypto market and make cryptocurrency investment a more appealing venture for interested parties.
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