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7 Cryptocurrencies That Are Leading The Market Higher in 2021

Posted on Monday, January 11th, 2021 by MarketBeat Staff
7 Cryptocurrencies That Are Leading The Market HigherAn Influx Of Capital Is Driving Cryptocurrency Higher

There is an influx of money to the cryptocurrency market that is driving the entire complex higher. Not only is institutional interest peaking but recognition and use are on the rise as well. With Bitcoin setting new all-time highs 100% above the 2017 highs the number of new Bitcoin millionaires is on the rise too.

But Bitcoin is not the only cryptocurrency on the market today by far. The number of cryptocurrencies on the market has been growing steadily with more than 4,000 listed on Coinmarketcap alone. But that doesn’t mean they are all worth your time. Many if not most will not stand the test of time.

One way to judge the market’s interest in a cryptocurrency is its market performance gains. A cryptocurrency that is gaining in value is certainly one that you may want to own. The better method of judging the market’s interest in a cryptocurrency is the market cap. The cryptocurrency market is worth upwards of $1 trillion and growing, and most of that value is centered in the top seven. Together, the bottom 3,993 odd cryptocurrencies only account for 12% of the market and have yet to prove any lasting value.

#1 - Bitcoin

Bitcoin (BTC) is the leading cryptocurrency by a very wide margin. The coin’s dominance, or its percent of the total cryptocurrency market cap, has been running near 70% over the last few months and is on the rise. One reason is Bitcoin’s simplicity, it is the easiest by far to use, and the fact it has been around the longest. In a sense, Bitcoin is the “gateway to cryptocurrency” for many users because BTC wallets and exchanges are ubiquitous and many of the lesser-known coins and crypto-applications can only be purchased with BTC or some other cryptocurrency.

The drawbacks of Bitcoin are many but the main two are the cost of mining and the speed of the network. In terms of cost, Bitcoin is a power hog consuming more than 140 million terahertz of computing power every second of the day. In terms of transaction speed, the Bitcoin network processes about 5 transactions per second compared to the near-limitless amount of transactions per second handled by Visa and Mastercard

#2 - Ethereum

Ethereum (ETH) is the second biggest cryptocurrency market by market cap and growing. To help put the market into perspective and how important Bitcoin is to the overall picture understand that 2nd place Ethereum is only 13% of the total market. That’s a big difference from first to second.

The difference between Ethereum and Bitcoin is the use-case. Bitcoin has only one purpose, to provide a means of exchanging value across the Internet. Ethereum is meant to function as a sort of blockchain-based computer. You can use the ETH tokens as an exchange of value but the real value lay in smart-contracts. Smart-contracts elevate block-chain to a new level where complex financial transactions can take place and that is the foundation of defi or decentralized finance.

Staking, derivatives, insurance, lending, and interest-bearing savings accounts are only a few of the defi applications that are being built on top of the ETH network. Deposits into defi accounts surged in the first week of January 2021 rising more than 33% in that time. At last count, there was more than $22.5 billion of value locked into defi and this figure is growing daily.

#3 - Tether

Tether (USDT) is the 3rd most valuable cryptocurrency by market cap with a circulating value of just over $23.5 billion. Tether, unlike Bitcoin and Ethereum, is a stable coin whose value is pegged to the dollar. The value of the dollar may rise and fall versus BTC, ETH, or some other fiat currency but Tether dollars will always be worth $1.00. The Tether network is run by Tether Limited that issued coins, supposedly, on a 1-to-1 basis with deposited dollars.

Tether is a very controversial cryptocurrency because, in reality, it is not backed 1:1 by the dollar but by a combination of dollars and other securities. Tether is also central to a theory that Bitcoin’s 2017 price-spike is due to market manipulation involving the Bitfinex exchange. Proponents of the theory claim Bitfinex and Tether Limited issued un-secured Tether dollars and used them to artificially prop up the price of BTC. Regardless of all this, Tether trades $1:$1 with the dollar.

#4 - XRP

XRP  (XRP) is the native token of the Ripple network and a cryptocurrency that came under a lot of pressure at the end of 2020. Ripple is a cross-border platform that facilitates banking transactions in a decentralized manner. The network functions on the XRP token but Ripple’s founders say they have no control of it.

In late December 2020, the SEC charged Ripple Laboratories and two of the company’s execs for selling securities without a license. The charges are the end result of a much larger scandal alleging that Ripple Laboratories has been creating an unlimited number of coins “out of thin air” and selling them for profit.

In the lawsuit, the SEC claimed that XRP was a security instead of a commodity (like Bitcoin) because it was generated and distributed by Ripple Labs in a centralized fashion and was not being adopted by financial institutions for its advertised use cases. The SEC alleges Ripple executives sold 14.6 billion units of XRP for more than $1.38 billion to fund the company’s operations and enrich themselves.

#5 - Litecoin

Hardfork is a word every cryptocurrency investor needs to be aware of. A hard fork is when a blockchain splits into two new blockchains. Hard forks are not very common, and one coin tends to win out over the other, but there are some success stories. One of them is Litecoin (LTC). Litecoin is based on an original and very early version of Bitcoin (Bitcoin has seen some upgrades over the years) and aims to be a faster, lighter version of the original.

Litecoin holds the #5 position in terms of market cap with nearly $12 billion in total value. Among Litecoin’s advantages is the speed at which blocks are created. Litecoin is able to process transactions at a quicker rate because it creates a new block every 2.5 minutes compared to Bitcoin’s target of 10 minutes. Among Litecoin’s disadvantages is its use of memory-intensive algorithms that make it both more complicated and more expensive to run.

Litecoin was among the very first blockchain networks to adopt the Segregated Witness or SegWit protocol. SegWit effectively splits each block in two, the ID portion and the data portion, allowing better security as well as enhanced network speed.

#6 - Bitcoin Cash

While Litecoin’s launch was planned Bitcoin Cash (BCH) was not. Bitcoin Cash was born from a rift in the Bitcoin mining community that resulted in a split and the creation of new money. The rift centered on how to update Bitcoin to accommodate the growing number of transactions. The ultimate solution was SegWit but some in the community felt the move would take Bitcoin down a path that was never intended by its creators. Instead of being a vehicle for transferring value Bitcoin would become the store of value that it has become today.

The Bitcoin Cash hard fork took place on August 1st, 2017, and resulted in two different blockchains based on the same root. What this meant for Bitcoin holders was the immediate creation of new Bitcoin Cash coins in a quantity equal to their BTC holdings. Not surprisingly, the BTC Cash community ran into another hiccup that resulted in the formation of Bitcoin SV. Bitcoin SV, or Bitcoin Satoshi Version, is the version of BTC that most closely resembles the original coin. Bitcoin SV is 12th in terms of total market cap with a value of $4.8 billion or about 0.60% that of Bitcoin.

#7 - Cardano

Cardano (Ada) is an open-source cryptocurrency platform intended to be a public platform for running smart contracts. The platform was founded in 2015 and launched in 2017 by a team including Ethereum co-founder Charles Hoskinson. Hoskinson claims he started the Cardano project after a disagreement among the Ethereum development team. He wanted to keep Ethereum non-profit and the others didn’t.

The coin powering the Cardano network is called the Ada after Ada Lovelace. With a market cap of $9.9 billion, it holds 7th place in terms of market cap and it may move up the ranks later in the year. The Cardano network is branching into the world of defi and expected to bring its first projects on-line in early 2021. Among them is a new partnership with the eCommerce platform Bondly. Bondly is already running on the Polkadot network, the new project will bridge the two and is not the only project in the works for Cardano.


Cryptocurrency Is Worth Your Time

We don’t think cryptocurrency needs to be the bulk of your portfolio or even a substantial portion, but it is worth your time. The cryptocurrency is in the early stages of a global transition in finance that will center firmly on blockchain and cryptocurrency technology.

It’s hard to know which cryptocurrency will come out on top but that doesn’t matter. If speculating on the future value of a cryptocurrency isn’t within your risk tolerance there are other avenues to take. The rise of cryptocurrency has also brought a new industry along with it. Defi, or decentralized finance, offers a host of financial solutions that can provide steady, long-term gains for investors.

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