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This article highlights seven cryptos that are likely to rise over the next year. This is based on my analysis of what is going on with their blockchain platforms and other developments in their platforms. In most cases, these cryptos are easy to buy and are all available on Coinbase Global (NASDAQ:COIN) or Binance US.
The fact remains that cryptos have outperformed stocks this year. For example, year-to-date, as of Oct. 26, the S&P 500 index is up 22.0%, according to Yahoo! Finance and the GSPC index fund. But the top five cryptos, in terms of market cap, are up much more than that.
For example, Bitcoin (CCC:BTC-USD) is up 111%, Ethereum (CCC:ETH-USD) is up 470%, Binance Coin (CCC:BNB-USD) is up 11.74 times, Cardano (CCC:ADA-USD) is up 11.3 times, and Solana (CCC:SOL-USD) is up 105 times.
So you can clearly see that it is no match. The problem is this is looking backward. We want to find the best seven cryptos that will do well next year. Will the legacies above continue to carry the torch, or will new altcoins pick up the slack?
Let’s dive in and look at these cryptos:
Stellar Lumens (CCC:XLM-USD)
Top Rated Cryptos: Bitcoin (BTC-USD)
Source: kitti Suwanekkasit / Shutterstock.com
Market Cap: $1,170 billion
Bitcoin is by far the largest cryptocurrency in the world with a market cap of well over $1.17 trillion, according to Coinmarketcap. This is still lower than the largest stock in the world, Apple (NASDAQ:AAPL) which has a $2.477 trillion market value, according to Yahoo! Finance.
But in the last year to Oct. 26, Apple stock has risen 30% from $114.01 to $149.92. In contrast, Bitcoin has jumped 375% from $13,075 per BTC token to $62,085, as of Oct. 22. That alone should tell you where the momentum is between these two asset classes: the largest stock vs. the largest crypto.
For example, if Bitcoin doubles in the next year and Apple rises the same as last year, Bitcoin will have a $2.34 trillion market value and Apple will be at $3.21 trillion. But if this occurs again in 2023, Bitcoin will have caught up, having a $4.68 trillion market cap and Apple’s will be just $4.18 trillion.
In other words, in two years, it is very possible that Bitcoin could be the largest single asset in the world, and a digital one at that. This assumes that the world begins to put a huge value on digital decentralized assets.
Given its track record so far, and given the fact that there is a limited supply of BTC tokens, this is very possible. In case this happens, investors might want to switch at least a part of their investment in Apple into Bitcoin.
Source: Filippo Ronca Cavalcanti / Shutterstock.com
Market Cap: $490.9 billion
Standard Chartered Bank recently wrote a report on Ethereum indicating it could be worth between $26,000 and $35,000. For it to get there, the analyst said that Bitcoin would have to trade at $175,000 per BTC token. As I have shown above, this is not out of the realm of possibility, especially given its performance.
In fact, Ethereum has significantly outperformed Bitcoin in the last year. On Oct. 22 last year it was at $393.89. As of Oct. 26, 2021, it was at 4,186.18, over times that prior number.
Ethereum has already made several changes this year that make its blockchain platform more attractive to long-term investors. One change is the implementation of EIP 1559, which I have written about earlier.
This started the process of lowering the number of ETH tokens out, thereby deleting a certain amount in each transaction. This will give it a deflationary supply, that could help push Ethereum higher. Once the change to a proof-of-stake validation system occurs, it could also make Ethereum more popular with institutional investors.
Ethereum now controls the bulk of new smart contracts such as Defi (decentralized finance) and other Dapps (decentralized apps) such as NFTs (non-fungible tokens). However, one big problem with Ethereum is its huge transaction costs and its slow transactions speeds. This has spurred the development of alternative cryptos, such as Cardano, Solano, Algorand and Avalanche.
Top Rated Cryptos: Cardano (ADA-USD)
Market Cap: $71.6 billion
Cardano is one of the big four cryptos with its huge $71 billion market cap. Moreover, in the last year, ADA crypto has risen nearly 20 times from 10.31 cents on Oct 23 to $2.16 a year later. This makes it one of the highest-performing cryptos so far this year.
Cardano is a proof-of-stake blockchain platform that recently had a hard fork in Aug. 2021. This means it brought smart contract functionality to the network. This allowed developers to build decentralized finance (DeFi) apps on Cardano. The hard fork developed by IOHK, the crypto’s promotion firm, set this smart contract function to start as of Sept. 12.
That probably explains much of the recent move in ADA crypto. For example, as of July 19, it reached a trough of $1.0563. Since then it is up 104% as of Oct. 26.
IOHK expects that the new smart contract ability will entice developers to use Cardano as a Defi platform. They also hope it will be a utility coin to build NFTs (non-fungible tokens).
Cardano began development in 2015 and was started by Charles Hoskinson. He wanted it to outperform Ethereum, as he saw many issues there, having worked to build Ethereum from the beginning as a co-founder. He did not actually launch Cardano until 2017.
Four years later, Cardano is now finally ready to offer smart contracts and dApps. It has also had five major platform upgrades. It seems to offer more “appealing optimizations based on scientific research and formal verification” according to one analyst who compared it to Ethereum.
Cardano enthusiasts hope this will be the extra secret sauce that will allow Cardano to catch up with Ethereum in terms of developers using it for their apps. If that happens, expect to see ADA crypto move significantly higher.
Market Cap: $62.1 billion
Solana is the 6th largest crypto with a market cap of $62 billion. Since a recent trough at $23.49 on July 19, Solana crypto has skyrocketed to $206.66 as of Oct. 26. That represents a gain of 779.78% in the space of just three months.
One reason for this is that investors now realize that Solana is quickly becoming an alternative to Ethereum in the smart contract arena. Solana’s blockchain technology is focused on the decentralized app (or “Dapp”) market. Its claim to fame is its ability to scale transactions and high throughput speeds.
For example, Solana claims a maximum throughput of more than 50,000 transactions per second (TPS) and block times of as low as 400 milliseconds. By comparison, Bitcoin does about 4.6 TPS while Visa (NYSE:V) does about 1,700 TPS as of 2019. This scalability is something Solana is known for with its transactions.
Solana uses an innovative hybrid consensus model, including proof-of-history and proof-of-stake. This has helped it gain interest from small-time traders and institutional traders alike. The Solana Foundation is also trying to spur the development of Solana smart contract apps in the decentralized accessible on a larger scale.
Much has been written about the competition between Solana and Ethereum (and other “Ethereum killers”). The problem with Ethereum is now showing up in the competition for NFTs (non-fungible tokens) and NFT marketplaces, as I recently wrote about.
For example, Solana is now starting to pick up market share from Ethereum in the NFT marketplace arena for NFTs. My recent articles in Medium and Newsbreak address the competition between Solanart.io (Solana-based NFT marketplace) and Opensea (Ethereum based NFT marketplace).
Suffice it to say that until Ethereum can lower its gas fee (transaction costs), both Solana and Cardano are going to continue to pick up market share in the smart contract arena. That will help push up these two cryptos even higher.
Top Rated Cryptos: Avalanche (AVAX-USD)
Source: Hakan GERMAN / Shutterstock
Market Cap: $15.7 billion
Avalanche is the 14th largest crypto with its market capitalization of $15.7 billion. It is well known as a competitor to Ethereum due to its ability to deliver fast transaction speeds. As a result, AVAX crypto tokens have risen significantly in the past three months.
For example, on July 19, it fell to a recent low of $9.65 per AVAX token. But now as of Oct 26, it is up 601.5% to $71.34. This is an amazing return for investors in just 3 months. And it is likely to keep on moving up.
One reason is that Avalanche purports to have a platform processing speed of 4,500 transactions per second. By comparison, Bitcoin can handle only seven transactions per second and Ethereum just 14, although that may have increased recently with its EIP 1559 changes.
This will allow Avalanche to handle huge decentralized applications (Dapps) that need to have scale. Recently the Avalanche Foundation, a non-profit that oversees the development of the Avalanche blockchain, raised $230 million by selling AVAX tokens.
The money will be used to support Defi (decentralized finance) apps on the Avalanche blockchain. This will, in turn, increase the popularity of AVAX tokens as the Defi apps gain traction.
Market Cap: $12.5 billion
Algorand is the 19th largest crypto with its $12.5 billion market cap and is seen as a potential Ethereum “killer” along with Cardano and Solana. In fact, in the last 3 months, ALGO crypto has risen 173% from 69.72 cents on July 19 to $2.02 as of Oct. 26.
One major reason is that the government of El Salvador recently recognized Bitcoin as a legal tender. The government signed an agreement with a major Latin American crypto firm, Koibanx, which signed a “cooperation agreement” with El Salvador on Aug. 31. As part of that deal, they chose to use Algorand as the underlying blockchain in order to help it build out its digital asset infrastructure.
This could have a huge effect on ALGO crypto once the deal gets implemented. For example, Algorand will assist the country to build a national blockchain Covid certification program. It will also help build a point-of-sale credit issuance system and various smart contract financing platforms.
The reason Koibanx chose Algorand was due to its active advantages over Ethereum. This includes its “performance, scalability, security and functionality required to implement large scale projects around the world.”
It also doesn’t hurt that a major hedge, Skybridge Capital, has taken a huge position in Algorand. The fund has taken a position of $700 million in cryptos. This includes seeding a new $100 million ETF fund specifically for investments in ALGO crypto.
Top Rated Cryptos: Stellar Lumens (XLM-USD)
Market Cap: $9.2 billion
Stellar is the 23rd largest crypto with its $9.2 billion market capitalization. Stellar is well known as a fast-growing blockchain payments system. Its focus is on easing global money transfers for the world’s “unbanked” to allow money to transit borders, connecting banks, payment systems and individuals.
As a result, XLM crypto has performed very well this year. It closed last year a bit over 13.24 cents on Dec. 31 rose to a peak of 73 cents by May 10.
After that, it fell to a tough of 21.15 cents on July 18 and subsequently rose to 38 cents as of Oct. 24. That means it is now up 187% for the year-to-date, even though it has been a bumpy ride. I suspect, though, that its gains are likely to continue.
One advantage that Stellar has in the money transfer business is its low transfer and transaction costs. Stellar has a cost of just 0.00001 XLM, the equivalent of 0.000038 cents per transaction. This is much cheaper than many international transfer transaction costs. They typically cost 1% or more.
However, a major reason now to buy Stellar crypto is due to its new deal with MoneyGram International (NASDAQ:MGI), announced on Oct. 6. MoneyGram, the remittance company, signed an agreement with the Stellar Foundation, to build a payments bridge that streamlines money transfers.
In addition, MoneyGram now allows crypto wallets connected to the Stellar Network to access its global retail platform. MoneyGram will also enable “near-instant backend settlement,” using the USD Coin (CCC:USDC-USD) crypto coin and using the Stellar network.
Once this is implemented it could lead to major uplift in XLM crypto tokens. That will especially be the case if this arrangement leads to other major remittance deals around the world.
Conclusion: Top Rated Cryptos
These seven cryptos are likely to do extremely well over the next year based on their historical patterns and also based on developments within each blockchain platform.
However, investors should keep in mind that investing in cryptos is not for the faint-hearted. Huge gains and losses will likely be seen along the way. This means that investing in any of these cryptos should be for only a portion of your portfolio.
However, keep in mind that this is also not investment advice for any particular person. I simply want to point out that one must have a speculative mindset in investing in these cryptos.
On the date of publication, Mark R. Hake held a LONG position in ETH-USD. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.
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