Here’s How 5 Altcoins Have Had Huge Gains in 2021

Bitcoin's rise has brought increased popularity to the digital asset space - altcoins included.
Here’s How 5 Altcoins Have Had Huge Gains in 2021
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As Bitcoin surged past $60,000 in the early months of 2021, altcoins also saw a huge rise in popularity, with new and veteran crypto investors alike vying to get in early on the Next Big Coin. And while we can’t predict the future, examining the past is a smart way to make some educated guesses. Here’s how 5 altcoins have had huge gains in 2021.

What is an Altcoin?

If you’re a crypto investor, you’ve heard of Bitcoin. And even if you’re not a crypto investor, you’ve probably still heard of Bitcoin. In fact, Bitcoin as a brand is synonymous to crypto in general, with the term bitcoin being used interchangeably with cryptocurrency, much like Kleenex is both a brand and a generic name for tissue. 

The success of Bitcoin and decentralized financial markets overall has led to a ton of other viable digital assets popping up. These are generally known as altcoins.

Most simply put, an altcoin is usually defined as any coin that isn’t Bitcoin. An altcoin is any crypto coin that launched after Bitcoin’s inception in 2009. Bitcoin, on the other hand, was the first peer-to-peer digital currency built on a blockchain.

Altcoins aren’t inherently better or worse than Bitcoin; they usually aim to capture an entirely different value proposition. For example: some altcoins provide decentralized smart contract capability. Currently, there are more than 9,000 cryptocurrencies in total.

What is an Altcoin Cycle?

The price of Bitcoin, and alternatively altcoins, tend to move in cycles of 4 years. These are the periods of boom and bust; bull and bear markets. These cycles move in the following phases:

Phase 1: Exponential Highs

In phase 1, Bitcoins and altcoins lead investors to new all-time highs. A “fear of missing out” (FOMO) leads investors to buy into the cryptocurrencies more from euphoria than common sense. Investors buy-in at price levels that are simply too high.

Phase 2: Correction

There is a time and a season for everything, and this includes investing in cryptocurrencies. In the aftermath of this 12-month, euphoric Phase 1, the market corrects itself. Overvaluation and profit-taking by investors leads to a healthy retracement. 

Phase 3: Accumulation & Recovery

After an extended correction, momentum begins to build as price wanes. This is where the smart investor knows to jump in. 

Phase 4: Continuation

For those investors who jumped in at Phase 3, or those who held on all the way from Phase 1, this is where their investment really pays off. It’s in these last 12 months where the bottoming-out is over and a new uptrend begins.

Altcoins that Saw Huge Gains in 2021

Thanks in part to the predictable Bitcoin-altcoin cycle, investors are able to make smart investments into crypto assets, much like the traditional stock market. The easiest way to predict what the top altcoin investments in 2021 are is to look at the gains of some of the most popular altcoins so far this year.

1: Ethereum (ETH) 

Ethereum is an open-source blockchain with smart contract functionality. By market capitalization, it is second only to Bitcoin. Despite its delayed transition to Ethereum 2.0, it is also the most actively used blockchain in terms of transaction volume.

While Ethereum has been trading for years, it’s market cap experienced significant growth in 2020-21. On Jan. 6, 2019, ETH was trading at just 152.09 USD. By Nov. 15, 2020, it had risen steadily to $461.01. By January of 2021, ETH really started taking off.

Since Jan. 3, 2021, ETH has risen from $1043.16 to a peak of $4182.79 on May 12. That’s 300% to the upside in 2021 alone. If you were lucky enough to get in at January 2019 levels, you would have seen a profit unjust south of 3000%.

As of June 28, 2021, ETH is trading at $2,048 – still up nearly 100% for the year.

2: Uniswap (UNI)

Uniswap (UNI) is a decentralized exchange that facilitates the trading of digital assets. First launched in November of 2018, it was created by a former Siemens’ mechanical engineer Hayden Adams.

2021 has been a great year for Uniswap (UNI) from the very beginning. If you were one of the smart investors who got in in January 2021, to its peak in late April, you saw gains of nearly 1000%.

UNI has only been on the market since 2020, where it virtually traded flat until 2021. The exchange continues to evolve however, having completed its V3 upgrade in May.

On Jan. 1, 2021, UNI began its huge climb from 5.17 USD. By March 1, it was already up to $22.16. UNI peaked at $42.77 on April 29, finally tapering-off and settling in the $25-range in mid-June. As stated, for investors who got out in late April, they saw gains of nearly 1000%. Of course, hindsight is 20/20; but for those investors still holding, over 300% gains in just 6 months isn’t chump change.

3: Chainlink (LINK)

Chainlink (LINK) is a third-party network that provides real-word data to blockchains. By market capitalization, Chainlink is currently the 15th largest cryptocurrency by market cap, down from its peak of #5 in 2020. Chainlink was founded in 2017 by Sergey Nazarov.

2021 was a very good year for LINK. Trading in January in the $11-range, it peaked in May at over $51. That’s just under 400% gains in only 5 months. LINK value has receded and retraced in the following months, settling in the $25-range by mid-June.

Actual trading data for 2021 includes: 

Price Action:

  • January 1: $11.25
  • May 10:  $51.85
  • June 15:  $24.93

4: Stellar Lumens (XLM)

Lumen (XLM) is the native cryptocurrency for Stellar, an open-source blockchain payment system. Stellar aims to connect the different financial institutions via blockchain, providing affordable transactions in developing markets.

Stellar launched in 2014 by Jed Mccaleb, founder of Mt. Gox and Ripple. Stellar initially received $3 million in seed money from Stripe to develop its platform. Stellar launched with assets totaling 100 billion Stellars.

If you bought into Stellar at the beginning of the year, you realized gains of nearly 500%. After a flat 2020, Stellar took off right after the beginning of 2021 and didn’t look back until a downturn at the end of May. Still, in the middle of June Stellar is trading at nearly 200% gains over the beginning of the year.

Actual trading data for 2021 includes: 

Price Action:

  • January 1: $0.13
  • May 12:  $0.73
  • June 15:  $0.35

Stellar supports digital representations of any currency, but it also has its own built-in token known as the Lumen.

5: Aave (AAVE)

Aave (AAVE) is a decentralized, non-custodial liquidity protocol where users can participate as depositors or borrowers. Basically, depositors provide liquidity while borrowers are able to take loans. Aave is a great place for traders to earn passive income.

Traders with the insight to invest in AAVE at the beginning of 2021, and sell at its peak in the middle of May, saw a nearly 400% return on their investment. Those who were still holding in mid-June were still up more than 200%.

Actual trading data for 2021 includes: 

Price Action:

  • January 1: $88.33
  • May 19:  $631.26
  • June 15:  $318.28

Aave is completely open-sourced. Just make your deposit and you’re ready to go. And you can also borrow against your deposited assets. You get paid interest on actual funds in your account. 

Investing in Altcoins

While investing in altcoins isn’t for the faint of heart, it can spell major returns if you play your cards right. This may mean HODLing a coin through intense ups-and-downs, following trends (4 of the 5 of the above assets peaked in May, while another peaked on April 29) or choosing to buy or sell at the exact right moment.

How to Invest in Altcoins

Altcoins can be very rewarding, though quite volatile. If you’re into high risk/high reward investments, then altcoins are the vehicle for you.

Investing in altcoins is quite different from investing in stocks. Let’s go over the different variations.

Base Coins:

Assets like Bitcoin and Ethereum are known as base coins. You can purchase base coins directly with legal tender like the U.S. Dollar. With base coins, it’s as simple as using your debit card to make the purchase.

Altcoins: 

You cannot purchase most altcoins directly with cash or another fiat currency. To buy altcoins, first you have to trade-in your fiat currency for a base coin to then exchange for an altcoin.

Cryptocurrency Funds & Futures: 

If you’d like to experience the upsides to altcoins, while at the same time curbing your exposure, then crypto funds and futures trading may be the thing for you. Funds reduce volatility and eliminate the need of maintaining a digital wallet.

Looking to break into futures? Check out the most popular brokers for futures trading.

Pros and Cons of Altcoins

So, you’ve decided to invest in altcoin? Maybe not yet? If you’re still on the fence, here are some Pros and Cons: why you should or should not invest your hard-earned cash in something you can’t even put your hands on physically: altcoins.

Pros:

  • Altcoins have enormous upside potential
  • They are a potential hedge against inflation
  • Most altcoins have a completely different value proposition than Bitcoin
  • The price of altcoins may fluctuate less than Bitcoin
  • Trading is becoming increasingly accessible

Cons:

  • The price of altcoins is extremely volatile
  • The market is already oversaturated
  • Altcoins have the potential for 100% loss
  • Market cap is lower than that of Bitcoin
  • Altcoins are still relatively new to the market

Should You Invest in Altcoins?

If you love the rush of going all-in on a risky bet, then altcoins might be the investment for you. Make sure before you invest, however, that you have a strong stomach: this roller-coaster ride could go on for a long time.

If you’re still looking for the best altcoins to invest in 2021, remember the 4 phases, try to buy low, sell high and avoid acting on emotion.

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