Anyone with a remote knowledge of finance will understand that cryptocurrencies are the new wave of investment. Digital assets are now heralding the new wave of alternative investments, and many have been able to make millions by playing in the crypto market.
With the crypto market heading into 2021 on a strong note, interest in cryptocurrencies is at an all-time high. Everybody wants a piece of the crypto pie, and even with the crash that occurred in May, there is speculation that it was nothing more than a pullback that is setting the market up for even bigger gains.
The Great Bitcoin Dependence
That said, most people who are looking to enter the crypto market - and perhaps even some people who already play in it - continue to primarily stay interested in Bitcoin. The leading cryptocurrency continues to have significant dominance in the crypto market, and it seems almost like there is no way to knock it off its perch.
While names like Ether, Binance Coin, and Dogecoin have moved significantly this year, there remains an overly dominant desire for people to accumulate Bitcoin. It is understandable - Bitcoin remains the top digital asset, and its market cap is more than twice that of its nearest competitor, Ether. In fact, Bitcoin and Ether are the only two cryptocurrencies with market caps over $100 billion. So, it’s safe to see why anyone looking to get into crypto will want to hold it.
Still, the excessive reliance on Bitcoin isn’t exactly a good sign. If anything, it shows that there is still a fear of cryptocurrencies in general. People don’t want to take risks beyond what they know, and Bitcoin seems to always be the safer bet for these people. At least, with Bitcoin, they know that others go down if they do.
Despite this, it is important to remember that there are over 1,500 cryptocurrencies available. These assets continue to vie for investors’ attention and a chance at growing their stance in the industry. Bitcoin may always be on top, but it doesn’t provide the best chance of earning returns anymore. This is why it’s time to move beyond it.
Bitcoin’s Profitability Isn’t the Same
There’s no doubt that the late 2020 period was a momentous time for Bitcoin. The asset broke bounds and crossed the $20,000 mark for the first time ever. But, that wasn't enough. It continued its rise in 2021, hitting an all-time high of $64,000.
These numbers are undoubtedly great. It’s impossible to see any investment asset outside of crypto that will give you 300 percent returns. But, there have been assets that have performed much better this year alone.
Take BNB. The asset entered January trading around $40 and is currently sitting at $391 - and that’s after the crash that happened last month. At its peak, BNB hit $691. Even with the market crash, BNB is still up almost 1,000 percent since the year began.
Or consider Dogecoin. The asset started the year trading around $0.05 and is now around $0.4. That’s an 8-time increase. All of these assets - and many more - have delivered more substantial returns than Bitcoin this year already.
The problem with Bitcoin so far is that it seems to be wearing itself out. Drastic price increases aren’t coming as they used to. Think about it - at this point, it will take Bitcoin a rise of $3,000 in a day to measure 10 percent in gains. For BNB, it’s just $39. BNB investors have a higher likelihood of securing higher gains than Bitcoin investors. Sad, but true.
Where Do We Go Now?
Evidently, it’s time to find greener pastures. Bitcoin has established itself as a valuable asset across all standards. Investors who got in early or at its middle point have cashed out significantly.
Interestingly, investors are now looking for the next asset that can deliver such impressive gains. While the common thing to do will be to look at market trends and values to see which asset is the next to jump, the truth is that price isn't the only metric that determines these things. If it was, names like Litecoin and Bitcoin Cash would be surefire choices for people looking to put their money somewhere.
Instead, factors like functionality and digital currency supply are factors that should also be considered. If a cryptocurrency is to drive long-term value, it needs to be useful. At the same time, its functionality will be the key to its value as that will help it to survive any challenges and keep growing.
You will also need to consider supply and scarcity. Any currency that doesn't have a limited supply risks losing its value eventually. The reserves of its issuing company won’t be enough to prevent inflation. Bitcoin was popular because it has a hard cap of 21 million. Once these assets are done, there will be no more Bitcoins left to mine.
Every company that designs a cryptocurrency will need to have a method of combating inflation and keeping the asset’s value above water. Some use hard caps. Others burn tokens. Whatever it is, there are several other assets out there that you should consider - not just Bitcoin.