Time for a fun little prediction post for crypto in 2021. These are what I consider the best crypto buys for this year.
Note that while I consider them a good buy this year, I also mean that I consider them long-term plays with a timeline of 5 years plus. The crypto space is very volatile and these are very early days, so it makes sense to only invest with a long timeline if you want to have a good chance of making money on your investments without losing much sleep over them.
If you’re just starting off in crypto, I recommend you stick with Bitcoin and dedicate most of your time to learning how Bitcoin works. When you’re done with that, maybe think of Ethereum. The rest are more speculative bets.
Another good tip is to use the very best exchanges for buying or trading cryptos:
Read more: The best crypto exchanges and trading apps
It helps to have an investor scorecard when evaluating new cryptos to possibly invest in.
I’m also very interested in crypto lending services, both from a borrower’s and a lender’s perspective. I would recommend you check out BlockFi, YouHodler (only non-US residents) and Ledn, for example, and you can consider putting some of your cryptos to work by lending them out on these platforms.
Whatever you do, make sure you keep good records of all your crypto transactions by using a crypto portfolio tracking tool that can also double as a tax preparation tool. You can have a look at my review of CoinTracker, my favorite tracking tool.
Bitcoin
I’ve written quite a bit about Bitcoin, make sure you check out my dedicated post on whether you should buy Bitcoin.
I would also suggest reading the following books to further your knowledge of Bitcoin:
- The Bitcoin Standard
- The Internet of Money - Vol. 1
- The Internet of Money - Vol. 2
- The Internet of Money - Vol. 3
- 21 Lessons: What I've Learned from Falling Down the Bitcoin Rabbit Hole
- Mastering Bitcoin: Programming the Open Blockchain
- Programming Bitcoin: Learn How to Program Bitcoin from Scratch
- Layered Money
- The Price of Tomorrow
- Bitcoin: Hard Money You Can't F*ck With
- Digital Gold
- Cryptoassets: The Innovative Investor's Guide
Read more: The Best Books about Bitcoin and Crypto
I consider Bitcoin to be digital gold and the best store of value humanity has ever invented.
Ethereum
Ethereum has great plans and is benefiting from Metcalfe’s law, which makes the network very valuable. Practically the whole DeFi sector is built on Ethereum, and it should be a great long-term investment.
Read the following books to further your knowledge of Ethereum:
I would also stake some Ethereum to benefit from staking rewards. I recommend Binance and Kraken for staking.
Polkadot
I like what the Polkadot team is doing and linking different blockchains together seems to be a sensible long-term goal to me.
Read more about Polkadot here.
Chainlink
Chainlink‘s use case is that of an oracle that links on-chain contracts with off-chain real-world events. Again, this is one of the most important use-cases going forward, and I think Chainlink has a head start over its competitor oracle solutions.
Staking will also be available in the future for Chainlink. Read this comprehensive overview of Chainlink in 2021 for more information.
Aave
Aave is an open-source and non-custodial liquidity protocol for earning interest on deposits and borrowing assets. It is backed by very big companies in the crypto space, such as Winklevoss Capital, Parafi Capital and Blockchain.com.
Aave was originally launched as ETHLend, a lending platform that was founded in 2017 by Stani Kulechov.
The ETHLend ICO held in November 2017 raised $16.2 million.
ETHLend rebranded to Aave in September 2018, as it shifted from a peer-to-peer lending platform to a lending pool model.
Aave includes notable distinguishing features such as uncollateralized loans (Flash Loans) and “rate switching”, which allows users to switch between stable or variable interest rates to get the optimal rate when borrowing.
Liquidity mining has been a big part of the attraction in AAVE.
You can stake AAVE for an annual reward of around 4%.
Uniswap
UNI is the governance token for Uniswap. UNI was introduced on 16th September 2020 through a retrospective airdrop to users who have interacted with the protocol either by swapping tokens or by providing liquidity.
The UNI token allows token holders to participate in the governance of the protocol. Key decisions such as usage of the treasury or future upgrades can be decided through a governance vote.
Uniswap is a decentralized exchange (DEX) that makes it easy for users to swap an ERC-20 token for another ERC-20 token without the need of a centralized intermediary. With a DEX, traders do not have to deposit their tokens on an exchange and be exposed to the security risks of a centralized exchange.
Cardano
Created as an alternative to Ethereum, Cardano is the first peer-reviewed decentralized blockchain protocol utilizing a scientific approach. Cardano’s developers aim to create a blockchain platform that can process more transactions at a low cost. At the same time, to protect users’ data by integrating the distributed ledger technology and the smart contract infrastructure.
Cardano was founded by Charles Hoskinson, a mathematician who was part of the Ethereum founding team. The ICO of Cardano’s token ADA in December 2016 helped the team raise over $62 million. Subsequently, the project was launched on September 29, 2017.
One of the most significant market caps and a huge daily trading volume prove that Cardano is very popular among cryptocurrency enthusiasts. Its four-year history shows a stable growth of the coin’s value despite periodic price drops. A large number of partners support Cardano’s long term growth potential.
While Cardano might see a lot of positive price action, I’m not convinced of it in comparison with Polkadot. Its founder is also too eccentric to be the leader of a blockchain that aims to be a big player in the whole crypto ecosystem.
Portfolio Allocation
Here’s how I would allocate my funds between all the above crypto assets if I had around $100k to invest:
- Bitcoin – 70%
- Ethereum – 15%
- Polkadot – 7%
- Chainlink – 4%
- Aave – 2%
- Uniswap – 2%
Beyond $100k, I would probably just keep it in Bitcoin.
Other Projects I’m Keeping an Eye On
- Kusama
- Cosmos
- Solana
- Algorand
- Regen
- Celo
- Synthetix
- Kira
What are your thoughts on my picks? Would you add anything else?
Hi Jean
would like to know your thoughts on Electroneum? They have a few interesting projects ongoing within their eco system such as mobile airtime top ups for a mass amounts of providers, Electricity top ups already being used in African countries and their own version of a gig platform like fiver called AnyTask. Recently I have seen their Ad campaign reach the USA on televsions. I dont really hear much about them in the crypto space as such but they have real world usage and from what I can tell , no one else has went as far as them (Airtime, Utilities, AnyTask Gig Platform and a new deal with American Airports for Parking)
Seems like their biggest success was raising money for their ICO – I wouldn’t touch this. Seems very focused on hype and marketing.
Cannot go wrong with ETN in my opinion. The also have a proven CEO with entegrity and value.
Opinion only.
Hey Jean, I’m very new to the crypto game and only have small investments that can be make each month. I’m torn between Bitcoin and Ethereum. My head says Bitcoin but am I to late to that party? Or should I invest in Ethereum instead? I’d love to know your thoughts. Thanks!
Even if you’re buying small amounts, I’d still suggest getting a bit of both. Bitcoin is the safe bet that will still appreciate, while Ethereum is a riskier bet with high upside potential.
Thank you for taking the time to respond, Jean.
Hi Jean,
I bought some Doge and stellar coin. Any comment on both?
I would love to know your reasoning first.
Jean, I’m more than a little late to the crypto game. I’ve just started investing a few hundred here & there on Coinbase. But have been avoiding Bitcoin and Ethereum because I feel my small investments could gain greater long-term returns on the lower priced coins like Polgon MATRIX and ANKR. Am I totally wrong in my thinking??
In my view, yes you are wrong, although it’s a common way of thinking. You haven’t missed the boat at all. This is still early in the game for the crypto space in general – the end goal is the revolutionizing of the whole finance industry.
If we were to use the analogy of the internet here, I would say we’re in the year 2001. So yes, you haven’t entered in the really early days of the mid-90s, but you’ve thus avoided the huge volatility swings and scams by doing so, and can now invest in a pretty solid product with clear long-term potential.
Thanks for your answer. That actually makes me feel better about investing in crypto. Just a quick follow-up.
Jean. I wanted to get your thoughts on Cardano in regards to how it compares to Bitcoin. For example, I invested a small amount, $1000 into Cardano. It made sense, I figured I would only get a tiny fraction of a single Bitcoin. But if I spend that $1000 on Cardano I would get 750 complete tokens. – On paper, Cardano is a far superior token in terms of how it was engineered and its, speed, and ability scale, And yet its lackluster value does very little as it just floats above $1. – Why aren’t people scooping up on these better/cheaper coins. Why isn’t Cardano skyrocketing beyond Bitcoin?? At the very least it should be killing Ethereum. Shouldn’t it??
They’re completely different cryptos, and whether you buy a whole token or a fraction is actually irrelevant. You need to think of the value you’re putting in and how that will stay constant or grow over the future.
What you prefer to have, just as an example, 0.05BTC that grows 3x over the next 5 years, or 500 ADA tokens that become worthless over the next 5 years?
As Jean stated it is not too late. I would also like to point out that price is not what makes a good investment. If something goes up a 100% percent, it does not matter if you have bought .0001 BTC or 100 MATIC, either way you double your money.
The real question is the stability of that investment. BTC and ETH are solid choices when viewed on the risk/reward scale. There is still risk in terms of the unknown effects of certain-to-come regulatory actions on the part of governments but they are both already “too big to fail” in terms of the amount of money private and institutional investors have placed in them.
The second tier cryptos have a higher risk/reward ration. These include tokens like DOT, SOL, MATIC, ADA, LINK, and even BNB. They are tokens which have solid use case stories and adoption but like the early days of the Web version 1 in the 90’s, these Web version 3 “stocks” could just as easily crash and burn.
And then you have the rat poison (I’m looking at you Doge Coin). Completely unknown, untested, and unstable projects that are hugely risky but are stupidly profitable for the lucky few who time it right or are in on the scam. And remember that for every person that makes 10X on one of these, there’s a group of people who have lost the same amount. So here’s where you do a mental exercise. Can you take a hundred dollars out of your wallet and light it on fire and watch it burn without regret? If so, you just might be a Doge Coin buyer. 🙂
And finally, you should consider binance.us. The fees are SOOOO much lower than Coinbase with a larger selection of tokens. In addition, you can purchase BNB to pay for your fees, get another .25% reduction on the transaction costs AND get exposure to the appreciation of the token.
My .000002 BTC (two cents at current prices),
E!
Well said. With regards to exchanges, you’ll find a whole range of fees from different exchanges, and ultimately you need to see which exchange you feel most comfortable with.
For most beginners who are looking for an easy-to-use exchange with all the proper regulatory concerns taken care of, Coinbase or Kraken are solid choices.
Another one to add might be YIELD APP. https://www.yield.app/about-us
They ‘ve got a interesting concept/platform similar to swissborg. As a US citizen, I’m not allowed to participate, but the tokens seem like a high risk/high reward play too.
Cheers,
A
What about Bitcoin Gold (BTG) and Bitcoin Cash (BCH)? There’s been some concern in recent months as to the environmental aspect to BTC Mining and the effect miners can have. In addition there’s concern if BTC can innovate rapidly enough as a form of payment in the “real world” without having to be converted to fiat, will have the capacity to handle the volume of transactions as opposed to BCH?
Your thoughts?
They’re both zombie projects. Even if environmental concerns were valid and payments were a real issue, there are better cryptos than BTG (total scam) and BCH.
IMO BTC will never be a “real world” form of payment in the same way that gold is not a “real world” form of payment. They are both stores of value.
And they both have environmental impact. However, unlike gold which cannot have its impact mitigated due to physical limitations in the process, as power sources become more “green” so to does the environmental impact of BTC decrease. What I am curious about is what happens when the last block is mined and there’s no longer incentive in that respect. Will hashrates drop and transaction fess increase even more?
Agreed.
It’s too early to say what will happen when the last block is mined. By then if Bitcoin grows in value and market share, transactions will probably be more expensive, yes. Energy might have become cheaper by then, so the costs of the miners would be lower. Finally, there is the chance of the Bitcoin protocol being changed in order to adapt to the market conditions.
I am really optimistic about bitcoin. You can see that in the last few years the number of investors who turned to bitcoin increased dramatically. Imo there is a bright future for crypto in the next 5-10 years.
Wouldn’t touch alts though. For multiple reasons.
What do you think about the huge jump for BitTorrent (BTT) and FileCoin (FIL) ?!
I keep “hearing” that FileCoin will be a major player by this time next year…
They might, there actually are a ton of promising projects that I don’t have time to analyze deep enough to be able to take a sizable bet on. At some point, you realize that there are time constraints and that you need to limit your exposure to just a few crypto assets else you risk investing in something you don’t understand with all the extra risk that brings.
What are your thoughts on Chainlink and Atom?
For me it is a hedge investment in “the darkest timeline”.
I purchased both in early July 2020 after reading this article
https://www.coindesk.com/how-chainlink-and-cosmos-fit-into-chinas-grand-blockchain-initiative
Both have recently been “re-rated” along with Polkadot and done quite well for me. (knock on wood)
In fact, part of the reason I started following you (in a non-creepy, professional kind of way, ha ha ) was that I already held 5 of the 7 you suggested.
I’m also a fan of any staking rewards above 5%.
BlockFi currently pays 6% on BTC balances less than 2.5 and 5.5% on any ETH balance. A safe play for someone like me that doesn’t totally “get” the whole defi space.
Similarly, I am staking DOT on Kraken for 12%.
If you elect to have interest paid in tokens it can really have a compounding effect as the asset appreciates.
p.s. I’m also a fan and HODLer of SNX.
Thanks for your comments Elio. Chainlink and Atom are both interesting, and they could be good bets.
I think there’s an important distinction to be made between projects that one can be convinced of in terms of future staying power, and others that have potential for making a quick buck, but are absolutely not guaranteed to work long term.
I would classify anything apart from Bitcoin and Ethereum to be a moonshot at the moment. That’s not to say that in a year or two there won’t be other cryptos that I would be happy to bet long-term on. It’s just that we’re still very early in this space.
The big advantage for all crypto investors is that there is immense room for growth and lots of time for people to get involved even in other non-investor roles.
I think I may be to old and dumb to figure out cryptocurrency or whatever, what to buy and how to do it all! I only have a few hundred dollars to invest, so I have to make smart decisions, but like I said, I don’t have a clue of what to do! But I’ve lived on prayers my whole life and the Good Lord has never let me down, plus I’ll take all the advice you’re willing to give me. Thank you so much…
PS
Is there a “Buying/Investing In Cryptocurrency For Dummies” book or site🤦♀️?
I can’t give advice on investing, but I can say that probably the best option for beginners to get started in crypto is to buy Bitcoin from Coinbase and hold it there, keep it simple.
IMO, Coinbase is not a great choice. The fees are BONKERS. Binance USA site (not the dot com site since that is international and restricted to US customers) is the better choice.
The fees are lower and there is a greater choice in tokens.
Bitcoin is a solid choice for “set it and forget it”. I also like the BNB token on Binance as it has a solid appreciation trajectory since it is the utility token for both domestic and international Binance exchanges. It is basically their stock price.
Having looked into Binance further in comparison to Coinbase, I would agree with your comment with respect to fees.
On the other hand, I still think Coinbase is a more household name and probably easier for newcomers to start off. Both Binance and Coinbase are great options, if you don’t own any crypto yet, just choose the one that you feel is easier to reach your goal of owning Bitcoin or other cryptos.
Note that I believe that US customers typically use a VPN to bypass the restrictions on using Binance.com.
Hi Jean,
Looking forward to following 🙂
Before the crack down on US customers I had an account at Binance.com. However, they then sent a couple very stern emails about policy changes which forbid usage by US citizens including the risk of loss of funds. So while it is technically possible to access via VPN, new KYC requirements still make it difficult to utilize fully.
Recently, I had tried to use my Bitfinex account to move XRP in order to be ready once the lawsuit fails. However, even though my account is “level 2” verified I was unable to transfer tokens over, getting a “verification required” error. A good point that maybe this transfer would work over VPN.
In my opinion, you can get much much more profit from the recently released projects. Those ranked high in ICO stage and then are in releasing stage. You can easily make the money 10X and in a very limited time. But it needs to follow many channels and groups and sites to keep up with new projects and study them. Especially those not on Binance yet.
True, but you’d spend an inordinate amount of time and arguably still be taking shots in the dark. And to make big returns you’d need to still invest a good amount of money in the first place, which means an amplified level of risk. I’d prefer to focus my research on a handful of cryptos at max that are already established and have great long-term potential. In the long term, the returns would still be very big but you would need to put in much less work and have much lower risk of getting wiped out.
Excellent advice for new buyers of crypto…buy and hold a few coins with long-term potential.