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.
It helps to have an investor scorecard when evaluating new cryptos to possibly invest in.
Bitcoin
I’ve written quite a bit about Bitcoin, make sure you check out my dedicated post on whether you should buy Bitcoin.
I consider Bitcoin to be digital gold and the best store of value humanity has going into the future.
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.
I would also stake some Ethereum to benefit from staking rewards.
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.
Staing 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%.
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.
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.
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 – 13%
- Polkadot – 7%
- Chainlink – 4%
- Aave – 2%
- Cardano – 2%
- Uniswap – 2%
Beyond $100k, I would probably just keep it in Bitcoin.
What are your thoughts on my picks? Would you add anything else?
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.