Bitcoin remains by far the largest cryptocurrency in terms of market capitalisation, and who can quibble about its 300% price gain in 2020?
But that’s nothing compared with smaller cryptocurrencies like Ethereum, Chainlink, Polkadot and Cardano which appreciated by an astonishing 500% to 700% over the last year.
Take a look at the following table of the top 10 performing cryptocurrencies over one year:
These might seem like exceptional returns – and they are when stacked up against more traditional investments like stocks and bonds – but in crypto terms they aren’t unusual.Source: Revix
Bitcoin and Ethereum make up more than 70% of the whole crypto market’s value and continue to break all-time highs week after week. The cryptocurrency asset class has been hands-down the best-performing investment category you could have chosen over the last decade, turning out a remarkable 39 583% return over that period. You read that right.
It means that a R10 000 investment in the broader crypto market 10 years ago would be worth R3.96 million today.
While Bitcoin is enjoying growing support from institutional investors and big corporates, with Tesla being the latest blue chip to acquire a record breaking $1.5 billion (R22.4 billion) because of its perceived role as digital gold – and thus a hedge against inflation – the other cryptocurrencies shown above have entirely different forces powering their prices.
“We’ve been waiting for institutional players, from payment providers to big corporates to hedge funds to pension funds, to enter the crypto space and this is now happening at a rapid pace,” says Sean Sanders, CEO and founder of crypto investment platform Revix.
Although Bitcoin remains by far the largest crypto in terms of market cap, several altcoins (a terms used to define any cryptocurrency that is not bitcoin) have significantly outperformed Bitcoin over the last year. For example, Ethereum is up 630% over the last year, Chainlink 697%, Cardano 533%, and Polkadot 428%.
These returns are well ahead of Bitcoin at 267%, traditional assets like gold (up 18%), the JSE Top 40 stock index (15%) and the S&P 500 stock index (16%).
“This is in part thanks to the explosive rise in decentralised finance [DeFi], which is a subsector of the cryptocurrency industry where entrepreneurs are building automated trading and lending systems atop blockchain networks that don’t require any intermediaries like banks or brokers,” says Sanders.
One way to get broad exposure to these emerging cryptocurrencies is by investing in one of three diversified ‘crypto bundles’ offered by Revix.
Revix was launched to make it easy to invest in cryptos such as Bitcoin and Ethereum, the two largest cryptos by market cap.
Those who want to own a broader spread of cryptos can purchase the Top 10 Bundle, which spreads their investment equally over the 10 largest cryptos and automatically updates their holdings on a monthly basis.
There’s also a Payment Bundle for those who want exposure to those cryptos that are looking to become digital cash (like Bitcoin or Litecoin).
Then there is the Smart Contract Bundle, which spreads your investment over those cryptos being deployed in the rapidly-developing ‘business’ side of blockchain, where digitately automated ‘smart contracts’ can execute transactions, removing the need for intermediaries in many business operations such as supply chains and financial transactions.
You can also purchase USDC on Revix, a ‘USD stablecoin’ fully backed by the US dollar as well as Pax Gold which is an asset-backed token backed 1:1 by physical gold bars held in London Brinks Vaults.
Here’s how these bundles performed over the last year to date relative to Bitcoin:
The next boom has begun
While many investors in traditional assets have remained cautious about plunging into cryptos, believing either that it is a bubble waiting to burst or that it has already run too high, a little historical perspective may help.
Bitcoin’s astonishing rise from a few cents in 2009 to over $47 000 in just over a decade has been accompanied by several ‘bubble’ warnings. Those warnings are merited, given its extreme volatility. After hitting $20 000 in December 2017, bitcoin pulled back sharply – by 84% – before resuming its remarkable recovery.
What’s different this time is the entry of strong buying support from both retail investors and institutions like Tesla, PayPal, BlackRock, Fidelity, JP Morgan, MicroStrategy, Harvard’s endowment fund and Twitter founder Jack Dorsey’s company, Square, as well as billionaire investors like Paul Tudor Jones and Stanley Druckenmiller.
The influx of capital into crypto markets comes during a time of extreme and unprecedented economic uncertainty. It marks an important shift in the public’s perception of cryptocurrencies: rather than being seen solely as a speculative asset for those looking for eye-popping returns, cryptocurrencies now maintain a much broader appeal.
Bitcoin will likely remain king of the cryptos for the foreseeable future, but attention is shifting to the investment potential of smaller cryptocurrencies like ether (or ETH, the coin that makes business possible on the Ethereum blockchain), Cardano, Chainlink and others.
ETH has broken several new all-time highs since the start of 2021, breaking $1 500 in the last month and pushing its market cap above $150 billion.
While Bitcoin will only ever have 21 million coins in issue, ETH has no ‘hard cap’ and is expanding its coin issuance by about 2% a year.
The Chicago Mercantile Exchange (CME) is set to debut its new futures contracts on ETH this week, which will generate additional buzz around the coin.
The Ethereum blockchain (a giant and detailed ledger of transactions) is the platform on which an entirely new financial architecture is being built, where you can borrow, lend, earn interest, and craft business contracts that need no outside intermediary. This is the fast-growing world of DeFi and ETH is the currency that greases the system. The Ethereum blockchain is being upgraded to handle bigger volumes at speed, and more ETH coins are being held rather than traded – adding a potential element of scarcity of the kind that has driven bitcoin to such heights.
Have I missed out?
“As with all emerging sectors and technologies, the journey for crypto will continue to have its ups and downs,” says Sanders. “Price corrections are a natural part of any investment market and are especially natural in the crypto ecosystem. But one thing is clear: crypto has arrived and the time to get ahead of crypto’s mainstream breakout is starting to run short.”
How can I safely invest?
If you’ve been watching this year’s crypto boom from afar, and want to buy Ethereum, Bitcoin or a diversified crypto basket, now’s your chance to get started by signing up for a free account at Revix. All you need is your ID and proof of address.
The minimum investment is R500, and while you might think that crypto prices have run away from you and it is too late to catch the crypto bullet train, many clients ignore the price movements and simply invest a little every month – known as dollar cost averaging.
Revix charges no monthly account or subscription fees, but rather a simple 1% transaction fee for both buys and sells and a 0.17% per month rebalancing fee (which amounts to 2.04% a year) on the total bundle value held (this fee is not levied on single cryptocurrencies like Bitcoin or the Pax Gold token).
Brought to you by Revix.
For more information, visit Revix.
This article is intended for informational purposes only. The views expressed are not and should not be construed as investment advice or recommendations. This article is not an offer, nor the solicitation of an offer, to buy or sell any of the assets or securities mentioned herein. You should not invest more than you can afford to lose, and before investing please take into consideration your level of experience and investment objectives, and seek independent financial advice if necessary.