Best Cryptocurrency Investments 2021

Last updated on 16th January 2021

[Disclaimer]

The security and integrity of digital funds is one of the main reasons to invest in cryptocurrencies in 2021 and beyond. The blockchain is independent of banks and governments. There are no middlemen to reckon with and nobody exercises control over digital asset operation.

Is cryptocurrency a safe investment?

Cryptocurrency investments are not without risk, but we’re sure there’s no end in sight to the popularity of digital currencies. The degree of safety of this investment depends on the market at any given point in time and on your strategy.

Is cryptocurrency a good long term investment?

Surveys show that 81% of crypto investors on average say they are in Bitcoin for the long haul. Just 3.1% use it to pay for goods. Just over 7% use cryptos for business transactions.

The Best Long-Term Cryptocurrency Investment

Bitcoin has been the market leader ever since the first bitcoin was mined, but it hasn’t been without its ups and downs. After reaching almost $20,000 at the end of 2017, Bitcoin collapsed to less than $3,500 by the end of 2018. Today, it’s doing really well again. Bitcoin accounts for 78.59% of the digital currency market with a market cap of approx. $597 billion in January 2021.

Bitcoin is the mother of all cryptocurrencies, it’s the crypto reserve currency. That means that all other cryptocurrencies can be traded against Bitcoin on any cryptocurrency exchange. That’s why Bitcoin might still be the best long term cryptocurrency investment. Another argument in favor of Bitcoin is its global acceptance. However, the invention of Bitcoin was followed by another promising variant of an open blockchain system: Ethereum. This equally impressive crypto project, brought a new concept to the market, which works very effectively alongside Bitcoin’s because they complement each other. This is indicative of how diverse the blockchain can be according to tech entrepreneur Andreas Antonopoulos.

According to him, Bitcoin and Ethereum solve different problems. Bitcoin offers robust security as a reserve currency with a great deal of infallibility and immutability. This is because it’s built simply. For this reason, it doesn’t enable smart contracts. Ethereum does because it’s more complex, but it also loses some of the solidness that Bitcoin possesses. Some people see Bitcoin and Ethereum as king and queen above all crypto projects that followed them.

Litecoin (LTC), the “light” version of Bitcoin, plays the bronze to the reigning king’s gold and Ethereum’s silver. It has some of Bitcoin’s best properties with a few important changes. Litecoin transactions are much faster than Bitcoin’s, which can take up to 10 minutes to be confirmed. Its system requirements are also much lower than Bitcoin’s. You can mine Litecoin using an ordinary computer. Easy and fast makes it a great option for both users and investors.

When is Cryptocurrency a bad Investment?

Investment risks of cryptocurrency include volatility, lack of regulation, fallibility, and proneness to be affected by termination or forks. Unanticipated market sentiment changes can lead to rapid price fluctuation. Cryptos can drop in thousands of dollars of value quicker than you can bat an eye.

Neither central banks nor governments regulate cryptocurrencies. This aspect began attracting more attention recently. There are debates on whether to classify them as a virtual currency or a commodity.

There is no failsafe way to prevent hacking, human error, and technical glitches. Finally, discontinuation and hard forks can threaten cryptocurrency trading. There is always financial volatility around hard forks in that prices change very quickly. Sometimes, platforms will suspend trading if underlying market prices are not reliable. Reputable, solid exchanges make every effort to notify their clients of potential forks, but there’s no guarantee they’ll manage.

Risks of Cryptocurrency CFDs and Spread Bets

Some exchanges allow you to trade Bitcoin and Ethereum through a CFD account or a spread bet. You’d face a slightly different risk than if you were to buy them directly. With these trades, opening a position is as easy as depositing a percentage of the trade’s value. The full trade value determines profits and losses. Cryptocurrency volatility in tandem with margin trading can incur not insignificant damages.

Gapping can affect these trades. Excessive volatility can move prices between multiple levels, meaning the price can move to a higher or lower level and skip an intermediate one. When the market is very volatile, slippage is quite common. The platform might execute your stop-loss at a level far less optimal than what you requested. This can amplify your losses in unfavorable market conditions.

Ask about and review the costs involved before you start trading. Other asset types may have lower charges. Charges on CFD crypto or spread betting trade are usually higher and will be deducted from your profit.

Last but not least, there can be a great deal of variation in crypto prices used to determine CFD position and spread bet values compared with fiat currencies.

Best Cryptocurrency Investment Company

Robinhood provides investment services not only in cryptocurrencies, but also ETFs and listed stocks. There is no investment minimum and no investment fees for a basic account. The premium account is paid, but offers far more features.

Best Cryptocurrency Investment Funds

Competing for the top position in this category are 500 Startups, Pantera Bitcoin Fund, and Grayscale. 500 is the most active venture capital fund worldwide. Apart from having invested in crypto and blockchain startups like Hijro, the Silicone Valley based startup has an investment portfolio of thousands of companies in tens of countries.

Pantera Bitcoin Fund had generated ROI of over 10,000% after deducting expenses and fees by the summer of 2018. The fund was launched in 2013. Its lifetime returns had exceeded 25,000% by the end of 2017.

Grayscale’s fund for cryptos posted record gains in the third quarter of last year. It is the biggest fund of its kind in the world.

Cryptocurrency ETF

Cryptocurrency ETF make it possible for investors to access the market through intermediary accounts. While regulatory oversight is still scarce, some banks have been jumping the bandwagon on this quite lucrative investment.

Banks Offering Cryptocurrency ETF

Among the banks that offer this investment option are Silvergate Capital, the Spanish BBVA, DBS, and London’s Standard Chartered. Silvergate is the least known of the four. However, it has become top choice for the buoyant crypto industry’s banking needs. Its clients include major hedge funds, hallmark cryptocurrency exchanges, and renowned investors. As crypto ETF gains momentum, Silvergate is positioned as a big beneficiary.

BBVA (Banco Bilbao Vizcaya Argentaria) is the second-largest bank in Spain. Coindesk reports that they’re planning to start a crypto custody and trading platform, which will be based in Switzerland and available to European clients. The launch is expected in the immediate future. Regulatory approval is pending.

Insiders report that Standard Chartered bank has brought a number of crypto exchanges together to create an innovative, customized digital asset trading platform. The crypto trading group is made up of four exchanges and several major over-the-counter traders. A settlement token based on Ethereum will be available.

Among the companies involved in the trade and custody project are well-known players like ErisX and LMAX. Standard Chartered has invested in custody provider METACO, who will support the project. It has the support of Cobalt, a U.K.-based trading tech company, in which the bank has invested as well.

DBS is the largest bank in Southeast Asia. Their digital exchange offers accredited and institutional investors custody and trading services and tokenization. By tokenization, we mean transforming rights to shares in private equity funds, unlisted companies, or other assets into a unique digital form. 10% of the digital exchange is held by Singapore Exchange. The bank owns the rest.

Cryptocurrency ETF Funds

There are some reliable and lucrative funds worth mentioning. These include BLCN and KOIN. The large-cap BLCN places a wide focus on the tech market worldwide, tracking the returns of companies involved in use, support, research, or development of blockchain technology. Among this fund’s biggest holdings are Square Inc., the mobile payment provider, and Microsoft Corp.

KOIN is also a large-cap exchange trade fund, which mainly invests in growth shares. KOIN tracks companies that have adopted, invested, or otherwise been involved in blockchain technology or cryptocurrencies. Among their biggest holdings are PayPal and the international semiconductor company NVIDIA.

Best Cryptocurrency to Invest in 2021

Apart from buying and holding, there are staking and interest accounts. The Ethereum ecosystem recently turned 5. A few years ago, the projects it’s made possible were unimaginable. Consider DeFi: in five years, the platform for smart contract development expanded the Blockchain concept and gave developers an opportunity to create high-performing products and apps. In consideration of that, experts concur that some of the best cryptos to invest in this year may be ChainLink, AAVE, Compound Finance, and Polkadot. (This is not financial advice. Do your own research and consult your financial advisor).

ChainLink

This network is aimed at making secure inputs and outputs available for complicated smart contracts that one could link to real world payments, events, and data. ChainLink’s decentralized financial system can power ETH blockchain oracles. You simply can’t miss its impressive and steady growth.

AAVE

This non-custodial, decentralized lending protocol makes it possible for users to borrow and lend digital assets and profit from rate fluctuations. Its lending pools are similar to those of our next choice, Compound Finance. AAVE is unique in that it introduced flash loans as the first market protocol. These loans help create a more convenient user experience and increase any earnings generated. It’s possible to get a loan without collateral at once. You must return the loan in one block to guarantee transaction safety. If not, you render all parallel actions invalid and illicit.

Compound Finance

In the latest DeFi cycle, this was one of the first companies to attract widespread attention. Before adjusting to its current level, their token COMP’s value skyrocketed. This cryptocurrency lets users borrow assets or earn interest. Both processes are based on the Ethereum blockchain. It is pretty simple to contribute to a liquidity pool on this coin. Anyone can start earning compounding interest immediately because the rates are based on demand and supply and adjusted automatically. On July 30, 2020, the company’s locked assets were worth $790 million. Just two months earlier, this number was $100 million.

Polkadot

While not based on Ethereum, Polkadot has a strong roster of features that can be used by DeFi projects. Polkadot investors have seen some fascinating use cases as the company enabled the development of independent blockchains. DeFi built on Bitcoin and Ethereum will use bridges to interact with Polkadot’s ecosystem.

Best Cryptocurrency Investment Strategy

Cryptocurrency investment strategies have two elements: technical analysis and fundamental analysis. Technical analysis uses support, indicators, price charts, resistance, and historical patterns and trends to forecast future price movements. It enables market players to perceive past performance statistics in their complexity. In addition, this analysis studies the principle of demand and supply, which has an undeniable impact on the price. Conversely, fundamental analysis is based on the impact of the market on the asset price, ex. its ups and downs. It also studies the impact of news within the company.

Factors to Consider

Relevant factors include profit margins, cryptocurrency news, financial statements from top management, natural disasters, the pandemic, and political events. Analysts can determine whether the asset is overpriced or underpriced based on these underlying forces.

There are several main differences between the two types. Technical analysis helps one establish the right time to enter and exit the market. On the other hand, fundamental hones in on the currency’s intrinsic value. It considers longer asset history periods. One is more likely to use fundamental analysis for long-term investments in this context. Technical analysis is more suitable for swing and short-term traders.

Typically, traders opt for technical analysis, while investors use only fundamental analysis. The latter tells investors whether to purchase and hold the asset for a given term. The former tells them about quick profits.

Fundamental analysis takes into account the fact that it’s not just the past that affects the asset. Typically, technical analysis studies historical asset behavior rather than deal with current events.

Do Your Own Research

It pays off to learn about crypto exchanges before you even begin developing a crypto investment strategy. According to Bitcoin.com, there are about 500 cryptocurrency exchanges on the market to choose from. Before you proceed, talk to more experienced traders or investors and read other reliable reviews.

Storing Digital Currency

You will need to store any cryptocurrency you buy. One option is a digital wallet. An exchange is another. Each wallet comes with different benefits, security levels, and technical requirements. Before storing your funds, investigate the storage options available.

Diversification is Key

No investment strategy can succeed without diversification, and this applies to cryptocurrency investments as well. You shouldn’t put all of your money in one single coin. With thousands of coins on the market, you should spread your investment around to at least a few.

What’s the Return on cryptocurrency investments?

2020 data show cryptocurrency returns are around 20-fold compared to those of equity investments or conventional currencies. Of course, this goes both ways. The risk of cryptocurrency investments is substantially higher. Still, coins promise enormous returns. In our next section, we will cover the best investment providers.

Binance Interest & Staking

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Binance needs no introduction. They offer two types of staking: locked and flexible. With locked, the user earns interest by holding locked staking-supported cryptocurrency. Neither trading nor withdrawing is supported during the locked period. Users who need to hold their cryptos to get higher returns and for a longer period of time will find this a suitable staking option.

Flexible staking is just what the name implies: no locking. You can trade whenever you want. On the downside, the returns are lower, but that’s only natural. This type of staking is a good choice for people who want flexible assets and don’t mind lower proceeds.

Kraken Interest & Staking

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To take advantage of staking with Kraken, you choose an asset to stake from those at your disposal n your spot wallet. These staked assets yield rewards twice a week. The highest returns are on the cryptocurrency Flow; annual rewards of +20%.

Every investment is augmented by a cryptocurrency investment profit calculator. These calculators are easy and simple to use and help you calculate your potential altcoin profits at the speed of light. You can also see unrealized profits. There are buy and sell commissions fields to enter data in. These are flat rates, not percentages.

Cryptocurrency Investment Trackers

You can track your investments using Excel. In fact, this is the simplest way. All you need to do is enter text in a cell, then convert it to type “Stocks data.” This relatively recent feature links to an online data source, which is why it is seen as linked data, and is available to Microsoft 365 subscribers. Those links make it possible to bring back a wealth of useful information that you can use and work with.

How do you get your Investment in Cryptocurrency paid out to you?

One good approach to get an investment paid out to you is by buying shares of a company that will then pay out a dividend to you as a shareholder. The world of cryptos mirrors this practice. Quite a few cryptos pay dividends out to token or coin owners.

Staking and holding are the two most common ways for an investor to access dividends. With the latter, you earn interest on your coins by purchasing and holding a specific token or coin in a wallet. With the former, you earn it by getting a special wallet to hold a proof-of-stake coin in.

Examples of ways to get your investment in cryptocurrency paid out to you include Komodo, NAV, and NEO coins. Komodo pays its holders a yearly reward rate of 5%. NEO rewards its investors with GAS, which powers their blockchain network. 8 GAS are distributed per every new block generated. Users of NAV who stake their coin holdings get up to 5% interest. This is how cryptos give buyers added value, giving them a chance to generate a passive income from their crypto holdings.

Cryptocurrency: Take Profit, leaving initial Investment

This is one of the more popular investment strategies, but what is it exactly? It’s also known as the “up 40%, sell 20%” approach. Basically, you sell 20% of your position when a stock price increases by 40%. Then, you sell another 20% when it goes up another 40%. What this leaves you with is approx. 60% of the original investment off the table and 125% of the initial position. It’s also possible to apply this method on what’s left of your position.

Minimum Cryptocurrency Investment

One of the best things about crypto investments is that there’s no minimum investment amount. Exchanges such as Coinbase allow users to purchase as little as two dollars’ worth of Bitcoin. Considering that most platforms charge buying, selling, or transfer fees, investing very small amounts can be a bad idea.

Cryptocurrency Investment With an IRA

You can invest your individual retirement account in cryptocurrencies, but it’s not explicitly permitted under IRS regulations. The Internal Revenue Code only specifies transactions and investments that have been banned, not the self-directed plans that are open to investment. Crypto custodians and brokers claim cryptocurrency IRAs are permitted as capital assets on the basis of not being explicitly disallowed by the IRS.

How to Buy a Bitcoin IRA or Cryptocurrency IRA

Given how complicated currency computing is, people no longer buy cryptocurrency directly from crypto companies. A private exchange is the most common way to buy a Bitcoin or altcoin IRA.

Cryptocurrency Investments in the News: Pro and Contra

Career investors Warren Buffett is one of the biggest opponents of crypto. He believes these assets don’t produce anything, making them nothing but speculative. This is because Bitcoin’s actual use as a means of payment is still very limited.

Unlike him, the experts at Blackrock believe cryptos are here to stay. Their iShares solution makes crypto investing accessible and transparent. Extensive risk management is ensured via their proprietary technology Aladdin®.

Legit Cryptocurrency Investment Sites

This section will cover three of the most popular (and of course legal) investment platforms: Kraken, BlockFi, and Binance.

Kraken

Kraken offers the option to purchase crypto directly, interest programs, crypto ATMs offering Bitcoin and, of course, an exchange. It’s possible to buy online or from someone in person.

Binance

Binance offers staking, lending, and other services enabling users to generate a passive income, including an affiliate program. In essence, staking is an alternative to mining that takes up less resources. You get staking rewards by validating transactions and performing other functions on the network. You have to hold your funds in a suitable wallet, which the exchange provides. The token holding (stake) encourages network security maintenance through ownership.

With lending, you earn interest on your holdings passively. You lock your funds to collect interest on Binance’s peer-to-peer lending platform. You can set the interest rate based on the current market one or let the platform fix it.

BlockFi

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BlockFi has a wide variety of investment services, including crypto-based real estate loans and stocks. People who are holding assets in Bitcoin, Litecoin, or Ethereum can put them toward a property purchase, a property renovation, or another investment in real estate.

BlockFi offers loans in USD with crypto as collateral. Basically, you give them Bitcoin, Litecoin, or Ethereum and they give you a fiat loan. It takes only a few minutes to apply for a loan. When approved, the client gets a loan in USD, USDC, or GUSD in less than two hours. It’s transferred to their wallet or bank account.

Many holders of cryptocurrency find it viable to sell for USD, but instead of selling, they can use it as collateral towards a loan.  This way, they still own their funds, but they get access to fiat at the same time, which they can invest in their projects. BlockFi also offer business loans with cryptos as collateral.

Best Cryptocurrency Investment Apps

Here are the best cryptocurrency investment mobile apps:

• Best for Simplicity: Gemini
• Best for Global Users: eToro
• Best for Privacy: Crypto Pro
• Best for iPhone: Voyager
• Best for All-in-One Software: Altrady
• Best for laymen: Coinbase