There are many options and alternatives in the cryptocurrency asset class. Most of the attention has focused on Bitcoin and Ethereum, the two leading cryptocurrencies that represent more than 75% of the total asset class market cap.
However, there are more than 8,480 other tokens that make up the entire market. As digital currencies remain a growing asset class, many newcomers will fail. Choosing a token that can be traded over the long term can be a challenge.
Only recently has the total market capitalization increased above the one trillion level. As of February 15, the amount was around $1.466 trillion. The cryptocurrency market is still small compared to other markets. Apple has a market capitalization of nearly $2.233 trillion, much higher than the value of any digital currency.
In the market, the strongest assets tend to perform their best over time, while the weakest ones are often overlooked. Polkadot and Cardano are two of the top ten cryptocurrencies by market cap. Their position tells us that they will likely last for the next few years.
The asset class continues to grow
In 2017, when Bitcoin rose to over $20,000 per token for the first time, the market cap of the entire digital currency asset class moved above the $800 billion level. A little more than three years later, with Bitcoin trading at more than double that level, the asset class’s value has grown to nearly $1.5 trillion. Bitcoin alone accounts for nearly $ 903 billion.
Meanwhile, the massive volatility of Bitcoin and other cryptos means market cap and individual value are moving targets. The number of tokens is growing every day and stands at 8,484 as of Tuesday, February 16th.
Bitcoin and Ethereum have the largest share of market cap. Another 8,438 coins has the potential to challenge both of them.
Polkadot and Cardano are two cryptocurrencies with a market capitalization of over $25 billion and are in the top 6 cryptocurrencies. Bitcoin, the barometer for the asset class, hit new highs, surpassing $52,000 on February 17, although it is currently trading below that round number.
Cardano is number four on the list
Cardano is currently the fourth leading cryptocurrency by market cap. Cardano’s symbol is ADA.
At $0.9399 per token currently, Cardano has a market cap of $296.41 billion.
Cardano is a cryptocurrency network and open source project running a public blockchain platform for smart contracts. The Cardano Foundation in Zug, Switzerland, developed the project.
Cardano is a non-profit platform that allows multiple digital currencies. The website states:
“Cardano restores confidence in a global system – creating through science, a safer, more transparent and sustainable foundation for individuals to transact and exchange, systems to regulate, and companies to grow.”
Polkadot is sixth
Polkadot’s symbol is DOT. At $31.45 per token, it is the sixth leading cryptocurrency having a market cap of $28.60 billion.
Polkadot is a multi-chain interchange and heterogeneous translation architecture that allows customized side-chains to connect to the public blockchain.
Ethereum co-founder Gavin Wood created the protocol. Polkadot builds on previous blockchain networks, offering several fundamental advantages, including scalability, specialization, a stand-alone co-working environment, self-governance, and ease of upgrade.
The trend is higher
Position in the volatile hierarchy of the cryptocurrency market is a moving target. Polkadot and Cardano have seen significant price increases.
By the time you read this article, the ratings may have changed. Meanwhile, Polkadot and Cardano price trends were higher along with other asset classes.
The chart highlights that Polkadot has traded from a low of $2.932233 to a high of more than $30 on Feb.16.
Cardano was trading at lows of below 2 cents in October 2017 and more than 83 cents per token on February 17.
Cardano hit a record high of $1.172654 in early 2018. After trading below 10 cents at the end of 2020, Cardano has climbed to the top with the rest of the digital currency asset class.
The impressive climb places the crypto’s fifth market cap behind Polkadot, and above XRP in mid-February 2021. Since then, Cardano’s position has shifted.
Crypto mania comes in waves
There are so many digital currencies to choose from today. While Bitcoin and Ethereum are the asset class leaders, and the ones that get the most attention, the most attractive candidates for appreciation are likely cryptos that are outside the daily radar of the market.
Someday we may all need to own cryptocurrencies for practical reasons, so for that reason I follow three rules when considering investing in one currency.
First, I only took risks that I was willing to take away. With more than 8,480 tokens in circulation, many are likely to fail and disappear.
The second rule is that I tend to like those who have gained a critical mass in terms of market capitalization. Therefore, leading cryptos with a market cap of over $1 billion have the best chance of success. As of February 16, sixty of 8,484 digital currencies are eligible.
Finally, upside price action in an asset class is likely to come in waves. The first wave ended in late 2017 and early 2018 when Bitcoin and many other tokens rose to early highs.
After three years of price consolidation, the second wave has brought Bitcoin substantially more than double its 2017 high and the market capitalization of the entire asset class is closer to the $1.5 trillion level.
I hate buying rallies. In October 2020, Square, a technology payments company founded by Jack Dorsey Twitter, announced that it had invested $50 million in Bitcoin. At $11,000 per token, Dorsey’s purchase is surprisingly cheap as SQ more than quadrupled its investment over the past four months.
The latest push higher for Bitcoin and the asset class comes after Elon Musk announced that Tesla is buying $1.5 billion in BTC and will accept BTC as payment for its future car products. While the news is bullish, digital currencies are a market. All markets tend to advance to much higher levels than anyone believed during a bullish trend.
When gravity hits, cryptocurrencies often fall to illogical levels on the downside. We are now in the middle of a substantial bullish and parabolic period in the asset class. Even though the trend has always been your best friend in the market, and remains higher, the risk of a severe correction increases with the token price.
Now could be the perfect time to put down the token with the best chance of succeeding on your radar. When gravity hits the market, buying at a lower price can increase your chances of long-term success.