Which cryptocurrency will explode in 2021?

Edited by jkelly

Given Bitcoin’s volatility this year, what are the other top coins to watch in 2021?

Cryptocurrencies in 2021                                 
Cryptocurrencies in 2021 – Photo: Shutterstock
                                

Contents

Which cryptocurrency will explode in 2021? It’s a difficult question to answer. So far this year, several coins have experienced dizzying surges – only to take a step back as another altcoin steals the limelight.

Dogecoin (DOGE) rallied from $0.004927 on 1 January to $0.7476 on 8 May – a trough-to-peak recovery of 15,073%. Since then, however, it has slumped by roughly 68% to stand at $0.24 on 7 October 2021

Although some copycat coins have shown potential as the next cryptocurrency to explode, their triple-digit gains are often short-lived.

Here’s Floki

When Tesla CEO Elon Musk tweeted a picture of his new shiba inu puppy Floki on 12 September, several tokens with the words ‘Shiba’ and ‘Floki’ in the title went through the roof. Indeed, Shiba Floki had a crazy rally in the 36 hours following the tweet. The token went from $0.000000000572 on 12 September to $0.0000000636 on 14 September. Although this increase may seem insignificant at only a tiny fraction of one cent, it represents a percentage rise of just over 11,000%.

The downside with trying to track down which crypto will explode upwards is that the price may collapse just as dramatically – and just as quickly. Four hours after hitting its then all-time high on 14 September, FLOKI lost 60% of its value, taking it back down to $0.00000002583. This powerfully illustrates the danger of chasing tokens that have already enjoyed astronomical price growth. All good things come to an end – and you could be the one left holding the bag.

Beyond the coins we’ve already discussed, let’s take a look at which major cryptocurrencies could explode in 2021 based on analysts’ statements.

The following isn’t intended as financial advice – it’s always crucial to do your own research and that’s especially true in periods of volatility like now. It’s also worth remembering that analysts often get things wrong.

Cryptocurrencies
Cryptocurrencies – Photo: Shutterstock


Which crypto will explode?

Inevitably, any discussion about which cryptocurrency will explode in 2021 has to centre on bitcoin (BTC). We’ve already seen dramatic asset movements so far this year. Last month was especially volatile for the overall crypto market, a situation not helped by the news on 24 September that China had made all crypto transactions illegal, which sent bitcoin’s price down by 8.1% to $41,108.

Now, on 7 October, the bitcoin price has rebounded to break through $53,000. This follows news that the US authorities have no plan to copy China’s crackdown on cryptocurrencies. The question now is whether bitcoin will overtake its April all-time high of $64,863.10 to sustain its recovery.

Standard Chartered turned heads on 8 September when the investment bank’s new crypto research team stated that they believed BTC would surge to $100,000 in late 2021 or early 2022. When it comes to the longer-term view, the firm’s analysts predicted that the world’s biggest cryptocurrency could one day be valued at $175,000.

“As a medium of exchange, Bitcoin may become the dominant peer-to-peer payment method for the global unbanked in a future cashless world.” Standard Chartered, in a note to clients

Crucially, the analysts noted that BTC is cyclical – every four years or so bitcoin’s value drops, for example, bitcoin plunged from $20,000 in December 2017 to $4,000 by the end of 2018. If the pattern is maintained, prices may retreat if a bear market forms in 2022 or 2023 with bitcoin’s momentum only returning in 2024, which is when the blockchain’s next halving event is due to take place.

Standard Chartered isn’t alone in this view – Bloomberg Intelligence described $100,000 as the “path of least resistance” for bitcoin. Senior commodity strategist Mike McGlone said in September’s crypto outlook that the market is stronger after enduring a “gut-wrenching correction” – and now, it’s more likely to “resume its upward trajectory than drop below the second-quarter lows”.

Trade Bitcoin to US Dollar – BTC/USD chart

Bitcoin to US Dollar
Daily change
63376.7
Low: 62200
High: 63643.9

Ether

McGlone’s “path of least resistance” also applies to ether (ETH), with his report setting a target of $5,000 for the world’s second-largest cryptocurrency.

The excitement surrounding ETH right now relates to Ethereum Improvement Proposal (EIP) 1559. This upgrade means that – instead of going to miners – part of the transaction fees paid by users is now burned, or taken out of circulation forever. By 7 October, more than $1.6bn worth of ETH at current market rates had been destroyed. Last month, the amount of ETH burned in a day outweighed new coins entering circulation, making it a deflationary currency.

NFT projects

Other factors are also reducing the amount of ether in circulation. A sizable proportion of this crypto is currently tied up in decentralised finance (DeFi) and non-fungible token (NFT) projects. And that’s before we consider the effect that staking is having on Ethereum’s tokenomics.

When the Ethereum blockchain moves from proof-of-work to proof-of-stake, a milestone that’s expected to happen next year, miners will be made obsolete. Instead, validators are going to be responsible for verifying transactions. To run a validator node, participants need to stake 32 ETH (worth $115,200 on 7 October). Their efforts will be rewarded with new ETH for helping the network run smoothly, but their stake could be slashed if they work against the network’s best interests. Right now, more than 7.9 million ETH has been staked, with a market value of $28.4bn.

Standard Chartered has said that it structurally values ether at between $26,000 and $35,000 – up to seven times more than the $5,000 target set by McGlone. This does come with a caveat, however: such prices are only likely to be achieved if bitcoin shoots up to $175,000.

It’s worth noting that ETH has outperformed BTC in 2021, as well as throughout the whole of 2020.

Ethereum versus Bitcoin
Ethereum versus Bitcoin – Photo: Shutterstock

Trade Ethereum to US Dollar – ETH/USD chart

Ethereum to US Dollar
Daily change
4110.99
Low: 4053.67
High: 4156.17

What will be the next cryptocurrency to explode?

Another contender when it comes to what cryptocurrency will explode in 2021 is solana (SOL).

This blockchain project has set its sights on wrestling market share away from Ethereum. Billing itself as the fastest blockchain in the world, Solana says that it can support DeFi and NFTs, all while offering less punishing fees than Ethereum.

SOL’s value has recently attracted attention by reaching an all-time-high of $214.96 on 9 September. Even when the crypto markets suffered a crash on 7 September, the day El Salvador embraced Bitcoin as legal tender, SOL appeared to be more resilient than other cryptocurrencies in the top 10.

On 14 September, however, the Solana network suffered a 17-hour outage that caused the SOL price to hit a low of roughly $143. As of 7 October 2021, the price is hovering around the $154 mark. So the question now is whether SOL will enjoy further momentum.

We’re in uncharted territory right now – and, after an unsettled 10 months, crypto enthusiasts should prepare for the possibility that just about anything could happen next. As always – remember to do your own research first and never invest more than you can afford.

Further reading

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