The cryptocurrency market has experienced a very rapid growth in the 2021 and while the growth stalls a bit occasionally, there is no trend reversal in sight just yet. This week’s selection consists of three cryptocurrencies that are hopefully going to continue push the total crypto market capitalization further up. Two out of three cryptocurrencies featured in this week’s top three coins to watch provide an alternative to Ethereum and Ethereum-based solutions, while the third on the list is arguably the most established and biggest cryptocurrency by market capitalization.
1. Polkadot (DOT)
Polkadot is a blockchain solution that allows multiple specialized blockchains called parachains to run at the same time and interoperate. Polkadot can connect diverse blockchains into a single, decentralized and highly scalable ecosystem. The network operates using a Proof of Stake consensus algorithm and utilizes a native currency DOT. The project was originally designed by Dr. Gavin Wood, one of the co-founders of Ethereum and the inventor the smart contract programming language Solidity.
Polkadot Roadmap Release adds Fuel to the rally, Pushes DOT to ATH
The Polkadot team released a more detailed roadmap of the work on their protocol on Monday, February 15. The roadmap, which ends with the rollout of parachains and slot auctions, marking the full launch of the protocol, is divided in three stages. Currently, we are still in the first phase, where developers can play with the interchain communicating mechanisms, such as the Cross-Chain Message Passing-lite, or XCMP-lite. This protocol allows for tokens and generalized messages to be sent between various parachains, Polkadot’s version of shards. In the next phase, parachains will be deployed on Kusama, Polkadot’s “canary network.” Once the parachains on Kusama are stable and all audits completed successfully an on-chain vote will be triggered on Polkadot to launch parachain auctions.
While the official roadmap provides no indications of the precise timelines for these milestones, the release of a more detailed launch plan has apparently significantly contributed to DOT’s price rally. As many other cryptocurrencies, DOT has also set its new ATH pride last week, which now stands at $42.28. While the token is currently changing hands at around $38.80 per DOT, an 8.5% drop from the ATH, the recent rally was more than enough to push the cryptocurrency up the ladder for a few spots. After decisively overtaking Ripple (XRP) at the beginning of last week, Polkadot has recently managed to reach a higher market capitalization than Tether (USDT) and Cardano (ADA) as well. This puts the Polkadot with its market capitalization of over $34 billion on the fourth place – all this before parachains, arguably the protocol’s most important feature, are even fully implemented. Will DOT continue to further grow, or has it maxed out?
2. PancakeSwap (CAKE)
PancakeSwap is a Uniswap-like decentralized exchange (DEX) and yield farming protocol operating on the Binance Smart Chain (BSC). The fact that it does not operate on the congested Ethereum network allows for lower fees and consequently more profit. PancakeSwap currently has a total value locked (TVL) of $3.8 billion and boasts with APYs of up to 850%. All trades are executed via an “automated market maker” design.
PancakeSwap Overtook Ethereum-based Uniswap by Trading Volume
PancakeSwap overtook the Ethereum-based Uniswap by trading volume on February 18 and became the world’s largest decentralized exchange by daily trading volume. On that day over $1.7 billion worth of Binance Smart Chain tokens were traded on PancakeSwap, while its competitor Uniswap saw only $1.6 billion exchange hands. It appears that now that a cheaper alternative with a great UI is available, Uniswap is slowly losing its market share, as is struggles with Ethereum network congestion and astronomical transaction fees. To illustrate just how big of a gas-guzzler Uniswap is, the platform’s users paid over $16 million in fees on February 18 alone.
PancakeSwap currently lists 210 “verified” cryptocurrencies across over 799 different trading pairs. The most traded pair is the WBNB/BUSD with over $454 million in volume, with CAKE, BAKE, BURGER, and food-named tokens also raking up big trading volume. PancakeSwap’s governance token is also yummy-sounding – “SYRUP”. Users can receive SYRUP in return for staking their CAKE, which the protocol uses to provide liquidity to the numerous trading pairs on the platform. In addition, users can participate in IFOs and a lottery game as well as non-fungible tokens (NFTs) auctions.
The PancakeSwap’s increased trading volumes have also translated to a price rally, causing CAKE to surge to its all-time high price of $20.98 on February 19. While the token’s price has since dropped by 20%, CAKE is still up by almost 140% in the last seven days. The fact that the PancakeSwap’s market capitalization remains less than a half of the Uniswap’s indicates that there is still a lot of room for growth for CAKE.
3. Bitcoin (BTC)
Although we believe Bitcoin does not need much introduction and that all eyes would be on it even if it were not featured on our list, here is a short summary of the history and key characteristics of the first truly decentralized digital currency. The world’s pioneer cryptocurrency was launched by pseudonymous figure named Satoshi Nakamoto in 2009 and has a capped supply of 21 million coins. The decreasing miner block rewards makes the cryptocurrency scarcer with time, ensuring a deflationary nature.
Bitcoin market capitalization hit $1 trillion after a week of setting one ATH price after another
Bitcoin, the flagship cryptocurrency, and the barometer for the whole cryptocurrency market seems to be just unstoppable in 2021. The asset is currently changing hands at around $57,600 meaning that the price per BTC is up by 110% YTD. The amazing performance at the beginning of 2021 has led many to believe that the bullish Bitcoin price predictions of $100,000 by the end of the year might be achievable. The likelihood of Bitcoin hitting this mark seems even higher if the money printing by COVID-19-struck would continue throughout 2021. Consequently, Bitcoin market is recording a high influx of institutional money as home offices, funds and corporate leaders are copying Michael Saylor’s and Elon Musk’s Bitcoin playbook. In addition, retail investors have woken up in 2021 as well, adding additional fuel to the Bitcoin’s rally and causing every bigger dip to be bought up quickly. Leaving retail FOMO aside, Bitcoin is also not perceived as a strictly store of value asset anymore, but it is also growing its payment utility, as many services are integrating Bitcoin as a means of payment. These services provide a crucial utility as well as attract new users and help grow Bitcoin adoption. And more users roughly translate to a higher price, a positive feedback loop that already Satoshi Nakamoto predicted:
Bitcoin broke two important milestones last week. On February 16, Bitcoin traded above $50,000 for the first time in the history. The rally didn’t stop there, however, as Bitcoin continued to set one all-time high price after another. On February 19, BTC pumped from below $53,000 towards the highs of $56,600 and it was this price climb that caused the total market capitalization of Bitcoin to exceed $1 trillion for the first time. Nevertheless, there is much uncertainty as to what lies ahead for Bitcoin. While some bulls believe that the road from $57,000 to $100,000 is pretty much a straight highway, other warn that the road could be much bumpier than the Bitcoin greenhorns are expecting. Analysts are saying that a correction sooner or later is inevitable. Furthermore, at this stage a correction with a magnitude of around 30%, would even be considered healthy and there were numerous readjustments of a similar magnitude during the 2017 bull market. A drop by 85% or more is highly unlikely at this point. Either way, if BTC corrects, altcoin will likely drop even more.
Andrew is a writer that does most of his work on cryptocurrency-related topics. While he’s primarily interested in Bitcoin, he also follows major altcoins and the innovative ideas that new cryptocurrency and blockchain projects are bringing to the table.