In 2021, cryptocurrencies experienced an unprecedented bull run that resulted in tens of millions of new token holders. Just a few weeks ago, CoinGecko and CoinMarketCap celebrated the achievement of 10,000 different tokens in their databases. These numbers are truly frightening if you think that only 10 years ago there were only a dozen cryptocurrencies (bitcoin, litecoin, doge, namecoin, peercoin and a few others). But with all this innovation and all these tokens, a big question arises: which categories of tokens should you invest in to get the best long-term returns? Today we are going to help you out by choosing the ones we think are the pillars of the crypto world and have a very strong chance of staying alive in 10, 100 or more years!
Top Cryptocurrency Categories by DeFi.cx
1) Large market cap: A category that includes the largest projects in terms of Market Cap. These include Bitcoin, ETH, ADA, XRP and so on. These are tokens that have been on the market for several years that have always had a lot of liquidity and huge teams behind them, so they are here to stay for a long time. Most of your investment should go into this category of token, so that you feel less of a hit during bear markets and most importantly so that you can close your position when you want to! If you have invested too much money in a token with little liquidity, you will have to lose an additional 20-30-50% to get out of it when liquidity is limited! P.s. of course BITCOIN should always represent the majority of your portfolio!
2) Exchange-Based Tokens: These tokens are my favourite! We are talking about governance tokens of decentralized or centralized exchanges. Examples include UNI from Uniswap, 1INCH from 1Inch Network, BNB from Binance, CAKE from PancakeSwap and so on. These tokens will be valuable sooner or later and be an integral part of the exchange they belong to. And considering that the trading volumes of the top exchanges are in the billions of dollars a day, the value of their tokens could explode. There are serious businesses behind it that generate net profits of millions/billions of dollars a year!
3) DAO and Governance Tokens: At the moment this type of token is almost only used to make proposals and vote in various projects. But what will happen if some of these projects become as big as banks or other credit institutions? Obviously, everyone will rush to buy their tokens and become an integral part of the project, creating strong buy pressure and taking the token to unprecedented levels. Examples are the DAOs of DeFi projects that generate millions of dollars in monthly earnings such as YFI from Yearn Finance, IDLE from Idle Finance, AAVE, CAKE, UNI and so on.
4) The whole DeFi world: Many of DeFi’s tokens also fall into the first three categories, but we would like to stress that these tokens are the ones that could go up a lot in the future, especially if DeFi manages to become a serious competitor to CeFi. Among the best tokens are AAVE, UNI, 1INCH, PNT, CAKE, BNB, MATIC, BNT and many others. Simply visit a site like CryptoFees.info to see what the best projects might be, then look at how many fees each DeFi project produces. P.s. and of course ETH is the basis of the whole DeFi world!
5) Privacy Coins: A category that is having a hard time this year. The problem is that the various governments have no control over these tokens and are trying to nip them in the bud, having them removed from the various exchanges and trying to block them in various countries. However, we are sure that this type of token will come back sooner or later and do so in a big way. People love Privacy and will always look for ways to hide, so projects like Monero, DECRED, DASH and so forth are bound to do great things. In this case, it will be hard to find the right token since due to problems with governments, many of these projects will surely close down. Those that remain, however, could go up in value 100, 1000 times.
6) Oracles – An indispensable cryptocurrency technology that is growing fast. However, in this case, adoption is lacking in 99% of projects, as almost all serious projects only use ChainLink (LINK tokens). A good idea would be to invest in Band Protocol as it is also supported by Binance or in some emerging projects. However, try to find out how far the adoption is, considering that in the crypto world very often there are serious and robust projects that in the end don’t even have a dozen customers! Focus on the main ones!
I would absolutely avoid MEME tokens as they can make you millions but at the same time can lose 99% of their value in a few hours. I would also avoid Yield Farming and DeFi projects without Audit and tokens with low liquidity (or tokens listed only on 1 exchange). Happy crypto everyone!