Why do some altcoins have “staying power” while others appear, rise in to the top 10 by market capitalization - only to slowly fade away. If you look back at the roster of top 10 coins from the previous five years you will see a small list of “forgotten” coins. Only a few coins have endured over time staying consistently in the top 10 with the largest market capitalizations. Take a look at these top 10 coin lists for the last five years:
Currently, there are approximately 2,368 cryptocurrencies. And each year there are new coins introduced, all with seemingly good use cases that catch the eye of investors.
For a new cryptocurrency to gain prevalence, wide community adoption and market capitalization it needs to have a clear and unique use case which provides a new or improved solution to a problem for a large number of people. It seems that many people invested in top 10 coins over time but what can we surmise from these lists over time.
* Top Coins with Staying Power
First the top coins BTC, ETH and XRP (shown shaded in pink) have stayed in the top three (gold, silver and bronze) positions for the last five years. ETH and XRP have entered brief times where they have dropped from the top second and third sports but return proving they have stamina. Added in the group is Litecoin which has performed consistently well over time sitting in fourth to seventh position within the top 10.
* Bitcoin Contender Coins
Second, bitcoin forked coins Bitcoin Cash and Bitcoin SV (shown in blue) have, since their creation, moved up to the top 10. This is no surprise as these coins have code changes that seek to improve upon the original bitoin in different ways. Investors are betting that these forked coins do well and make faster progress and upgrades than bitcoin. If realized they may eventual gain more support with time, possibly to supplant bitcoin from which it was forked as the number one cryptocurrency.
* New Coins Showing Strength
Third, shown in yellow, are new coins that have made recent appearances in the top 10 lists. Tether and Binance coin both show the need and use for stable coins. Binance is the largest exchange and users are trading between coin pairs with BNB and Tether. The appearance of stable coins in the top 10 lists is a reflection of the ongoing growth of cryptocurrencies and overall number of transactions occurring that require a stable coin to buffer against coin pair volatility
* Older Coins with Strength
Fourth, we have a small set of strong performing recent coins such as EOS, Cardano (ADA), Stellar (XLM) and Tronix (TRON) (shown in green) that have entered the top 10 and have had the strength to stay at or near the top. If invested in these coins one should be careful and watch the team’s activity, partnerships, positive developments, and the overall market capitalization.
* Coins Fading Over Time
Finally, there are coins that seem to have done well in the past but appear to be fading (shown in grey). Coins such as Monero (current rank: 14), DASH (current rank: 16), Miota (current rank: 23), NEM (current rank: 29), Augur (current rank: 39), Bitshares (current rank: 80), MaidSafe coin (current rank: 92), and Peercoin (current rank: 412) and have slowly fallen from the top 10 ranking. This isn’t to say these coins aren’t doing well as some market caps have increased, however, money flows in to the other coins are greater (there is greater interest in other new coins). Even though they are not ranked in the top 10 in 2020, several projects such as DASH, Monero, Steem, Miota, and NEM if they survive will likely continue to do well as investments for long-term holders.
Conclusion
Looking at the last five years of top 10 coin lists shows that several altcoins with promising use cases have come and gone. Many of these altcoins were the “darlings” of investors as they moved in to the top 10 market capitalization only to slowly fade after a year or two. A small core of coins including BTC, ETH, XRP and LTC seem to be long-term winners. Strong projects such as Stellar (XLM), Cardano (ADA) and EOS (EOS) appear to be holding up well. Picking the few coins with longevity is the real trick – and picking the new coins that climb to the top of the market capitalization list and have longevity is even more challenging.
As a risk-reward trade-off for long term cryptocurrency holds, it is safer to invest in coins that have consistently remained in the top positions such as BTC, ETH, LTC and XRP.
Disclaimer: The author holds only a few altcoins and currently holds no BTC, ETH, LTC or XRP in his portfolio at the time this article was written.
