One of these tokens has gained more than 17,000% this year.
Cryptocurrencies have had an extraordinary year, with some coins posting gains of well over 5,000%. More established coins like Bitcoin (BTC), Ethereum (ETH), and Cardano (ADA) have also seen strong price increases, but not to the same degree.
Indeed, Cardano is up over 800% since Jan. 1, according to CoinMarketCap data. But these better-known coins already had decent-sized market caps, so there wasn’t as much room to grow. As such, it’s harder for them to make the same eye-watering gains.
The important question is not which coins outperformed Cardano this year, but which ones might continue to generate profits in the years to come? Long-term investing means seeing beyond the immediate gains and considering investments that will succeed in the coming five or 10 years.
Here are four cryptos that left Cardano in the dust in 2021 and look likely to continue to grow in the future.
1. Solana (SOL) — up over 12,000% this year
Solana is one of the biggest gainers in 2021 with 12,000% growth since the start of the year. Its super fast transaction speeds and low fees have attracted a host of new projects and the token price has gone from all-time high to all-time high.
Ethereum was the first cryptocurrency to introduce smart contract capabilities and it still hosts a large proportion of applications. However, heavy network congestion and high transaction fees mean so-called Ethereum killers are booming as developers and investors look for alternatives.
Solana is leading the pack, though Cardano is also a strong contender. Cardano is a smart contract crypto that takes a slow and steady approach to development. This will likely serve it well in the long term. However, it leaves the door open for newer, faster-moving projects like Solana to capture market share. Solana overtook Cardano in the crypto charts at the start of November.
In truth, both could be good long-term options. The biggest risk for Solana is that it has grown too fast and can’t sustain its momentum, while Cardano risks moving too slowly.
2. Sandbox (SAND) — up over 17,000% this year
Metaverse tokens have shot up in recent months as virtual worlds move into the spotlight. Sandbox is one of the biggest gainers with an increase of over 17,000% since the start of the year.
Sandbox is a virtual world which users can explore using avatars. They can do many of the things they’d do in real life — such as attend virtual concerts and art galleries, build businesses, and buy and develop land.
Several factors have contributed to its growth, including the recent alpha launch of its metaverse, which has been in development since 2017, and Facebook’s Meta rebrand. Sandbox is a strong contender in the metaverse space, but it’s still important to be cautious. It isn’t clear how these virtual worlds will unfold, and in the short term, SAND may fall from its current highs.
3. Terra (LUNA) — up over 9,000% this year
Terra is a blockchain-based payment platform that issues stablecoins and supports decentralized finance applications. The system is underpinned by its LUNA token, and it has issued stablecoins that are pegged to the dollar, pound, euro, and many other fiat currencies.
Rather than fiat-backed stablecoins — that should have $1 in cash to back every $1 of tokens they issue — Terra uses an algorithmic system. Each token is backed by LUNA reserves and Terra uses an algorithm to keep the price stable.
Terra wants to make it cheaper and faster for both customers and merchants to make and process digital payments. It has already made big steps forward in Asia. However, investors need to be aware of the potential impact of upcoming crypto regulatory changes.
4. Polygon (MATIC) — up over 11,000% this year
We already discussed the way Solana and Cardano are competing with Ethereum. These are called layer 1 solutions because they have designed completely new blockchains. But there’s another group of cryptos — called layer 2 solutions — which sit on top of existing blockchains and improve their performance.
Polygon is a layer 2 solutions aggregator for Ethereum. This means it provides several different ways to improve the processing speed and reduce transaction costs for developers who still want to use the Ethereum ecosystem. Each project can choose the right solution for their specific needs.
Don’t write off Cardano
The cryptos above may have outperformed Cardano in 2021, but annual gains of over 9,000% are not sustainable. Don’t get me wrong, these cryptocurrencies could all have good long-term potential. It’s just that if you buy them hoping for similar gains in 2022, you’ll likely be disappointed.
Also bear in mind that crypto investing is not an either-or game. I hold Cardano as well as the other coins on this list as a part of a balanced crypto portfolio. For example, I think Ethereum, Solana, and Cardano will all be important ecosystems as the industry develops. And, for me, the fact that Cardano has not had a single outage in four years (and over 20 million transactions) is more noteworthy than its 800% price gain.
But every investor is different. We all have a different tolerance for risk, different ideas about what might perform well, and different financial goals. The most important thing to remember is that every cryptocurrency investment carries risk. These tokens are extremely volatile and the market is still relatively untested.
We don’t know what impact increased regulation will have, nor do we know whether newer technology will evolve to push the current contenders out of the running. What we do know is that we can minimize risk by only buying from reputable cryptocurrency exchanges, only investing money we can afford to lose, and carefully researching any new investment.
