2021 was a great year for the cryptocurrency market, featuring all-time highs not only for many, many coins but also for the market’s total cap as a whole. And even if it ended with a whimper, the current bearishness will eventually transform into renewed bullishness at some point, judging by previous market cycles of expansion and contraction.
As we’ve written previously, at least a couple of events on the horizon are likely to help push the overall market higher later this year, while the current macroeconomic picture — involving inflation and the threat of higher interest rates — may improve as the global economy continues to open up again. This means that investors might want to begin considering their options in preparation for a recovery, with the downturn giving them the opportunity to buy various coins at a significant discount.
To this end, we’ve chosen the 10 best cryptocurrencies to buy in 2022. It’s worth mentioning this article is not investment advice. These are just coins with good long-term potential, in the sense of having strong fundamentals, good levels of investment and/or usage, and a real potential for future development and growth.
Simon Chandler|Jan 11, 2022
It may be predictable, but bitcoin remains the best cryptocurrency to invest in at the moment. There’s a simple reason for this: it continues to dominate the market.
Not only does BTC dominate the cryptocurrency market in terms of its share of the market’s total cap (currently 38.4%), but — more importantly for investors — it continues to lead market rallies and downturns.
In other words, the market doesn’t rise without bitcoin rising with it (and vice versa). So if you believe that the market will recover strongly this year, you may as well allocate at least some of your portfolio to bitcoin, since bitcoin is all-but guaranteed to rise in parallel.
Bitcoin’s price over the past year, including its 30-day and 200-day averages, and its relative strength index. Source: TradingView
More fundamentally, bitcoin is the largest cryptocurrency by market cap for a reason. It has the most stable and secure blockchain (even if such security comes at an environmental cost), while it has attracted more institutional and corporate investment than any other coin in the market. This is why it remains number one, despite its relative age.
For some people, bitcoin may not remain the biggest cryptocurrency by market cap for much longer. Its crown may soon be taken by ethereum, which is due to have a very big year.
In particular, Ethereum is planning to migrate to Ethereum 2.0, a proof-of-stake version of its (currently) proof-of-work blockchain. Such a transition will make it faster and more scalable, allowing it to handle an even greater volume of transactions and traffic than it does even now.
Ethereum in the past year. Source: TradingView
Even without PoS, Ethereum still accounts for roughly 63% of the total DeFi sector, in terms of total value locked in. And with numerous layer-two scaling solutions picking up the slack for Ethereum right now, this percentage is likely to increase once Ethereum 2.0’s mainnet goes live, which is expected at some point in Q1/Q2 this year.
It’s also worth mentioning that, after the London hard fork of August, Ethereum now burns a portion of all its transaction fees. Combined with the locking up of ETH via staking, this could result in a big supply squeeze this year on the cryptocurrency.
Solana had a fantastic 2021, rising by around 3,800% in the past 12 months. This came on the back of it eating up a growing slice of the DeFi pie, and of seeing its usage increase rapidly.
For instance, back at the start of August, it accounted for only 1% of the DeFi sector’s overall total value locked in. Now it accounts for 4%, having increased its share in an Ethereum-dominated market on the back of offering average transactions fees of $0.00025 (note: Ethereum’s are currently $52). It also runs at around 2,600 transactions per second (with a theoretical maximum far in access of this), with Ethereum currently running at about 15 transactions per second.
Of course, Ethereum moving to proof-of-stake may undercut Solana’s momentum, but given that Solana already uses PoS and that Ethereum still has plenty of work to do, this shouldn’t be taken for granted.
4. Axie Infinity
Axie Infinity was another big performer last year, and while it has shrunk considerably from its all-time high of $164.90. Some highly pertinent facts need to be remembered.
Firstly, as a blockchain-based game involving the collection and trading of NFTs, Axie Infinity continues to host around 2.5 million active users every day. This has remained constant despite the recent marketwide downturn, speaking to the loyalty of the game’s users and the fact that it offers something beyond ‘number go up.’
It’s also significant that its developer, Sky Mavis, raised $152 million in October (at a valuation of $3 billion) from Andreessen Horowitz and Mark Cuban. This is a serious investment, providing Sky Mavis with the resources to continue building out Axie Infinity, and also showing that the big money believes in it.
5. The Sandbox
And speaking of blockchain-based games involving NFTs, the Sandbox is another one of our best cryptocurrencies to buy in 2022. It also had a great 2021, but its price action started only in late October, suggesting that it still has plenty of steam left for 2022.
Indeed, the Sandbox is another cryptocurrency game that has attracted serious investment, raising $93 million in early November from funds including Japanese VC giant SoftBank. At the time of this raise it had around 500,000 users for its platform, which enables the creation of user-generated virtual worlds.
Since then it has likely attracted even more, having generated $86 million in land sales in the last week of November, while also selling a single plot of virtual land for more than $4 million in December. This is currently the all-time record for a sale of virtual land.
Cardano had a mostly quiet 2021 as far as price action goes, but it did welcome a number of important developments in terms of its platform.
Most notably, it successfully implemented the Alonzo hard fork in September. This enables smart contracts on its blockchain, something which will be necessary if it’s to build its own ecosystem of dapps.
Input Output Hong Kong (which oversees Cardano development) has been steadily expanding Cardano’s capabilities in this area, with numerous platforms now developing apps that can operate on the network. Indeed, Cardano registered some total value locked in on DefiLlama in December for the first time in its history, showing that 2022 will be the year it finally makes good on its early promise and attracts actual adoption.
Chainlink is increasingly becoming an important element within the cryptocurrency ecosystem. Because as an ‘oracle network’ intended to supply blockchains with reliable data from the outside world, it has witnessed growing demand as blockchain technology has gained more mainstream adoption.
This will particularly be the case this year, with Chainlink already boasting of 12 integrations with other blockchains, as well as the delivery of more than one billion data points and over 1,000 projects running on its network.
Iota is a cryptocurrency that doesn’t receive massive amounts of attention, but its Internet-of-Things network has been steadily growing in the background while the market swoons over the latest meme coin or metaverse token.
Not only did it see partnerships with the European Union in 2021 (among others), it rolled out a couple of additional networks that provide its ecosystem with smart contract and DeFi capabilities. And with staking also now enabled, we may see demand for IOTA increase as more of its supply gets locked up.
Known most commonly by its ticker (LUNA), Terra has risen in price by over 8,000% in the past 12 months. This is largely because it forms such an important element in the Terra ecosystem (which is now the second-biggest platform in terms of TVL), which also issues and operates a number of stablecoins.
UST is the biggest of these, with LUNA having to be burned in order for new UST to be minted. This has meant that LUNA’s supply has declined as more UST has been minted, and with stablecoin demand remaining high for the foreseeable future, we may likely see LUNA continuing to appreciate over the course of this year.
Avalanche is another up-and-coming layer-one blockchain platform that gave Ethereum an increasing run for its money in 2021, and that’s likely to have a strong 2022 as well. As a general purpose smart contracts platform, its total value locked has increased from about $250m in the middle of August to $11 billion today.
As with Solana, this growth comes from Avalanche offering lower fees and more scalability than Ethereum. And with Avalanche raising $230 million in September from Polychain and Three Arrows Capital, it certainly has enough resources to continue growing this year.
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Taking all of these features into account, TAMA is the cryptocurrency with the highest potential in the P2E space. TAMA is trading on several leading exchanges having already completed its $19 million presale.