How to Invest in Cryptocurrencies in 2022

by | Apr 19, 2022 | Blog, Crypto

One of the most interesting new investment opportunities is cryptocurrencies: assets that have experienced a great revaluation since their creation. The most widespread definition of cryptocurrency is a digital, non-physical currency that uses cryptography to secure and manage transactions and create new currencies within the blockchain network.

This explanation includes these digital currencies’ two most important characteristics. The first is that there are no banknotes or coins for euros, dollars, or pounds. Cryptocurrencies are digital, and although they can be stored in physical devices (the so-called wallets or physical wallets such as hard disks or USB sticks), they have no physical representation.

The second is that cryptography is used to create new units; P2P technology is the one that, for practical purposes, makes you not dependent on any government or country. There is no central agency or government in charge of creating new currencies and putting more money into the market. For example, Bitcoin uses blockchain technology to regulate the creation of new units. Moreover, in this case, the number of coins available is limited, which is not always the case with other cryptocurrencies.

Cryptocurrencies are still on everyone’s lips in 2022. In fact, this year started with big drops in virtually all major cryptocurrencies. But what does that mean? Is it a bad time to invest in crypto? Many people think that the falls are the best time to keep buying; that depends on one’s strategy.

Best Cryptocurrencies to Invest in 2022

What were the most profitable cryptocurrencies last year? Which ones have the largest market capitalization (current price x outstanding supply)? You can see the complete lists on sites like Coinmarketcap. These figures can help us get an idea of what could be some of the best cryptocurrencies of 2022.

It is necessary to take into account the presence of new technologies and markets where cryptocurrencies can take center stage, as is the case of the metaverse, video games, and digital finance. In this aspect, the Ethereum network and its competitors such as Cardano and Solana are proposals to be closely watched. The Metaverse Decentraland and its platform where you can acquire “digital land” is giving much to talk about and The Sandbox. And Axie Infinity is at the head of the revolution in video games.

Cryptocurrency name

Profitability throughout 2021
Axie Infinity+17.166%
The Sandbox+16.645%
Terra+14.243%
Polygon+13.937%
Solana+10.027%
Decentraland+4.235%
Polkadot+347%

Returns during 2021, source: CoinMarketcap

 

Of course, it is important to remember the top 10 cryptocurrencies by market capitalization. This always indicates those cryptocurrencies with the highest relevance.

  • Bitcoin: $763,306,466,467,515
  • Ethereum: $367,769,333,246
  • Tether: $82,636,091,222
  • Binance Coin: $69,279,956,153
  • USD Coin: $50,681,743,188

Source: CoinMarketcap. Market capitalization as of April 13, 2022.

Most profitable cryptocurrencies

As the stock market saying goes, “past performance does not guarantee future performance.” And it has become evident with the huge fall at the beginning of this year, from which the market seems to be recovering.

The evolution of a virtual currency indicates its potential, but that does not mean that it is the best cryptocurrency to invest in in 2022. With a drop of more than 50%, the price of virtual currencies is a good example. Is this an indication that we should flee the sector in a hurry? Far from it, just that the price was too inflated.

Which cryptocurrencies are performing better in 2022? It is still too early to talk about this year’s most profitable cryptocurrencies, especially with the fall experienced during these first weeks. Some of the most profitable of last year were:

ETHER

Ethereum has surpassed the growth of the other major cryptocurrency, Bitcoin, in 2021. While Bitcoin grew by 67%, the Ether (ETH) rose by 502%, making it the fastest-growing mega coin.

Behind the Ethereum network is the Smart Contracts project that has received several nods for its usability in different applications from companies already starting to work in decentralized finance and the metaverse world.

CARDANO

Cardano (ADA) went from being valued at a few cents to being worth more than 1 euro among the top positions. This represents a growth of 670%. Based on Smart Contracts but betting on greater scalability, the ADA token is a strong competitor to Ethereum and its ecosystem.

TERRA

It was unknown at the beginning of the year and was a real protagonist with more than 10,000% growth last year. Terra (LUNA) focuses its project on creating decentralized finance applications on a very high-speed blockchain to generate a high correlation between stablecoins from the crypto world with fiat currencies worldwide.

SOLANA

It is another Smart Contracts project that competes closely with Ethereum by positing the possibility of handling up to 50,000 transactions per second. This would increase the speed at which transactions could be made in decentralized finance. With a brutal growth of 10,942%, Solana (SOL) achieved a record year and aimed to be a cryptocurrency to keep an eye on due to the great projection of its projects.

DOGECOIN

The “little dog” has done it! Dogecoin (DOGE) achieved a 3,000% growth driven, among others, by Elon Musk. Although its value has plummeted from the last half of 2021, its explosion during the first half of the year was such that it managed to stay in the top 10. The “Meme Coins” or “Meme Coins” do not have big projects behind them; in many cases, they have nothing, but they are very attractive to small investors looking to speculate in the cryptocurrency market due to their low value. So watch out for these types of cryptos in 2022.

What the Future Holds

There have been other cryptocurrencies and tokens with higher growth, as is the case of The Sandbox (SAND), which has grown more than 15,000%. This token went unnoticed during the year’s first half and barely moved, reflecting a flat trend. However, being a project linked to the metaverse, it began to explode in the market following announcements, such as Facebook’s now Meta, to enter this new world yet to be explored.

In 2022 we may have new protagonists we know little about but have begun to be talked about at the end of 2021. Protagonists of other ambitious projects linked to the metaverse and other new applications of Defi (Decentralized Finance) such as Polkadot, Decentraland, Polygon, or Avalanche. These crypto assets, which have experienced substantial growth and large projects, may give a lot to talk about in 2022.

Many of the crypto assets mentioned are strong competitors to most value cryptos and push ideas forward based on smart contracts. This makes it possible for position movements to happen among the largest ones as they feel threatened. It is key to not overlook that while Ethereum has grown by over 500%, Bitcoin has barely reached 70% growth.

We will see what returns 2022 offers us.

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