Early adopters of Bitcoin are sitting on some truly epic gains. The world’s first cryptocurrency has turned into a trillion-dollar asset class in just over a decade. However, its growth has slowed down recently.
For the next leg of price appreciation, Bitcoin will need to be adopted by institutional investors and sovereign states. That’s a much slower process. Growth-seeking investors should probably turn their attention to smaller cryptocurrencies with more room to run.
Here are the top three alternative digital assets that have already outperformed Bitcoin and could continue this streak in the near future.
Ethereum has outperformed Bitcoin by a wide margin this year. Since the start of 2021, BTC is up 92%, while ETH is up 480%. That’s a wide margin of outperformance and one primarily driven by Ethereum’s base effects and utility.
In other words, Ether was a smaller and more underrated asset in 2020 and therefore had more room to grow. Meanwhile, the network also has more utility than Bitcoin. While BTC is considered digital gold, Ether is considered the “value layer of the global internet.”
People have sold digital art as Non-Fungible Tokens (NFTs), raised funds through Initial Coin Offerings (ICOs), and developed decentralized applications (dApps) on the network. All that activity is non-existent with Bitcoin. That’s the reason Ethereum could actually be more valuable than BTC over the long run.
Unlike Bitcoin, Ethereum has serious competitors. Solana is probably the most popular right now. Just like its larger rival, Solana is a network for distributed computing. That means it can host NFTs, ICOs, dApps, and a whole range of other decentralized products. However, Solana’s network architecture is significantly different, which allows it to process transactions quicker and cheaper.
With network fees on Ethereum rising in recent months, several users and developers have migrated to the Solana blockchain. In other words, Ethereum is being disrupted by a smaller competitor.
Solana’s performance this year blows Ether out of the water. In January, a single Sol was trading at US$1.6. It’s now trading at US$280. That’s a 175-fold return in less than 11 months! Solana is still just 20% the size of Ethereum. That means it could deliver tremendous returns if it fully disrupts its larger rival within the next few years.
The final pick on this list is a little-known crypto project called Chainlink. The network is trying to bridge data from the traditional web to the decentralized web. For example, it helps developers link smart contracts with real-world data such as weather forecasts from regional governments or stock prices from the national stock exchange.
That’s a useful product, which is why I believe Chainlink could be one of the outperformers over the next few years. LINK tokens have delivered a 139% return year to date. While that’s lower than Solana and Ethereum, it’s still higher than Bitcoin.
If the Chainlink project gets more adoption in the near future, the price could accelerate.