The euphoria surrounding Bitcoin and Co has vanished, says Uwe Zimmer of Fundamental Capital. With the right crypto currencies, however, money can still be earned.
Since the beginning of the year, most crypto currencies have been in the plus zone. The Bitcoin has increased by around 120 percent. 120 percent is a value that puts almost all other investments in the shade. Binance Coin with a plus of 224 percent or Chainlink with a plus of 841 percent still stand out, but then it becomes less profitable among the reasonably large currencies, which create or at least come close to one billion US dollars in market capitalization.
Litecoin achieved a plus of almost 80 percent, Bitcoin Cash and Bitcoin SV as offshoots of Bitcoin are doing well with plus 55 and plus 29 percent, Ethereum achieved a good 28 percent. Eos with 26 percent and Monero with 25 percent still performed very satisfactorily, Tron with minus eight and Ripple with a minus of about 30 percent are the taillights of the big group.
But what does this mean for investors? To bet on the right currencies actually means to bet on Bitcoin. Of the many thousands of alternative coins, there are also some that have performed significantly better than Bitcoin. But all these currencies do not have any real relevance or liquidity. Therefore, the rule applies: when investing in crypto currencies, heavyweights should be used, preferably the heavyweight par excellence.
Almost two thirds of the total market capitalisation of crypto currencies is in Bitcoin, around 151 billion US dollars are worth the approximately 18 million Bitcoin mined to date. Ethereum, as the second largest currency, has a market capitalisation of just 20 billion.
Nothing will change in these orders of magnitude so quickly. Bitcoin was number one and will remain so for the foreseeable future. So when the crypto currency asset class returns to the investors’ radar, most of the money flows into Bitcoin. And that means: rising prices. In view of this year’s performance, crypto currencies could seem quite interesting. However, the high to very high risk associated with an investment in this area must always be taken into account.