2021-07-17 20:19:33

Smaller Cryptoassets in Demand As eToro Investors Seek Diversification

  • Cardano overtakes Bitcoin as the most held crypto on eToro in Q2
  • Dogecoin rockets in popularity, becoming the fifth most held crypto
  • Tron was the biggest mover in Q1

Retail investors are increasingly confident about the potential of cryptoassets, despite this quarter’s market correction, with new eToro data revealing increases in the numbers of crytoassets being held during the last quarter (Q2).

Perhaps surprisingly, Cardano’s ADA leapfrogged Bitcoin to become the most held crypto in the second quarter of 2021, seeing a 51% increase from the previous quarter. Bitcoin, which led the cryptoasset bull run at the start of the year, remained popular – seeing a 42% increase in demand – however, it was eclipsed by ADA and slipped from first to second place.

Simon Peters, crypto market analyst at eToro, commented,

“During Q2, Cardano provided a clearer roadmap for its upcoming Alonzo hard fork – currently in a testing phase. If successful, it will bring smart contract functionality by allowing the writing and deployment of smart contracts for the first time on the Cardano blockchain. This upgrade will be significant as it will enable developers to build projects on the network, helping Cardano to position itself as a real ‘competitor’ of the likes of Ethereum. The price of ADA climbed over the last quarter, suggesting investor optimism around the Alonzo hard fork and Cardano’s ability to challenge Ethereum long term.”

Ethereum, which has seen a big price rise this year, also gained in popularity, experiencing a 79% increase in investors holding the asset. This is ahead of the hotly anticipated London hard fork, slated for July, which will see increased functionality added to the network and preparation for the Serenity (ETH 2.0) upgrade slated for 2022. It will also include the EIP-1559 update which will change how gas fees are paid on Ethereum 1.0 going forward. This will see base fees adjusted to market rates, with the option of speeding up transactions by tipping miners.

Simon Peters said,

“Cryptoassets have had an exciting year, with big milestones achieved in terms of price movements and increased institutional investment signaling more adoption by the traditional financial services ecosystem.

No matter the headlines, we urge retail investors to be mindful of the risks when investing in crypto and to do their research before investing.”

Most held cryptoassets among eToro clients globally in Q2 2021
Rank Cryptoasset Q1 2021 rank Q2 2020
1 Cardano (ADA) 2 6
2 Bitcoin (BTC) 1 2
3 Ethereum (ETH) 4 3
4 XRP (XRP) 3 1
5 Dogecoin (DOGE) N/A N/A
6 TRON (TRX) 6 13
7 Stellar (XLM) 5 5
8 IOTA (MIOTA) 8 11
9 Litecoin (LTC) 7 4
10 Ethereum Classic (ETC) 12 9
Source: eToro. Data accurate as of 01.07.2021.

The data in this table represents the top ten cryptoassets held by global investors on the eToro platform in the second quarter of 2021. It does not include positions held as CFDs.

Investors diversify in the search for the ‘next Bitcoin’

Despite attention focusing mainly on the cryptoassets with the largest market caps, the biggest moves in Q2 came from smaller cryptoassets, with Tron (TRX) and Ethereum Classic (ETC) leading the charge. Tron (TRX), in particular, saw impressive gains, with a 163% increase in global users holding the asset in Q2 as compared to Q1 of this year, and Ethereum Classic saw a 151% rise quarter on quarter, alongside a 247% year-on-year increase.

Simon Peters continued,

“Rather than focus solely on Bitcoin and Ether, where many investors can only own a fraction of a coin, we are seeing increasing demand for lower priced coins. With owning one Bitcoin out of reach for most retail investors, many are looking for cheaper alternatives like ADA, MIOTA and TRX, all of which are priced around $1. With staking rewards available on eToro for Tron and Cardano, investors are now able to reap rewards for holding these assets long term, which is helping to drive demand.

The emergence and increasing popularity of altcoins means the crypto ecosystem is becoming stronger, with greater diversity and more and more use cases. It’s great to see investors looking beyond the store of value, and opening up their portfolios to assets they believe will not only help hedge against growing issues such as inflation but provide solutions other assets might be encountering.”

This post originally appeared on the eToro blog.

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Disclaimer

eToro is regulated in Europe by the Cyprus Securities and Exchange Commission, by the Financial Conduct Authority in the UK and by the Australian Securities and Investments Commission in Australia.

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eToro AUS Capital Pty Ltd, AFSL 491139. eToro AUS Capital Pty Ltd offers CFDs over cryptoassets. Trading CFDs does not result in ownership of the underlying assets. CFDs are leveraged and risky financial products and may not be suitable for all investors. You may lose substantially more than your initial investment. This information is general advice only.  It has been prepared without taking into account your objectives, financial situations or needs, and you should, before acting on the advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. You should consider our PDS before making any decision about whether to trade CFDs.

This communication is for information and education purposes only and should not be taken as investment advice, a personal recommendation, or an offer of, or solicitation to buy or sell, any financial instruments. This material has been prepared without taking into account any particular recipient’s investment objectives or financial situation, and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Any references to past or future performance of a financial instrument, index or a packaged investment product are not, and should not be taken as, a reliable indicator of future results. eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication.

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