What is the most volatile cryptocurrency in 2021?

The third big bitcoin “halvening” happened in May, and according to our very own Matt McCall — whose Ultimate Crypto portfolio has averaged a jaw-dropping 121.54% gain in 2020, against the market’s 13.4% gain year-to-date — that’s a huge reason to be bullish on cryptocurrencies in 2021.

But, before we jump into understanding what that halvening is (also referred to as a “halving”) and which cryptocurrencies to buy for 2021, let’s first understand why cryptocurrencies as a broad asset class have a bright future.

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Sure, there are risks to cryptocurrencies achieving mainstream adoption and overtaking government-backed currencies. But, lower transaction costs and quicker transactions are large enough value props to warrant there being a bright future for cryptocurrencies (even if they don’t take over the world).

Why the Halvening Is Bullish

Now, let’s take a deeper look at why cryptocurrencies will keep rising in 2021.

Two key characteristics of bitcoin are limited supply and constrained supply growth.

There are a fixed number of bitcoins in the world (21 million). The bitcoin world started with most of those bitcoins being “locked in the system.” Each time an individual updated bitcoin’s ledger (also called “mining”), the individual would unlock new bitcoins. But to constrain supply growth and retain incentives for mining, the bitcoin system is set up so that every so often, the amount of new bitcoins unlocked for mining a block is halved.

Bigger demand growth plus lower supply growth equals higher cryptocurrency prices. That’s largely why Matt McCall, who has already picked four triple-digit altcoin winners this year, thinks that the best of the big cryptocurrency rally is still ahead of us.

With all that in mind, I suggest readers keep a close eye on these seven explosive cryptocurrencies in the coming year:

Cryptocurrencies to Buy for 2021: Bitcoin (BTC)

Of course, the most obvious cryptocurrency to buy for 2021 is bitcoin. Over the past year, the price of bitcoin has surged by 202%, as bitcoin proved to be a direct beneficiary of slowing supply growth and accelerating demand growth across the cryptocurrency world.

On the supply side, the third halving directly effected the amount of new bitcoins coming into market, and led to relatively slow supply growth.

Meanwhile, on the demand side, cryptocurrency interest will soared this year after the halving drew media coverage and public attention. Bitcoin demand simply is the “gateway” into cryptocurrencies for new investors. That is, as new investors enter the cryptocurrency market over the next few quarters, most of them will likely start by getting their feet wet with bitcoin.

Accelerating demand growth plus constrained supply growth will lead to higher prices for bitcoin in 2021.

Zcash (ZEC)

Privacy is a top priority in the cryptocurrency community, and privacy-focused coins will likely win big in 2021. That’s why McCall has picked top privacy coin Zcash as one of his top altcoin investments.

Zcash, which is one of McCall’s favorite altcoins in his Ultimate Crypto portfolio, is a pure play on the growing importance of privacy in cryptocurrency.

That is, the first wave of cryptocurrencies was all about decentralization …

“Existing currency valuation models do not quite take into consideration decentralization — a potentially distinguishing feature of cryptocurrencies,” says Professor William Cong of Cornell University.

Now that cryptocurrencies have gained more mainstream traction and are starting to exhibit staying power, it’s time for another distinguishing feature to emerge — privacy. Privacy is one of the more important and discussed characteristics in both the crypto world and the financial transaction world at large.

As the importance of privacy grows in the crypto world, privacy coins will outperform, and Zcash looks particularly primed to outperform given the company’s pivot into private mobile transactions.

Cryptocurrencies to Buy for 2021: Ripple (XRP)

A leading altcoin positioned for potentially big gains in 2021 is Ripple.

Ripple is a company that leverages blockchain technology to enable banks, payment providers, digital asset exchanges and corporations to send money globally, usually using the company’s cryptocurrency, XRP.

In many ways, then, Ripple is the infrastructure behind cross-border cryptocurrency payments.

As cryptos gain more mainstream traction, Ripple is adding more and more banks and various other customers to its network. Most recently, the National Bank of Egypt just partnered with Ripple.

More and more banks will partner with Ripple in 2021 as cryptocurrency awareness and demand rises. As it does, the price of XRP will rise, too.

Basic Attention Token (BAT)

One of the more interesting cryptocurrencies that could explode higher is Basic Attention Token.

The core idea behind BAT is pretty simple. The digital advertising model is broken, in that user and advertiser incentives are not aligned. Instead, they run opposite one another. That is, advertisers want users to watch their ads, while consumers want to skip the ads.

The idea of BAT is to realign the incentive structure in the digital ad network so that user and advertiser incentives match one another.

To do this, users get paid Basic Attention Tokens to watch ads in the Brave browser, so that they are now financially incentivized to watch the ad. The end goal, of course, is that more consumers watch ads, and advertisers sell more product/generate more brand awareness.

It’s a pretty smart business model.

And, as cryptocurrencies gain more mainstream consumer traction in 2021, this smart model for compensating users to watch ads should similarly gain traction. As it does, the price of BAT should rise.