Best cryptocurrencies to invest in March 2021: your monthly guide to the world of digital money
After the recent surge in Bitcoin (BTC), investors are keen to know: what is the best cryptocurrency to invest in right now? To help you better navigate the market and the abundance of opportunities it has to offer, this article highlights the latest news and project developments for you to decide what cryptocurrency to invest in March.
The latest market overview
The cryptocurrency market has been driven higher in the last month as Bitcoin capitalised on the recent Tesla (TSLA) investment with a rally to highs at $56,000. The price of BTC is now pulling back from the explosive surge as “whale” investors take profits, but the move lower has attracted dip buyers at the $44,000 level.
Last week saw the founder of Ark Invest, Cathie Wood, giving her approval to BTC with a suggestion that the coin could replace bonds. She said: “You think about the traditional 60/40 stock-bond portfolio, but look what’s happening to bonds right now. If we are ending a 40-year secular decline in interest rates, that asset class has done its thing. What’s next? We think crypto could be the solution.”
The comments were timely as Bitcoin was dragged lower by a rise in bond yields as traders began to consider higher inflation as economies started to reopen. This led short-term investors to move out of cryptocurrencies to seek higher bond yields.
Here is our list of the top cryptocurrencies to invest in March 2021.
Bitcoin is now trading at a discount to the recent highs around the $58,000 level. The reality is that corporate interest has now been defined in the coin and it wouldn’t be a surprise to see announcements later that some large companies have been buying on this latest correction in price.
BTC is a vital coin in the cryptocurrency ecosystem and buying the coin on dips is a wise move, in order to get access to other coins at lower prices, or to use for collateral in decentralised finance. If corporate America’s largest companies are looking to store their savings in BTC, then small investors can too.
For investors asking what is the best cryptocurrency to invest in right now, Bitcoin seems to be up there.
If you don’t currently own any Dogecoin then the recent pullback could be a chance to follow the wisdom and influence of Elon Musk when asking “what cryptocurrencies should I invest in?”
DOGE has pulled back from highs near $0.0900 to trade at an almost 50 per cent discount. This would be an opportunity for investors to have some holdings in the “meme” coin in the event that Musk decides to utilise the coin in one of his projects. This may be in the form of a gimmick but there is enough attention to drive the coin higher if it happens.
Recent news that the SEC was probing the Tesla founder’s tweets about the coin make this likelihood more possible. The regulation of cryptocurrencies is a grey area for the SEC and it is unlikely that they can do much about the price surge. Musk may even look to provoke them with further cryptic tweets.
Musk commented on the possibility of SEC action, saying: “I hope they do. It would be awesome.”
The developers of DOGE also announced on Sunday that they had upgraded the coin’s blockchain. The latest version of the protocol will reduce the default time that transactions are cached in the mempool from 336 hours to 24 hours.
Cardano’s ADA coin is now the third largest in the market after jumping above the Tether stablecoin. It currently has a market cap of $40.5bn, compared to Ethereum’s $175.5bn valuation.
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The two cryptocurrencies have a very different circulating supply of coins with ETH at 117 million and ADA having 31 billion available. This may cap the upside of Cardano’s coin, but the projects are both undergoing upgrades in technology and Cardano’s founder has said that his project will be superior to Ethereum.
Hoskinson said: “We’ve chosen radically different scaling models. And actually I think both of them have the potential to work, but I think Vitalik’s (ETH) are a little bit riskier from an engineering and research point of view.”
Hoskinson also pointed out ADA’s commitment to on-chain governance as a key improvement over ETH. The upcoming upgrade will add tools and performance to Cardano. And for that, the coin deserves to be on the list of the best crypto to buy now.
XRP was lower by almost 20 per cent on the week and the coin is facing the pressure of the ongoing SEC lawsuit regarding the selling of coins by Ripple. The SEC claims that XRP is a “security” and should be regulated as such. The company refutes the claims, and this will cap upside potential in 2021.
Despite this, investors could look at the longer-term potential and seek to attain XRP while it misses out on the overall crypto rally.
The final option to consider when deciding what crypto to buy now is XEM. The coin has seen a surge in 2021 from $0.20 to touch highs of $0.80. It has since pulled back to the $0.60 level, but the project still trades under the radar and could surprise the market in the development process.
NEM is about to launch a new “symbol” blockchain on March 15, and investors will get an XYM balance equal to that of their XEM balance at the time of the Snapshot. This is driving the current demand, and the price could sell-off when the migration happens but getting ahead of the date will allow investors to snap up their XYM balance.
The price of XEM hovered above the $1 level back in January 2018, and it may look to retest those highs again in the foreseeable future.
What should we expect in spring?
In our February analysis, we warned traders that the cryptocurrency market was “at risk of a correction as we go further into March”. This is playing out right now, giving investors the opportunity to buy at better prices.
The headwind to further gains would be an increase in the recent surge in US bond yields. This has made investors less keen to hold risky, or non interest-paying assets. The likelihood is that central banks will act to cool any rise in bond yields, while the $1.9trn in US stimulus will likely make its way into the crypto market.
If you are not ready to make long-term investment commitments but want to try to profit from the volatility, you can do so by trading cryptocurrencies with contracts for difference (CFDs) at Capital.com.
Trading CFDs offers the opportunity to capitalise on both bullish and bearish price fluctuations. You can either hold a long position, speculating that the price will rise, or a short position, speculating that it will fall.
However, while the crypto market is one of the hottest investment sectors right now, it involves high levels of risk due to its immense volatility. We suggest investors and traders exercise caution and do their homework before investing in any cryptocurrency.
Find out how to trade crypto CFDs with our comprehensive guide. Once you are ready, create an account at Capital.com and follow our coverage of the latest developments to spot the best trading opportunities.