Classification of Cryptocurrencies Based on Historical Price Movements

Although crypto space is a vast sea, a general pattern of price movements is gradually forming in my mind.

I evaluate crypto coins according to price movements in two categories: Those whose price is predictable and not predictable. The prices of cryptocurrencies, which have a significant use case, are increasing exponentially. Of course, every project needs a certain amount of time to mature, but I am skeptical of blockchains that have remained as a project for a very long time. Such projects, if they have achieved a certain recognition, can be quite long-lasting. They can even create a significant amount of money for their shareholders during bull market times. However, when the market goes bad, they become assets that turn people off from crypto investment.

Between April 2013 – October 2021, the crypto market has grown by an average of 2.4 times a year. A large part of this increase was caused by Bitcoin and Ethereum. On the other hand, recently, cryptocurrencies such as Solana, Polygon, Terra, Avalanche have appeared, which are growing much faster. We don't know yet whether these growth rates are sustainable or not.

Bitcoin, which gave birth to the crypto world, is a category on its own. Its value that doubles every year on average, its low inflation, its high level of awareness, and its resistance in bear markets are its prominent features.

Ethereum also deserves to be included in a category on its own. Its value, which increases threefold on average every year, has made Ethereum a coin that is difficult to compete with its price performance. Categories such as NFT, Defi have become known for Ethereum. It can be called the most robust cryptocurrency after Bitcoin. Moreover, over the past week, it has become deflationary. I believe that in the next few years it will be able to overtake Bitcoin in terms of market capitalization.

In third place are such blockchains as Binance, Solana, Avalanche, Polygon, which were the rising stars of the last year. These blockchains, which are an alternative to Ethereum, have created wide application ecosystems due to relatively low network fees. Since their market value is small compared to Ethereum, they are likely to grow faster. On the other hand, they will not be as resistant as Bitcoin and Ethereum in a possible bear market. Although it is completely different, I can also add Terra Luna to this list.

In the fourth place, I can count the dog coins that have recently become a craze. The success of Shiba Uni led to the emergence of a large number of similar projects. And most of these projects are also performing well. The doubling time of prices in these projects is expressed in days, not months. It can be a good opportunity for those who managed to get in early and get out on time. They are not for me.

Finally, I would like to mention some projects whose price has been steadily increasing. FTX, AXS, QNT, OHM, and RUNE are the coins that are in the top 100 and can sustain exponential price increases. As the weather is positive in the market and money inflows are continuing, there are many alternatives with strong stories. The fact that we do not satisfy with an annual increase of 2-3 times and are looking for higher-yielding coins shows that the bull market is strengthening. On the one hand, we have started to hear niche coin stories that make 10x in a short time.

Part of me says that this time we should learn from 2017 and act more prudently, and part of me says that I should enjoy the strengthening bull market.

I think the coming months will be quite eventful. I hope that we can spend these critical months getting the maximum benefit.

Thank you for reading.

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