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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