There were no losers in the cryptocurrency market of 2017.
Sustained media attention coupled with scandals and expert commentary about their prospects headlined a stellar year during which cryptocurrency markets skyrocketed from a valuation of $17.7 billion at the beginning of 2017 to $679.6 billion by the end of the year.
Traders did not distribute their largesse indiscriminately, however. The top 10 most-traded cryptocurrency list was mostly the focus of their attention and funding. At the start of 2017, it accounted for 96.5% of the overall market capitalization. Towards its end, it lost some of that share but still commanded more than 70% of the total cryptocurrency market cap.
So, what should investors make of these figures?
For starters, this means that not all cryptocurrencies are created equal. (See also: The 6 Most Important Cryptocurrencies Other Than Bitcoin.)
Of the 1,385 cryptocurrencies available in the market today, a majority are expected to drop out of circulation and only a handful will survive. To do that, the cryptocurrencies will need cash as well as traction.
In that sense, the cryptocurrency market is similar to the dotcom mania at the turn of this century. As the bubble burst, companies without a sustainable business model or product went out of circulation, taking down their investors. Those that survived the bloodbath, such as Amazon.com Inc. (AMZN), were well-capitalized and had defined business models and customers.
In a similar fashion, the changing constituents of the top 10 most-traded cryptocurrencies through 2017 are indicators of possible survivors, in case the bubble bursts. Here is brief analysis of major winners and losers in cryptocurrency stakes from the start of 2017 until the end.
Winners and Bigger Winners
As the year progressed, there were several new additions to the top 10 most-traded cryptocurrencies. Two stand out for the rapid gains they made in the markets.
Bitcoin Cash, which was launched in August 2017 as an offshoot from bitcoin’s blockchain, had a valuation of $41.5 billion and was the fourth most-valuable cryptocurrency by the end of the year.
IOTA, a coin launched in June and is targeted at the IoT economy, announced impressive agreements with the likes of Oracle Corp. (ORCL) and was worth $9.5 billion on the last day of December. (See also: How Did Bitcoin Cash's Price Perform In 2017?)
Despite the unremitting spotlight, bitcoin was not the biggest gainer among the top 10 most-traded cryptocurrencies. That honor belongs to Ripple, a payment network that caters to banks. While it has mostly maintained a low-profile, Ripple was already the third most valuable cryptocurrency heading into the year.
Midway through 2017, it was up by 4,733 percent. The addition of new clients and a surge of investment from Asian investors resulted in an astounding 35,233% increase in its price by the end of the year.
NEM, a blockchain-based cryptocurrency that uses harvesters instead of miners, was the world’s 11th most-traded cryptocurrency at the beginning of 2017. That was before Japanese traders flooded cash into it. By the end of the year, it was up by 30,900 percent and was the world’s eighth most-traded cryptocurrency.
With gains of 8854.7%and 4934.3% respectively, Dash and Litecoin, both cryptocurrencies aiming to garner a share of the market for daily transactions, were the other winners. But the valuations for these cryptocurrencies comes with a caveat. Unlike Ripple, whose technology is being tested in Asia, Dash and Litecoin do not have proven use cases for their technology yet.
Then there were the cryptocurrencies that fell out of the top 10 list, outpaced by rivals. Although it began the year on a strong note, MaidSafeCoin, a coin offered by a Scotland company in exchange for disk space to run its SAFE security network, could rack up gains of only 70.1 percent. It was in the top 10 at the start of 2017 but fell to 58th in terms of valuation in cryptocurrency markets by the end of the year.
The other cryptocurrencies to drop out of the top list were Augur (which increased its price by 1,615%), Steem (which was up by 254%), Ethereum Classic (which racked an impressive 2,569% gain), and Monero (which was up by 2,389%).
Cryptocurrencies gained mainstream traction in 2017, and the top 10 most-traded cryptocurrencies were major beneficiaries of the surge in funding as a result. Even as bitcoin remains the cynosure of media attention, other cryptos are increasingly garnering attention and cash from traders.
Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns 0.001 bitcoin.