Last year was a true coming-out party for cryptocurrencies. You could have practically thrown a dart at any of the largest virtual currencies, held throughout the year, and walked away with a tidy profit. In total, the aggregate market cap of all cryptocurrencies combined jumped from less than $17.7 billion to end the year at $613 billion, representing a gain of more than 3,300%.
This year hasn't quite been the same. Even though digital currency valuations soared to an all-time record high of $835 billion during the first week of January, they've fallen off a cliff ever since. In recent weeks, the market cap of all cryptocurrencies combined has pushed as low as $274 billion, essentially shaving two-thirds off the all-time high set less than three months earlier.
As you might imagine, this train wreck has been pretty broad-based. Bitcoin, the world's most popular cryptocurrency by market cap and with merchants, has fallen from approximately $20,000 per coin in mid-December to as low as $6,000 per coin at one point in February. No. 2 Ethereum and No. 3 Ripple in market cap are down 71% and 86%, respectively, since hitting their all-time highs in January 2018. Even though these well-known cryptos are still way up from where they once were, the roller-coaster ride over the past few months hasn't been pretty.
Surprise! These three large cryptos are up this year
However, amid this steep pullback for virtual currencies, three large cryptocurrencies -- i.e., those with market caps in excess of $1 billion -- have managed to push higher in 2018. While we're not talking about the monstrous four- and five-digit percentage gains we witnessed in 2017, any upward movement is impressive given the more than $550 billion in market cap losses for cryptocurrencies as a whole since Jan. 7, 2018. In no particular order, here are the year-to-date standouts, with data through midday March 29.
1. VeChain Thor: Up 15%
Even though VeChain Thor, which rebranded earlier this year from just "VeChain," is up a mere 15%, I'd argue it's had the most exciting year of any of the three top-performing cryptocurrencies in 2018. Known as a blockchain-as-a-service company -- blockchain being the digital, distributed, and decentralized ledger responsible for recorded transactions without the need for a bank -- VeChain Thor has turned heads with three major events.
First, it announced a partnership with global assurance service DNV GL. One of the most intriguing uses for blockchain in the non-currency setting is as a monitor for supply chains. Businesses employing the use of blockchain will be able to view product tracking in real-time, locate inefficiencies quickly, and, with the aid of Internet of Things technology embedded in certain products, allow for the examination of quality control records for products that are tested. VeChain Thor's partnership with DNV GL should allow wholesalers and retailers to do all of this.
Next, VeChain Thor became the first cryptocurrency ever, according to PwC, to pass the Cryptocurrency Disaster Recovery Plan (CDRP). Think of the CDRP as stress tests for the crypto market. It examined various threats to VeChain Thor's blockchain, depending on their likelihood and severity, and then analyzed how VeChain Thor has prepared to deal with those threats. Its passage suggests that there are sufficient procedures in place to protect the cryptocurrency assets of its token holders.
More recently, VeChain Thor announced a partnership with German auto giant BMW (NASDAQOTH:BMWYY) via a YouTube presentation, which also detailed its rebranding. Though no specifics were covered, VeChain Thor could bring two immediate benefits to BMW. First, its blockchain service could allow BMW to more accurately track its supply chain of products. More importantly, though, blockchain provides transparency, which could prove fruitful given the scandals that've rocked the auto industry in recent years. VeChain's transparent and immutable (i.e., unchanging) blockchain could be perfect for on-the-fence auto buyers looking to build trust with an auto brand.
If VeChain Thor keeps landing new partnerships, it may continue to outperform its peers.
2. TRON: Up 10%
TRON may not sport the biggest gain in 2018 (up 10%), but its investors are probably thrilled to see it up for the year as the majority of its peers tumble.
The excitement surrounding TRON is twofold. First, it's the underlying business model that has investors pumped. As described by CoinCentral, TRON's focus is on being a decentralized entertainment sharing platform and storage technology that aims to cut out digital content middlemen, such as Google Play and the Apple Store. This would allow content creators to be funded directly by consumers, as well as remove some of the content control that a few major corporations currently possess.
The second catalyst appears to be the coming launch of its main net -- i.e., its proprietary blockchain network. A beta version of its network is set to launch on March 31, with the official launch of its primary blockchain, known as Exodus, expected by May 31. This was recently moved forward from an expected July 1 launch date. In other words, after months of expectation, the live launch of TRON's beta network and live network are right around the corner.
Of course, TRON's network is really a four-part evolution that's expected to take years to realize its use and potential. Exodus is just the first of many steps in evolving this entertainment-based content project. Whether TRON can continue to push higher is anyone's guess at this point.
3. Binance Coin: Up 27%
However, the cream of the crop so far in 2018 among cryptocurrencies, with a 27% gain, is none other than Binance Coin. Who saw that coming, because I sure didn't!
Binance Coin is the official coin of the Binance cryptocurrency exchange. Just as with any brokerage, crypto investors can expect to pay transaction fees when buying or selling virtual currencies on the Binance exchange (or any exchange for that matter). The more popular cryptocurrencies become, the more trading that'll be undertaken, and presumably the more fees Binance will collect. The sheer emergence of cryptocurrencies as a burgeoning asset class in 2017 likely propelled transaction fees higher.
More importantly, Binance incentivizes its members to use the Binance Coin to pay for transaction fees, rather than bitcoin. Users who pay their transaction fees in BNB (the Binance Coin) can receive discounts of up to 50% during their first year of use. These discounts do eventually shrink on a staggered basis, but for the first four years active or aggressive virtual currency investors can net themselves meaningful transaction fee discounts. This incentive has been pivotal in lifting the price of Binance Coin.
Last but not least, this past fall Binance unveiled plans to use 20% of its profits to buy back and burn up to 100 million BNB. When a publicly traded company buys back its common stock, it increases the scarcity of each remaining share, often having a positive impact for existing shareholders. The same idea presumably applies here. If fewer BNB are in circulation, the value of each remaining coin should be pushed higher as they become scarcer.
Can Binance Coin continue to lead the pack in 2018? Only time will tell.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Sean Williams has no position in any of the stocks or cryptocurrencies mentioned. The Motley Fool owns shares of and recommends Alphabet (C shares) and Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.