5 Best Performing Binance Leveraged Tokens in 2020
These are the five best Leveraged Tokens on Binance, based on year-to-date performance.
2020 has been a phenomenal year for cryptocurrencies. Year-to-date, cryptocurrencies have outperformed most traditional asset classes, as the entire cryptocurrency economy grew over 180% since the start of the year. Notably, Bitcoin has outperformed Gold and the US 10-year Treasury Note — asset classes that were widely expected to excel in the unprecedented economic climate that we are experiencing today. Bitcoin’s resilience amid this crisis has positioned itself as the top-performing asset class of 2020 thus far.
This has resulted in massive demand for crypto leveraged tokens as investors seek to register huge gains in a short span. Leveraged tokens provide increased exposure (i.e. 2x or 3x) to the underlying crypto asset's daily performance by employing various leveraged instruments such as swaps and futures contracts. Due to their compounding effect, investors can enjoy higher returns in a very short period, provided the trend remains positive.
Below we highlight some leveraged tokens from different corners of the market that piled up more than 100% gains in 2020. These funds will continue to be investors’ darlings provided the sentiments remain bullish.
5 Best Performing Binance Leveraged Tokens in 2020.
1. ETHUP - Up 290%
Source: Binance
ETHUP is by far the best performing token on Binance, with cumulative returns of over 290% since its inception. This came as no surprise as Ethereum has been one of the best crypto assets to own this year, largely driven by positive sentiments surrounding the ETH 2.0 upgrade and DeFi’s meteoric growth. As such, ETHUP tokens have been one of the most profitable tokens to trade and generate outsized returns. Two major trends that generated considerable returns for ETHUP traders.
The first was when ETH crossed above $500. Correspondingly, ETHUP surged from $27 to $41, increasing over 50% vs. 32% on the spot market.
The second major trend occurred when ETH recovered from a sharp pullback, where spot prices rallied from $480 to $630, increasing over 31%. Meanwhile, ETHUP rose from $21 to $47, soaring more than 120% in the same period.
2. YFIUP - Up 264%
Source: Binance
Another big mover is YFIUP. Yearn.Finance (YFI) is a decentralized finance (DeFi) platform with a native governance token (YFI) used for voting rights and staking rewards to holders. Its market capitalization has grown more than double since August from under $300 million to over $750 million today. As a result, YFIUP tokens have produced impressive returns since its inception in October. One of YFIUP’s highlight of this year was when the token doubled in a day on November 17th, following a 30% upsurge in its underlying asset.
Much of YFI’s exponential growth was mainly attributed to four major factors: limited supply, active and robust community, reputable development team, and innovative products.
3. XRPUP - Up 190%
Source: Binance
XRPUP was an unexpected entry after spending much of the year idling. Its underlying asset, XRP, revived from its multi-year slump after a significant price jump of over 177%. XRPUP tokens soared more than ninefold in three days, from a low of $10.75 to a high of $96.6. Undoubtedly, one of the biggest short-term trends in Binance Leveraged Tokens. XRPUP’s rapid increase demonstrates the true power of leveraged tokens as investors can potentially generate outsized returns in a fairly short time.
Many cryptocurrency advocates have been critical of XRP and consider the project a very centralized operation no different from traditional databases. Despite this criticism, XRP holders believe that the token will continue to rise as more corporations and financial institutions are beginning to explore the cryptocurrency space.
4. BTCUP - Up 183%
Source: Binance
Bitcoin has dominated the headlines in recent months as prices march their way towards a new all-time high. Bitcoin's recent stellar performance is no secret as the number of institutional investors attracted to the digital asset is likely to grow. Consequently, BTCUP tokens on Binance have performed remarkably well, with over 183% in cumulative returns. BTCUP traders saw their biggest gain on November 30th when Bitcoin gained over 8% in a day to mark a new all-time high. Correspondingly, BTCUP tokens surged 21% in the same day, delivering outsized profits for Bitcoin leveraged tokens holders.
5. LTCUP - Up 99%
Source: Binance
Finally, LTCUP, is the fifth-best performing token on Binance, producing more than 99% cumulative gain since September. Litecoin, which holds a strong correlation with Bitcoin, has had a phenomenal run on the coattails of Bitcoin’s success. Since Bitcoin’s breakout above $12,000, Litecoin has performed in tandem with the bellwether cryptocurrency, moving from under $55 to a high of $94 on Binance’s spot market. In the same period, LTCUP tokens rose from $12 to $34.8, an increase of 190% vs. 70% upsurge on its underlying asset.
Follow these 3 rules to capture powerful short-term trends with leveraged tokens.
These are just a few examples of tokens that have produced fantastic returns to their holders in the last few months. Leveraged tokens can be powerful if you know when to enter and exit out of the market.
But make no mistake. The crypto markets can be a roller coaster. Past wins don’t guarantee future gains. In trending markets with low volatility, leveraged tokens can outperform the returns of their underlying asset. However, in volatile markets, tokens may underperform due to the daily rebalancing and re-leveraging mechanism embedded in leveraged tokens.
With that in mind, here are the three rules that you should follow to maximize your winning potential in every leveraged token trade.
# 1: Use leveraged tokens for short-term trades. If you hold leveraged tokens for too long, you’re battling with the potential negative impacts of the token’s daily rebalancing, impacting your performance returns.
# 2: Focus on markets that are sharply trending. Leveraged tokens perform best in markets where there are strong trends and momentum. Ensure these factors are in your favor to increase the probability of profit in your trade.
# 3: Use leveraged tokens to supplement exposure in your core portfolio. Leveraged tokens are not a substitute for holding assets in the spot market. However, they provide additional options for traders to gain more exposure and profit in short-term trends.
Leveraged tokens can be very powerful for short-term trading, but you need to be cautious when holding these tokens over a long period. You have to understand how leveraged tokens work to use the right tools for the job.
For more information about leveraged tokens:
Read: 4 Pitfalls of Trading Leveraged Tokens and How to Avoid Them
Read: Your Essential Guide To Binance Leveraged Tokens
Bottom Line
For traders who are near-term bullish on Bitcoin or any of the above crypto assets, leveraged tokens could make an interesting choice. A near-term trend-following trade could be intriguing for those with a high-risk tolerance.
If you can predict price movements correctly, you will generally make money by trading leveraged tokens. Tokens offer many viable alternatives for amplifying gains, putting less trading capital at risk, and profiting with strong market momentum.
While leveraged tokens are beneficial for short-term trading, it could also lead to huge losses when markets fluctuate or whipsaw. Furthermore, leveraged tokens' performance could vary significantly from their underlying asset's actual performance over a long period due to their compounding effect. Hence, users are advised to avoid holding leveraged tokens for long periods.
Disclaimer: Binance does not take into account your personal investment objectives, specific investment goals, specific needs, or financial situation and makes no representation and assumes no liability to the accuracy or completeness of the information provided here. The information and publications are not intended to be and do not constitute financial advice, investment advice, trading advice, or any other advice or recommendation of any sort offered or endorsed by Binance. Binance also does not warrant that such information and publications are accurate, up to date, or applicable to the circumstances of any particular case.