Best Cryptocurrency to Invest in 2021

Summary

Cryptocurrency had a breakout year in 2021, with many top coins outperforming bitcoin. In fact, bitcoin had a rather underwhelming year compared to other altcoins. But, what was the best cryptocurrency to invest in 2021? Let’s take a look.

Bitcoin wasn’t the only one trailing behind- the old guard, including bitcoin, cardano, stellar lumens, and XRP failed to keep up with many of the newer offerings. You may have noticed many of these in our article on the Top 10 Cryptocurrencies.

2021 saw crypto markets on a continued trajectory of maturation. There are many ways for individuals to buy altcoins that don’t require purchasing and using bitcoin in the process. As a result, pricing for altcoins were dictated more by the value and functionality of their protocol and applications rather than their correlation to bitcoin.

While bitcoin managed to return 59.8% last year, the crypt sector grew its total market cap by 187.5%. There were a variety of coins that offered four-digit returns.

Payment-focused cryptocurrencies were largely ignored for projects with smart contract capabilities.

Cryptocurrency Performance 2021

Ethereum Competitors

Ethereum greatly outpaced bitcoin in 2021, returning 399%. A large part of this growth came from the popularity of NFTs and the creation of DeFi 2.0 protocols like Olympus (OHM), which may expand possible use-cases.

Ethereum suffered from rising gas fees. A 50% increase in transfers year-over-year saw minimums surge. Participants watched single transactions range from a minimum of $20 to NFT mint prices ranging around $40 and soaring into the hundreds of dollars on congested network days. Pricing was a reason the retail crowd migrated to other platforms with a better fee structure.

Smart contract platforms like Solana, Avalanche, and Fantom had 4-5 digit percentage returns.

Ethereum is set to merge into the beacon chain this year, which uses proof of stake instead of proof of work. It is possible that 2022 will bring lower gas fees and retail investors with it.

Memes. No Seriously. Memes

It’s true. It was the memes that powered the greatest returns on 2021. Dogecoin ran away courtesy of one Elon Musk adoption. Other dog coins followed. Shiba Inu “SHIB” benefitted the most and returned 19.85 million percent.

SHIB to USD Chart

Crypto, Games and the Metaverse Intersect

The metaverse allows a decentralized exchange through a gaming “marketplace.”

Axie Infinity was the first crypto native game to successfully establish a play to earn structure. The model combines native tokens AXS and in-game NFTs.  Other projects like Defi Kingdom grew in popularity. Defi Kingdom has more than $1.0 billion of total value locked in this play-to-earn game.

Facebook’s name change to Meta resulted in two projects, The Sandbox (SAND) and Decentraland (MANA), surge to five and four digit gains, respectively.

Overall, the best cryptocurrency to invest in 2021 was The Sandbox, with more than a 16,000% increase. Although, prices have quickly fallen since the beginning of 2022, we will continue to look for the next big cryptocurrency based on high performing blockchain protocols in the future.