Retrospective: 6 of the Best Performing Cryptos of 2021

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There are several ways to rate cryptocurrency performance for 2021. One way is by the largest percentage gain for the year – indicating pure value growth. Another is by the largest capitalization – indicating market strength. And a third could be the best cryptocurrency poised for growth going forward – the most subjective measure. Depending on your Solo 401k investing objectives, you may want to consider each of these and then further perform your own research to determine which meets your specific needs and desires.

Here, we rank a few in each category as a top list for 2021 and a brief list for 2022. The result is not actually a top 6 rating but rather a list of cryptocurrencies based on 3 different investing strategies.

Cryptocurrency Goes Mainstream in 2021

One of the biggest takeaways from crypto in 2021 is how it gained widespread acceptance. With the broadening acceptance came major fluctuations in values as individuals, markets, and governments further defined their roles in a global economy resurging from the COVID-19 downturn of 2020. According to the July 2021 report Measuring Global Crypto Users by cryto.com, the number of global crypto users reached 221 million in June 2021.

“Notably, it only took four months to double the global crypto population from 100 million to 200 million. By comparison, it took nine months to reach 100 million from 65 million since we began tracking these numbers.”

~crypto.com

In November 2021, the total value of all cryptocurrency assets exceeded $3 trillion, according to Bloomberg News (the peak was $3.3 trillion). It roughly quadrupled from its 2020 year-end value. But with more than doubling of acceptance (and speculation) comes great fluctuation. In December of 2021, the total value had retreated to the mid $2.5 trillion range. Bitcoin is the biggest and most recognized of the cryptos. Bitcoin saw 2021 prices swing from a high of over $68,990 in November 2021 after starting the year at just under $30,000. Some experts say the price of Bitcoin will surpass $100,000 — most saying it is a matter of when it happens, rather than if. But fluctuation continues with the price of Bitcoin at around $49,000 in late December. Other coins are even more volatile.

There have been many major developments affecting crypto values in 2021. Among the most notable were:

  • In June, El Salvador passed a new law to adopt bitcoin as legal tender, becoming the first country to do so.
  • 2021 was a huge year for crypto companies going public (IPOs).
  • The first U.S. futures-based bitcoin ETF launched on the New York Stock Exchange under the ticker “BITO.” (It does not hold the crypto directly.)
  • Broader institutional crypto adoption. For example, PayPal and Square (and others) are allowing users to buy on their platforms. The market is watching for positions from giants like Amazon and Walmart that would be complete game changers.
  • In September, the People’s Bank of China confirmed its continued crackdown on cryptocurrency.
  • Throughout 2021, there was a heightened focus on U.S. cryptocurrency government regulation.
  • In November, decentralized autonomous organizations (DAOs), caught the attention of mainstream investors when ConstitutionDAO raised over $40 million to buy a rare copy of the U.S. Constitution at auction.

By any stretch of the mind, those are only a few of the major cryptocurrency developments during 2021.

Cryptocurrencies with the Largest Percentage Gain in 2021

At least two crucial factors make percentage gains a high risk method for ranking crypto growth in 2021. First, the highest gains are with cryptos new to the market with almost no history and unknown staying power. Second, the percentage gains are overly magnified by increases from pennies to several dollars.

For instance, Polygon (MATIC) is considered among the biggest gainers, but the increase is from less than 2 cents at the beginning of the year to about $2 in December. It shows a YTD gain of 11,026% and a market capitalization of $14 billion. Important to know is that the gain was primarily achieved by directly addressing Ethereum’s overused and clogged blockchain. Other smaller but fast-rising cryptos include Gala (GALA) at the very top with a return of about 40,000%, along with Axie Infinity (AXS) at about 19,000%, and Sandbox (SAND) with a gain of about 15,000%.

Looking at the much better established, well-known, and accepted cryptos is Ethereum (ETH) the second-largest cryptocurrency by market cap with skyrocketing gains. This year saw a year-to-date gain of 416% and a market capitalization of $441 billion.

Large percentage gains were extraordinary and abundant in 2021. Others worth mentioning include:

  • Cardano (ADA)
  • com Chain (CRO)
  • Binance (BNB)
  • Shiba Inu (SHIB)
  • Avalanche (AVAX)
  • Dogecoin (DOGE)
  • Solana (SOL)
  • Terra (LUNA)

Cryptocurrencies with the Largest Capitalization in 2021

Make no mistake about it, there are thousands of different cryptocurrencies out there. Many are brand new in 2021 and others are only a year or two old. Every one of them is hoping to survive to become a leading crypto. But not all of them will survive. Understanding the nuances among the thousands is more than a full-time job. Even some of the best and most innovative will never make it to the top of the list. On the other hand, as the breakout year of 2021 ends, there are clear leaders when measured by market capitalization (the total value of all the coins currently in circulation).

Bitcoin (BTC) is the most recognized name in the market. It is by far the clear leader with a market capitalization of over $1 Trillion. First created in 2009, it runs on a blockchain or ledger logging transactions distributed across a network of thousands of computers. Five years ago, one bitcoin was worth about $500. This year saw a new high at $68,990 before settling back to around $49,000. From five years ago, that’s growth of about 11,400%.

For market cap, Ethereum (ETH) comes in at over $557 billion but a distant second to Bitcoin. It’s worth noting because this one year’s percentage gain was about 416% as mentioned in the section above. Over five years, it has gone from about $11 to over $4,700 (more than a 42,000% gain).

You will also find others high on the market capitalization list that also appear in the high gains list above. Other notable 2021 high capital cryptos include:

  • Binance (BNB) with a market cap of over $104 billion.
  • Tether (USDT) with a market cap of over $73 billion.
  • Solana (SOL) with a market cap of over $64 billion.
  • Cardano (ADA) with a market cap of over $52 billion.

Among the thousands of cryptocurrencies, there are still several more with a capital value of well over $1 billion.

Possible Top Cryptos for 2022

Although 2021 saw phenomenal gains for some cryptocurrencies, there was a general retreat later in the year and particularly in December. Crypto is almost certain to again be volatile in 2022 as even more investors seek an economic haven from government currencies and inflation. There will no certainty for which ones will perform the best. Due to its name recognition, market capitalization, an inflation hedge, and as a store of value, Bitcoin is still going to be a leading investment choice, especially among more conservative Solo 401k investors.

For those that are more risk-tolerant and looking for a rising star, there are a few with particularly good potential going into 2022. Again, making its appearance on this third list is Ethereum (ETH). It has a lot of work in the pipeline related to decentralized apps and smart contracts. Not all of which are going to come to fruition in 2022. Ethereum is hard at work on a 2.0 upgrade that has substantial risk but should make the network exponentially faster along with other upgrades that will further validate its place in the market. The risk is that an upgrade of this scale has never been tried on a blockchain of this size and volume. It’s realistic to expect that there will be delays. It may not happen in 2022 or even in 2023. But, if and when it does happen successfully, it will lock in its position as a leading cryptocurrency with the possibility of upstaging Bitcoin.

Future of Crypto?

The future of crypto is wide open and no one knows exactly what the next major game changer will be. However, Basic Attention Token (BAT) is taking a different tack that moves beyond being a simple currency and speculative investment. The innovative approach is toward application-focused cryptocurrencies. This is quite different from pure cryptocurrency because BAT is web-browser based. It has the inklings of combining Google with crypto. The basic workings are that it will pay “BATs” to users for viewing and interacting with web advertisers. Is it a long shot? Yes! But crypto is a wild new frontier with many applications yet to be discovered.

If you’re new to cryptocurrency investing with your Solo 401k or need a refresher, the place to begin is our basic Crypto Education Series:

One of your best choices is opening a crypto exchange account in the name of your Solo 401k trust or through a Special Purpose LLC.

Contact a Nabers Group team member today to see if the Solo 401k is right for you. We’re happy to answer your questions about crypto assets and help you put together a plan so you can move forward thoughtfully, efficiently, and in full control of your retirement funds.

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