28 Dec 2021

2021 in review pt 2 of 5: A yearlong altseason

2021 has been a flying year for most altcoins. While bitcoin showed strength in 2021, we’ve seen a constant stream of capital trickling down into altcoins.
Source: Tradingview
Throughout the first five months of the year, bitcoin saw a continuous loss of dominance, as traders rotated into altcoins while bitcoin pushed above former highs. These months saw a mixture of “stupid” pumps in memecoins and Ethereum DeFi strength. Bitcoin’s dominance has since May 19th stabilized in the 40-50% range, with traders constantly rotating between narratives. Currently, we see the strongest narrative and momentum among the “ETH-killers”, and GameFi/Metaverse related tokens.2022 prediction: Traders will continue rotating between narratives unless the bear forces her claws on the market.
The resurrection of Ethereum
Source: Tradingview
The multi-year range breakout on the ETHBTC pair is among the prevailing trends of the year. Ether has stood out on a year-to-date basis, rising by about 500% compared to bitcoin's increase of roughly 95%. This performance gap is the widest seen since 2015, when Ethereum was launched. However, ETH still lags behind BTC in terms of market cap, with a valuation of around $490 billion compared to bitcoin's $1 trillion. 2022 prediction: ETH will continue to outperform BTC, but we will not see the market cap of ETH surpassing that of BTC.
The year of the layer-1s
Source: Tradingview, Coinmarketcap
As ETH has outperformed BTC, other layer-1 networks like Solana, Avalanche, Terra Luna, Fantom, and Harmony have outperformed ETH significantly. We expect this trend to continue in the upcoming year as these other smart contract platforms continue to steal market share from Ethereum in terms of users and the amount of funds stored on the network. These networks have thriving and fast-growing ecosystems that continuously drive the price performances of their native tokens. 2022 prediction: Adoption of other layer-1s than Ethereum will continue to surge, and they will continue to outperform ETH.
Meme coin mania: The absurd dog fight
Source: Tradingview
We cannot summarize the 2021 market without mentioning the absurd meme coin rally of 2021.  Not long after Tesla purchased bitcoin, Elon Musk picked up a habit of frequently tweeting about Dogecoin (DOGE), leading to several mind-blowing rallies for the OG meme coin. Correspondingly, the WallStreetBets community went deep into option bets on GME, AMC and CLOV, fueled by the mantra “We Like The Stock”. We saw a similar mentality in the crypto sphere, with the mantra “We Like The Coin”. The DOGE rally led other dog-related meme coins to rally even harder, with Shiba INU (SHIB) seeing a blow-off top as Musk appeared on Saturday Night Live. In October, SHIB again prospered as several large exchanges utilized SHIB as a marketing tool to attract new customers to the platform, leading SHIB to flip DOGE’s market cap briefly.
The breakthrough year for NFTs
Source: Dune Analytics
Let there be no doubt, 2021 was the breakthrough year for NFTs. In March, Beeple's "Everydays: the First 5000 Days" was sold at a Christie's auction for a whopping $69.3 million, making it the eighth-most expensive artwork sold in 2021. Following the sale, NFT awareness turned mainstream. Everyone and their grandma entered the market: Artists, venture capital, Visa, Christie's, Sotheby's, Nike, Adidas and Pepsi. Additionally, gaming companies like Ubisoft seek to turn in-game items into NFTs. Prices soared in NFT projects such as CryptoPunks and BAYC's, leading OpenSea volume to surge from $10 million in January to $3.4 billion in August. OpenSea reached unicorn status through a capital raise and has an estimated valuation of $10 billion. The extreme NFT growth has contributed to Ethereum’s growing fee problems, creating opportunities for other layer-1s with higher throughput to prosper.2022 prediction: Traditional gaming companies will continue to explore ways to implement NFTs to the games. This is part 2 out of 5 in our year in review article series. URL pt 1 URL pt 3 URL pt 4 URL pt 5
Share this article