This year has been an exciting year for crypto investors who have seen Bitcoin witness two all-time highs, not to mention the rise of meme coins such as Shiba Inu and Dogecoin, as well as so-called Ethereum killers including Solana and Cardano.
But let’s not forget it’s also been the year that saw Facebook change its name to Meta as the metaverse came to the fore in the mainstream. And in the crypto side of the metaverse, we’ve also seen the rise of virtual gaming worlds such as Sandbox and Axie Infinity which have also been top performers.
Narrowing the choice down to just five top-performing cryptos is no easy exercise, but let’s start with what many consider the best long-term bet namely Bitcoin.
Bitcoin (BTC)
The performance of Bitcoin in 2021 has been volatile, to say the least, but it’s been backed up by some strong fundamentals which underscore why many investors believe it may top $100,000 in 2022. The volatility included an all-time high in mid-April, only for its value to plunge to around $30,000 in mid-July, before reaching a new all-time high in November at $68,000 before again dropping again to under $50,000.
Part of the reason for the long-term belief in Bitcoin’s performance is several real-world developments in 2021. These include El Salvador adopting it as legal tender, the Taproot upgrade which allows for smart contract-based transactions for the first time, and the launch of the first Bitcoin exchange-traded fund (ETF).
But while mainstream coverage of cryptocurrencies has focused on Bitcoin, the best performing currencies that you should consider for your portfolio mirror the maturation of the crypto market in 2021.
Axie Infinity (AXS)
It’s a pleasure to see one of the top performers in 2021, with a year-to-date performance at the time of writing over 17,777% of the play-to-earn blockchain-based game Axie Infinity. The metaverse-powered gaming project enables players to breed, raise, and trade cute digital pets called Axies.
The idea of the game is to get small love potions (SLP) to create new Axies. In turn, SLP is itself a crypto token that can be sold on an exchange, with top players earning up to 1,500 SLPs a day. As a further revenue stream, the game also allows you Axie can also be sold as an NFT, plus other in-game items. The monthly trading volume of all Axie Infinity NFTs is around $170 million.
What’s more, it may be worth noting for investment purposes that the Vietnamese startup Sky Mavis’s core revenue and the performance of the AXS token are closely correlated. This is no doubt a reflection of the fact that most of the company’s revenue comes from Axie ‘breeding’ fees paid in AXS to the treasury, which in turn significantly has the effect of decreasing the circulating supply of AXS – an in-built supply-side squeeze mechanism which is good for maintaining Axie Infinity’s longer-term value.
Of course, this success has also attracted many competitors in the blockchain gaming and GameFi space so it will be interesting to see in 2022 if it can maintain its popularity in the space.
The Sandbox (SAND)
Cryptocurrency is the ideal form of payment in the virtual world, and though we don't yet know which metaverse will win the competition for user engagement, already Sandbox players can purchase and build digital real estate and develop their games and NFTs.
This functionality has driven the rise in the value of SAND tokens by over 14,000% since the start of the year.
Users can upload their creations into The Sandbox marketplace, where first they are registered as ERC1155 tokens (ASSETS) on the Ethereum blockchain. These ASSETS can then be bought and sold using the SAND token. This is an Ethereum-based game that, like Axie Infinity (AXS), follows the GameFi "play to earn" model.
The Sandbox now has more custom settings for users to choose from, and it places a greater emphasis on player-created NFTs. Users can create their own games and NFTs, as well as conduct transactions to gain benefits. Underlying its asset credentials going into 2022 Sandbox has announced several collaborations in recent months, including with NFT marketplace OpenSea, celebrity rapper Snoop Dogg, and TV show The Walking Dead. At the same time, it recently completed a US$93 million financing round.
Dogecoin (DOGE)
No discussion of the best performing cryptocurrencies of 2021 can be complete without pointing to the rise and rise of Tesla Elon Musk’s favorite meme coins, namely Dogecoin. It may not have performed as spectacularly as some with a 3622% rise over the year, but it makes up for it with its army of followers and celebrity backs. While this may sound trivial compared to the technical power of rival tokens, the importance of community cannot be underestimated in this mem-driven virtual metaverse-based economy.
It’s no doubt one reason why TV Shark Tank entrepreneur Mark Cuban has thrown his weight behind the token, using it for payment purposes at his Chicago Mavericks basketball team. Indeed, despite its meme coin heritage, its growing adoption as a payment method with very low transaction fees and fast transaction times supports the thesis that it will become more mainstream.
If Elon Musk and Mark Cuban are correct, and it gains in popular appeal beyond its core community, this core payment feature of Dogecoin may make it superior to other cryptocurrencies in terms of maintaining its value and sustained growth for the future.
Solana (SOL)
With close to a 12,000% rise in value the so-called Ethereum killer Solana has had quite an impressive year from an investment standpoint, despite bumps in the road such as network outages, and criticism from the Ethereum community directed at this contender. No doubt thought the rise of NFTs has played a significant part in SOL’s popularity, offering a price-competitive and speedier alternative to the NFT dominant Ethereum platform.
Bear in mind that Solana is capable of processing 50,000 transactions per second (TPS) or more, with the potential as the network grows, to reach 700,000 TPS. Ethereum currently has a processing capacity of 15 to 45 TPS per second. If there are any issues with Ethereum's upgrade, Solana can take advantage of them to increase its market share. So at least before the arrival of Eth2, Solana has time to expand its developer base and take on new projects, and for those fundamentals, it’s worth investing in as a long-term play.
Conclusion
These are my top five selections for 2021. Of course, it’s somewhat a subjective selection, for example, some investors will want to go solely on percentage performance to decide the top five.
While others might point to the strengths of Ethereum considering this year’s market focus on NFTs and the successful start of the Eth2 upgrade.
Other investors may put more emphasis on the meme coin sector, in particular Shiba Inu’s spectacular rise over the year which benefited from a strong army of supporters, a feature of price sustainability in 2022 which will only become more pronounced.
If I can add another 5 more cryptos to my list. It would be
- Kishu Inu- Rising star in the Ethereum Meme Scene,
- Safemoon- Godfather of Reflections,
- Light Defi- First photovoltaic plant with a 5 MegaWatt (MW) production capacity. ,
- XRDoge- Most Promising Doge in the XRP Family,
- BNB- Platform Token of Binance, the World Crypto Largest Exchange.
Looking forward to 2022 and what comes next.’