Ethereum, the second largest cryptocurrency in the industry, gained over 530% in 2021 and 2021 is still not over. This means that investors who bought Ethereum on January 1, 2021 saw a return of 530%. In an important milestone, the altcoin has for the first time delivered a higher annual return than Bitcoin. BTC started the year just under $20,000 and hit an all-time high of $69,044 in November. So it gained just over 200% in 2021.
There are other major cryptocurrencies on the market that are delivering tremendous returns in 2021, including meme coins like Binance Coin, Cardano, Solana, and even Shiba Inu. However, Bitcoin and Ethereum are the two largest coins in the industry, both in terms of market cap and adoption.
ETH’s rapid growth in 2021 is mostly associated with wider adoption and use of the Ethereum network. The growing popularity of NFTs and ERC-20 tokens has increased the value of ETH throughout this year. Both Ethereum and Bitcoin prices showed relatively less volatility, especially in the third and fourth quarters of the year.
However, Ethereum prices have exhibited tremendous stability even during strong bearish trends and regulatory disputes. For example, during the bearish market in November, BTC lost over 7%, but ETH rose 3%. This level has shown tremendous support as the altcoin has not consolidated below $4,000 in the past 40 days. Some market analysts predict that Ethereum will continue this uptrend into the new year.
Can Ethereum settle into the leading crypto position in 2022?
Ethereum’s market cap is almost half that of Bitcoin. ETH has a market cap of around $533 billion, while BTC has a market cap of around $1.1 trillion. Closing this gap may seem impossible due to the increasing adoption of BTC, but it is worth noting that Ethereum is advancing much faster than Bitcoin.
ETH’s market cap was just under $70 billion a year ago. In other words, it achieved a growth of over 660%, while the market value of Bitcoin increased by about 170%. There is also the growing popularity of NFTs created on the Ethereum blockchain. Almost every artist, developer, sports team is getting into the NFT industry these days.
The Ethereum 2.0 update has also reduced environmental concerns regarding ETH mining. Last week, Ethereum founder Vitalik Buterin also brought up plans to lower gas fees on the network. These expectations point to the assumption that ETH could fill this $500 billion gap faster than we thought.
Bitcoin seems to have reached a certain level where its growth is much faster than other cryptocurrencies in the market. This is considered a great development for its investors as it increases the probability of holding BTC as an inflation hedge. But Ethereum’s rapid growth poses a significant threat to the #1 Bitcoin position in the market.
Based on the current state of the entire crypto market, it would not be surprising to see ETH surpass Bitcoin’s market cap in the near future.
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.