High Level Observations

As 2021 has come to a close, a bit of reflection is in store. To start out, I will examine the industry as a whole and the two “top dogs”, BTC and ETH. The thriving crypto ecosystem is booming. The total crypto market cap rose by nearly 270% closing the year with a total market cap of $2.1 Trillion. For perspective, the S&P500 had a massive year, ending with a gain of 26.9%.

The two biggest crypto assets BTC and ETH rose substantially. BTC and ETH started 2021 at roughly $32,100, and $775 respectively. They each closed 2021 with a price of roughly 46,300 and $3,690 respectively. That represents a gain of 44% and 376% and has closed 2021 with market caps of $878 Billion and $440 Billion respectively.

Ethereum has been outpacing Bitcoin and it is widely believed that Ethereum will surpass Bitcoin’s market capitalization. (For you non-millennials out there, this potential phenomenon is known as “the flippening”). For context, the largest company at the close of 2021 was Apple (AAPL). Apple’s stock price rose an impressive 33% to end the year with a market cap just shy of 3 Trillion.

Both Bitcoin and Ethereum are Layer 1 block chains. What is a layer 1 block chain, you might ask? Well simply put it does not depend on any other block chain. They stand alone with their own characteristics and qualities. There are several other Layer 1 block chains that are not mentioned here, for simplicity’s sake. You can think of it like the first story of a house. You can not have two distinct houses on one plot of land. What about apartments and second stories you might ask. Well that is where layer 2’s come in to play. Ok, still not satisfied with my house analogy? Great, you can read more here.

So what should one take away from 2021 and carry into the year ahead? The crypto industry is booming. Large Layer 1 block chains seem to be one of the safer and more conservative investments in the space. Buckle up as volatility swings both ways so the years ahead will not be without turmoil and swings.