How Bitcoin and other cryptocurrencies fared in 2021: Explained in 3 charts

Cryptocurrencies were unrivaled conduits of greed and fear in 2021, alternately minting and destroying fortunes while swinging wildly while adding around $ 1.5 trillion in overall market value along the way.

Bitcoin, which is up more than 60% this year, absorbed much of the attention, but had to share more limelight with Ether and Binance Coin, as well as meme tokens such as Dogecoin and Shiba Inu.

In fact, Bitcoinpart of the crypto The market shrank sharply during 2021 as other tokens soared, a sign of how investor interest in digital assets has broadened despite, or perhaps because of, enormous volatility.

The decline in Bitcoin's dominance will likely continue into next year "given the explosion of assets in the crypto space and the various use cases," said Vijay Ayyar, head of Asia Pacific with crypto exchange Luno in Singapore.

Here are three key charts that tell the story of the year in crypto and point the way forward:

The overall market value of cryptocurrencies rose from around $ 1.5 trillion in 2021 to about $ 2.3 trillion as of December 17, according to tracker CoinGecko, which has nearly 12,000 tokens.

Bitcoin, the largest in the world cryptocurrency, started the year with a 70% market share. That has dropped to less than 40%, in part due to the rise in popularity of Ether. But money also flowed into other tokens, and for some that trend could be a sign of a potentially destabilizing speculative foam.

Controversy over the putative role of Bitcoin in investment portfolios continues to rage. Proponents argue that it offers the highest inflation hedge in a generation. But the token in 2021 tended to correlate more consistently with risk assets, such as tech stocks, rather than inflation expectations.

The more than 160% rise in the Bloomberg Galaxy Crypto Index this year far exceeds the jump in more conventional assets such as commodities and global equities, 23% and 13% respectively. Of course, given the huge changes in cryptocurrencies, the old adage that there is no pain, no profit also applies.

Bitcoin is now testing key levels of technical support after a more than 30% drop from a record just over a month ago. One is the 55-week moving average, which in the past has at times provided a floor for sell-offs, while another is a level around $ 44,100 implicit in a Fibonacci study of the rally from the March 2020 low. until the peak of November 2021. The cryptocurrency has already broken below a trend line drawn from the beginning of its rise during the pandemic.