Bitcoin Doubled in Appreciation Than Traditional Assets in 2021

Key facts:
  • The S&P 500 Index appreciated 30% in 2021, while gold fell 6%.

  • Bitcoin ranked 20th among the cryptocurrencies with the highest returns in 90 days.

At the end of 2021, bitcoin achieved an appreciation of 63.2%, which greatly exceeded the returns of traditional assets. The Standard & Poors 500 (S&P 500) index reflects an annual return of 29.13%, according to figures from TradingView.

Compared to gold, bitcoin’s performance stands out more this year. The precious metal went from $ 2,012 on January 1, to $ 1,826, at the time of writing. This represents a 6% drop for the year.

In terms of its market capitalization, bitcoin went from $ 597 billion on January 1, 2021 to $ 907 billion, an increase of $ 310 billion, or 51.9% for the year.

The price of bitcoin in 2021, compared to the S&P index and the price of gold. Source: TradingView.

2021, a year of high variability

As can be seen in the previous graph, the price of bitcoin ranged between USD 29,103, at the beginning of the year, and USD 69,500, the latter its historical maximum registered on November 10. Although it is not the most volatile year for bitcoin, its volatility index shows highs above 6% in February and June.

Between January 1 and April 14 of this year, the price of bitcoin continued the momentum that had started in October 2020. In three and a half months, bitcoin posted a 123% boost.

Added to the normal correction after an all-time high were Tesla’s announcements in mid-May that it would stop accepting bitcoin as a means of payment for its cars, resulting in additional downward pressure. The minimum point of said correction was reached on July 21, resulting in a 54% price decline, the steepest drop of the year.

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In the macroeconomic environment, fears and uncertainty about rising inflation contributed to a rebound in the price of bitcoin in the third and fourth quarters of the year.

Bitcoin’s growth since the July low was more pronounced than at the beginning of the year. With a very similar starting point, above USD 29,000, bitcoin grew with some fluctuations until reaching USD 69,000 on November 10. This represented a 133% rebound.

The subsequent correction was inscribed in a context of coupling the price of bitcoin and traditional assets. Compared to the May-July correction, the price pullback from the all-time high of $ 69,000 is appreciably less, roughly 30%. At the time of writing this article, the price of bitcoin is USD 48,095, according to the CriptoNoticias price index.

Compared to the cryptocurrency market, bitcoin shows a significantly lower return. The market capitalization of cryptocurrencies tripled this year, according to an analysis by CriptoNoticias published on December 27. Among the reasons for the better performance of the total market, which is linked to a more noticeable appreciation of altcoins, could be cited the strong growth of the non-fungible tokens (NFT) market, together with the rise of decentralized finance platforms (DeFi ).

On the other hand, the dominance of bitcoin went from 70% at the beginning of the year, to 40.21%, updated to December 26 by CoinMarketCap. This coincides with the 483% appreciation of altcoins, whose market value went from USD 230,000 million to USD 1.34 trillion.

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Bitcoin Doubled in Appreciation Than Traditional Assets in 2021

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