Inventory | The best performing crypto assets in 2020: Bitcoin, stablecoins and DeFi tokens

Bitcoin has had an outstanding 2020, but how have other top crypto assets fared? Let’s take a look at how some of the largest cryptocurrencies by market cap have done.

Bitcoin

First, Bitcoin has risen significantly since January 1, with its price surging from $7,195 to $28,422.

In 12 months, the price of Bitcoin has risen 290%, outperforming all major indices and most stocks except for a few, including Tesla (TSLA).

The main drivers of Bitcoin's rally are increased institutional demand, favorable financial conditions brought about by central bank liquidity injections, and a decline in the U.S. dollar.

BTC/USD monthly chart (Coinbase) Source: TradingView.com

These three macro factors combined to drive Bitcoin's upward momentum in October. Ultimately, Bitcoin's rise was accelerated by a sharp surge in trading volume and capital inflows on major institutional platforms, including the Chicago Mercantile Exchange (CME) and Grayscale.

Ethereum

Ethereum prices have performed strongly throughout 2020, despite a recent stagnation phase against Bitcoin’s price.

Ethereum started 2020 at $128 on major exchanges and peaked at $748 on December 30.

Throughout November, the main driver of Ethereum's rise was the launch of ETH2.0, which was launched after deposits exceeded the 400,000 Ethereum threshold.

ETH2.0 is a major network upgrade for Ethereum as it will exponentially scale the blockchain over time. Without ETH2.0, Ethereum can process less than 20 transactions per second. With Eth2ETH2.0, this number could increase to thousands of transactions per second.

Old altcoin

Looking at year-to-date performance, most old-school altcoins (from 2017 or earlier), including XRP, Cadano (ADA), and Stellar (XLM), have underperformed Bitcoin.

Among these altcoins, XRP initially performed particularly well in November as Bitcoin broke out to new all-time highs.

At the beginning of 2020, the price of XRP was $0.1923, soaring to a high of $0.9210, a four-fold increase in about 11 months. However, after the SEC filed a lawsuit against Ripple, XRP fell sharply, falling to a low of $0.17.

Smart Contract Protocol

Polkadot, Chainlink, EOS and Tezos have also all seen gains since the start of the year. When Bitcoin rallied to $20,000, all four smart contract-related cryptocurrencies saw significant gains.

Bitcoin weekly chart compared to Chainlink, Polkadot, EOS, and Tezos. Source: TradingView.com

For example, Chainlink, a blockchain network centered around oracles that aim to provide data to DeFi protocols, has benefited from the explosive growth of the decentralized finance (DeFi) sector.

As a result, Chainlink and many other DeFi-related tokens also rose as the total value locked in DeFi reached $16 billion.

Despite various drivers, Polkadot, EOS, Tezos, and Chainlink have lagged behind Bitcoin in year-to-date gains. The main reason for the flattening of price action is Bitcoin’s rapid rise after breaking through $20,000, which has caused altcoins to pull back.

The market capitalization of specialized tokens such as WBTC, USDC, and Tether has also seen significant growth. These tokens are mainly used in DeFi protocols, and the rapid increase in user activity has made each token unique in the DeFi ecosystem.

Tether’s market cap just passed $20 billion!
This amazing milestone is yet another proof that Tether is the most liquid, stable, and trusted currency!
— Tether (@Tether_to) December 18, 2020

Tether, in particular, has seen its market capitalization grow rapidly in the fourth quarter of 2020. As Cointelegraph reported, Tether is the most used stablecoin in the cryptocurrency market, with a valuation of over $20 billion.

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