In the world of alternative investments, 2021 was a year of extremes—explosive gains, dramatic crashes, and unprecedented volatility. While traditional assets like stocks and bonds delivered modest returns for many investors, digital currencies and select commodities stole the spotlight with jaw-dropping performance. Among them, one cryptocurrency surged over 139 times in value, redefining what’s possible in high-risk, high-reward markets.
This article dives into the most compelling alternative investment returns of 2021, spotlighting top-performing cryptocurrencies and commodities. We’ll explore what drove these surges, identify key trends, and help you understand where such opportunities might emerge in the future—all while keeping risk front and center.
What Are Alternative Investments?
Alternative investments refer to assets outside the conventional trio of stocks, bonds, and cash. These include:
- Real estate
- Private equity
- Hedge funds
- Commodities (e.g., gold, oil, metals)
- Art and collectibles
- Digital assets like cryptocurrencies
Unlike traditional investments, alternatives often offer lower liquidity, higher fees, and greater complexity—but also the potential for diversification and outsized returns when markets shift unpredictably.
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Cryptocurrencies Lead the 2021 Rally
If 2021 had a financial theme, it would be "digital transformation." At the heart of this shift was cryptocurrency—a once-fringe asset class now embraced by institutions and retail investors alike.
According to market data, trading volumes and total market capitalization of cryptocurrencies exploded in 2021. By year-end, 14 digital assets had surpassed a $15 billion market cap, led by **Bitcoin** at nearly $900 billion and Ethereum at over $450 billion.
But beyond the giants, a new wave of blockchain projects delivered life-changing returns.
The Top Performers: Who Gained Over 100x?
While Bitcoin rose about 60% and Ethereum nearly 4x, smaller-cap cryptos saw exponential growth:
| Asset | 2021 Return |
|---|---|
| Polygon (MATIC) | +13,900% (139x) |
| Solana (SOL) | +11,100% (111x) |
| Avalanche (AVAX) | +3,400% (34x) |
| Dogecoin (DOGE) | +3,200% (32x) |
Polygon took the crown as the best-performing cryptocurrency of the year. Built as a scaling solution for Ethereum, its network enabled faster and cheaper transactions, attracting major partners like Meta and Stripe. As decentralized finance (DeFi) and NFTs boomed, Polygon became a go-to platform—fueling demand for its native token.
Solana followed closely, leveraging high-speed blockchain architecture to support thousands of transactions per second. Its ecosystem grew rapidly, hosting top DeFi protocols and NFT marketplaces.
Even so, these gains came with extreme volatility. Polygon dropped more than 70% from its peak between May and July 2021. Similarly, Bitcoin plunged from around $60,000 to $31,000 during mid-year corrections—reminders that massive upside often comes with brutal drawdowns.
Why Did These Coins Explode?
Several macro factors contributed to the crypto surge:
- Global monetary easing: Central banks flooded markets with liquidity post-pandemic.
- Inflation hedge narrative: Investors turned to scarce digital assets as inflation fears rose.
- Mainstream adoption: Companies like Tesla and Square added Bitcoin to their balance sheets.
- Ecosystem growth: Ethereum’s DeFi and NFT boom pulled attention to complementary blockchains.
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Commodities: Tin Soars While Gold Falters
While crypto dominated headlines, traditional inflation hedges like precious metals underperformed. Instead, industrial metals and energy commodities led the charge.
Tin Shines: Shanghai Tin Up 95%
Shanghai Tin (SHFE) surged nearly 95% in 2021—outpacing nearly every other commodity. Driven by supply constraints and rising demand from electronics and renewable energy sectors, tin became a critical material in a tech-dependent economy.
Other top gainers included:
- INE Crude Oil: +55%
- DCE Plywood: +52%
- Low-Sulfur Fuel Oil: +38%
- SHFE Aluminum: +31%
Precious Metals Retreat
Despite inflation reaching multi-year highs, both gold and silver declined:
- SHFE Gold: -5.2%
- SHFE Silver: -10.4%
This counterintuitive move puzzled many investors. Analysts attribute it to stronger-than-expected economic recovery signals and rising real interest rates, which reduce gold’s appeal as a non-yielding asset.
Big Losers: Livestock and Iron Ore
Not all commodities fared well. The biggest loser was live hog futures, down over 52% due to oversupply after pandemic-driven herd expansions. DCE Iron Ore followed with a drop exceeding 30%, pressured by China’s property slowdown and environmental regulations.
Core Keywords Driving Market Trends
Understanding the language of alternative investing helps uncover deeper insights. Key terms shaping 2021’s landscape include:
- Cryptocurrency
- Blockchain technology
- Alternative investments
- Digital assets
- Inflation hedge
- Decentralized finance (DeFi)
- Commodity markets
- Market volatility
These keywords reflect evolving investor behavior—shifting from passive index exposure to active participation in emerging ecosystems.
👉 Explore how digital assets can act as inflation-resistant tools
Frequently Asked Questions (FAQ)
Q: Is cryptocurrency a reliable inflation hedge?
A: While many investors view crypto—especially Bitcoin—as “digital gold,” its price volatility makes it less stable than traditional hedges like real estate or Treasury Inflation-Protected Securities (TIPS). However, long-term scarcity and growing adoption support its potential as an inflation-resistant asset.
Q: How risky are alternative investments?
A: Alternative investments typically carry higher risk due to lower liquidity, less regulation, and complex valuation models. They’re best suited for experienced investors who can tolerate drawdowns and have a long time horizon.
Q: Why did tin outperform gold in 2021?
A: Tin benefited from tight supply chains and strong industrial demand in electronics and green tech. Gold, meanwhile, faced headwinds from rising bond yields and improving economic data that reduced safe-haven demand.
Q: Can small-cap cryptos really return 100x?
A: Yes—but rarely without extreme risk. Projects like Polygon and Solana succeeded due to strong fundamentals, developer activity, and timing. Most small-cap tokens fail; thorough research is essential before investing.
Q: Should I allocate part of my portfolio to alternatives?
A: For most investors, a 5–15% allocation to alternatives can enhance diversification. Focus on assets aligned with macro trends—like blockchain infrastructure or critical materials—and avoid speculative bets without clear catalysts.
Q: What lessons can we learn from 2021’s market swings?
A: Volatility is inherent in high-growth markets. The biggest gains often follow the steepest drops. Discipline, risk management, and emotional control are crucial to surviving—and thriving—in turbulent conditions.
Final Thoughts: Opportunity Meets Risk
The 2021 alternative investment landscape was a tale of two worlds—one where early believers in Polygon earned life-changing returns, and another where leveraged traders faced total losses during market swings.
Success in these markets isn’t just about picking winners; it’s about understanding cycles, managing exposure, and staying informed. Whether you're exploring digital assets or commodity plays, knowledge remains your strongest edge.
As innovation accelerates across blockchain networks and global supply chains reshape commodity flows, new opportunities will continue emerging—for those ready to act wisely.