Which Cryptocurrencies Were the Best to Buy in 2021? A Retrospective on Top Performing Digital Assets

The cryptocurrency market in 2021 was defined by explosive growth and a rush to identify the best crypto to buy. From January to December, the sector ballooned from under $800 billion to $2.2 trillion in total market capitalization. Bitcoin and Ethereum kicked off the year following strong momentum from 2020, but it was an entirely different cohort of digital assets that captured investor attention and delivered the most staggering returns. While Bitcoin climbed 66% to close out 2021, dozens of alternative coins returned triple-digit percentage gains, making 2021 a pivotal year for those seeking the best performing cryptocurrencies.

Metaverse Tokens: The Best Crypto to Buy for Virtual World Believers

The metaverse emerged as the defining investment theme of 2021, turning virtual world tokens into some of the best-performing cryptocurrency purchases of the year. Three metaverse-related coins dominated the rankings after Facebook’s rebrand to Meta catalyzed mainstream interest in digital experiences.

The Sandbox (SAND) topped the charts with a staggering 16,265% annual return, making it arguably the best crypto to buy if you believed in virtual real estate. The project’s SAND token experienced a 162-fold price increase as institutional adoption accelerated. Major brands including Adidas and Under Armour partnered with The Sandbox to establish virtual presence, validating the metaverse narrative and driving retail investment.

Axie Infinity (AXS) narrowly trailed as the second-best performer, posting a 16,160% gain. The play-to-earn gaming platform became a phenomenon in developing nations, particularly the Philippines and Venezuela, where pandemic-driven unemployment pushed citizens toward crypto-based income opportunities. Axie’s explosive growth spawned an entire new category of play-to-earn games that crypto advocates believe could accelerate mainstream adoption.

Decentraland (MANA) secured the seventh spot with an even more impressive 3,943% return, representing another major metaverse play that attracted both retail and institutional investors seeking exposure to the virtual worlds trend.

However, the reality of these “best” picks becomes more complex when examining their 2026 performance. Despite their spectacular 2021 gains, metaverse tokens have faced significant headwinds, with SAND down 72%, AXS declining 64%, and MANA falling 66% from their all-time highs. This underscores a critical lesson: best-performing in a single year doesn’t guarantee long-term value.

Layer 1 Blockchains: Best Alternative Cryptocurrencies to Ethereum

High transaction fees on Ethereum became a major pain point for users in 2021, spurring the search for best alternative blockchains. Five “Ethereum killer” layer 1 solutions claimed top-ten spots, attracting investors seeking scalable alternatives to the congested network.

Polygon (MATIC) delivered a 14,496% return to rank third among the best cryptocurrencies to buy in 2021. As an Ethereum sidechain, Polygon positioned itself as the scalability solution of choice, capturing DeFi users, NFT traders, and decentralized application developers. The ecosystem’s diverse project portfolio proved resilient throughout the year.

Terra (LUNA) rocketed 13,808%, securing the fourth position as a full layer 1 blockchain. Terra’s native token surged largely due to demand for its TerraUSD stablecoin, which reached a $10 billion market cap by year-end—a critical milestone that validators believed justified LUNA’s expanded valuation as the best long-term cryptocurrency buy among DeFi platforms.

Fantom (FTM) advanced 13,007%, while Solana (SOL) gained 9,374%, each representing compelling answers to the question “which layer 1 is best to buy?” The competing blockchains promised faster transactions and lower costs, drawing developers and traders away from Ethereum’s congested network.

Avalanche (AVAX) completed the layer 1 suite with a 2,787% return, offering yet another vision of what a best-in-class blockchain infrastructure could achieve.

By 2026, however, many of these “best” layer 1 alternatives have compressed significantly: LUNA fell 72%, MATIC declined 64%, SOL dropped 39%, and AVAX lost 57%. The initial promise of these scaling solutions has given way to market maturation and network consolidation.

Meme Coins: Retail Favorites Among 2021’s Best Crypto Bets

While the crypto community debated scaling solutions and rollup technologies, retail speculators drove a speculative surge in meme coins, creating an entirely new investment category.

Dogecoin (DOGE) powered into the eighth position with a 2,943% annual surge, aided significantly by Elon Musk’s public endorsement. The token’s all-time high of $0.74 occurred mid-year before consolidation, yet it remained one of 2021’s best cryptocurrency performers for early buyers. Whether DOGE deserves the label “best to buy” remains hotly debated in the crypto community.

Shiba Inu (SHIB), a DOGE derivative, claimed the final top-ten spot with a 1,608% gain as retail investors rotated into lesser-known tokens. The token’s explosive performance inspired an entire ecosystem of dog-themed coins, including FLOKI, ELON, HOGE, and DOGGY, though none matched SHIB’s momentum.

The meme coin phenomenon reflected broader 2021 dynamics: retail speculation flooded both equity and cryptocurrency markets, creating pockets of extreme volatility and outsized returns. Yet by 2026, the initial enthusiasm has cooled dramatically—DOGE has fallen 53% and SHIB dropped 56% from their peaks, reminding investors that meme-based momentum rarely sustains long-term value.

Reassessing What “Best” Meant in 2021

The cryptocurrencies identified as the best to buy in 2021 based on annual returns tell an important but incomplete story. SAND, AXS, and MANA promised virtual world dominance. MATIC, LUNA, SOL, and AVAX offered practical scaling solutions. DOGE and SHIB captured retail enthusiasm.

In retrospect, “best performing in 2021” proved different from “best long-term investment.” Many 2021 champions have experienced significant drawdowns by 2026, with Bitcoin itself down 23% over the past year and Ethereum declining 17%, illustrating that even established cryptocurrencies face extended downturns.

For investors evaluating which cryptocurrencies might represent the best opportunities, 2021’s dramatic bull run serves as both inspiration and warning. Exceptional short-term returns often mask underlying vulnerabilities or unsustainable narratives. True “best-in-class” investments require looking beyond annual performance metrics to fundamental utility, adoption trajectory, and long-term ecosystem development. Whether metaverse tokens, layer 1 blockchains, or meme coins ultimately deliver enduring value remains an open question that only time will answer.