Crypto Market 2021: A Year in Review

2021 has been arguably the most important year for cryptocurrency. The industry has been in the headlines all year-round and has gained traction in many mainstream media outlets. We look back at the most important events of the year that have shaped crypto into a multi-trillion-dollar industry. 

All time highs  

Of course, it wouldn’t be a year in review without touching on Bitcoin’s dramatic price surge at the beginning of the year, which was likely the catalyst for most of the events on this list. The world’s largest cryptocurrency hit an all-time high of $64,800 USD in April. Bitcoin later went on to top this all-time high by reaching $68,700 USD in October.  

Bitcoin was not the only one smashing records this year. The second-largest cryptocurrency, ETH, which is the native cryptocurrency of the Ethereum blockchain, reached a record high of $4,891 USD in October 2021. Newcomer, Cardano (ADA) gave top cryptocurrencies a run for their money when its price increased 1562% from $0.178 in January to $2.96 in September. We are continuing to see other large-cap altcoins hit new all-time highs such as Solana (SOL), Avalanche (AVAX), Terra (LUNA) and more. Time will only tell whether these coins will continue their success in 2022.  

Dogemania

It would have been extremely difficult to predict that dog-themed meme coins like Dogecoin (DOGE) and Shiba Inu (SHIB) would have been some of the top performing cryptocurrencies in 2021. Dogecoin can attribute a lot of its success to tech billionaire and meme aficionado, Elon Musk, who tweeted his fondness of the meme coin several times during the year, causing a frenzy of investors to snatch up DOGE and the price to soar. This dramatic influx shows the influence that public figures like Musk can have on cryptocurrency prices.  

Dogecoin wasn’t the only top dog in the kennel. Shiba Inu (SHIB), which is a Dogecoin-inspired meme coin, was the top performing coin of the year. In 12 months, the price of SHIB increased by approximately 50 million per cent, making it one of the greatest performing assets of all time. Similar to DOGE, the price of SHIB was most certainly impacted by actions from high profile public figures like Elon Musk.

May crash  

In May, the entire crypto market crashed, losing over 30% in market capitalization. The crash occurred due to a number of reasons. Firstly, Tesla CEO, Elon Musk, announced via Twitter that Tesla would no longer be accepting Bitcoin for purchase of their electric vehicles. The market was then pushed into further collapse when China reinforced their ban on all crypto trading, mining, and transactions. Given that over 70% of all Bitcoin mining took place in China prior to the ban, this caused widespread panic as more than half the world’s Bitcoin miners were taken offline. This was likely one of the key reasons that Bitcoin and the entire crypto market took a dive. At its lowest point following the market crash, the crypto market had lost a total of $1.2 trillion in market value.  

Thankfully, the market not only recovered but Bitcoin and many other altcoins managed to hit all-time highs in the months following the crash.  

El Salvador became the first country to adopt Bitcoin as legal tender  

In September, El Salvador became the first country in the world to accept Bitcoin as legal tender, meaning retailers and vendors with digital payment systems in place now have a legal obligation to accept BTC as payment for goods and services. Many large companies operating within the nation’s capital of San Salvador such as McDonald’s and Starbucks have begun accepting Bitcoin. Additionally, the El Salvadoran government is rolling out a network of 200 “Chivo” ATMs to help introduce consumers to Bitcoin. This huge step forward for cryptocurrency has seen a flood of support. Some believe the adoption of Bitcoin could prevent hyperinflation and assist in ending poverty in the country.  

On the other hand, the country’s adoption of Bitcoin has been met with heavy criticism. El Salvador is a country with widespread poverty, violent crimes, and gang activity. Many believe resources need to be allocated to tackling these issues before implementing a digital currency to a population that largely do not own smartphones and live on less than $2 USD a day.  

Mass adoption

The adoption of cryptocurrency and blockchain-based projects by large businesses and corporations in 2021 was more than we’ve ever seen before. Business intelligence company, MicroStrategy, become the first publicly traded company to invest significant assets into cryptocurrency. MicroStrategy CEO, Michael Saylor, reported that the company now has over $6 billion in Bitcoin holdings.  

Fintech and payment providing giants like PayPal, Venmo, Visa and Mastercard have begun to explore blockchain and crypto solutions, allowing users to transact with various cryptocurrencies on their payment networks. Even Twitter, one of the world’s largest social media platforms, has started to adopt Bitcoin.  

Many other major brands also began embracing blockchain based applications like NFTs. Globally recognised brands like McDonald’s and Adidas have embraced the rapidly growing crypto sub-sector as a means of engaging with their customers. McDonald’s released a McRib NFT in celebration of the sandwich’s 40^th birthday and Adidas have dropped a collection of NFT clothing to be worn in the Metaverse. 

With so many businesses and brands exploring opportunities within the crypto industry, the long-term trajectory of cryptocurrency is continuing toward widespread adoption and integration in numerous aspects of our daily lives. 

Bitcoin ETF

The ProShares Bitcoin ETF (ticker: BITO) was the first ever Bitcoin ETF to be publicly listed on a stock exchange. After BITO was publicly listed on the NASDAQ in October 2021, the price of Bitcoin reached all-time highs shortly after. A Bitcoin ETF merely mirrors the price of the cryptocurrency itself. This may be considered more favourable to investors concerned about storing Bitcoin themselves. This ETF is considered to be vital for the growth of Bitcoin as it provides a more traditional avenue for investors to invest in BTC. 

Many more Bitcoin and crypto ETFs are expected to list publicly on stock exchanges around the world. A cryptocurrency-focused ETF by BetaShares (ticker: CRYP) went public on the Australian Stock Exchange (ASX) shortly after the launch of BITO. This ETF aims to track the performance of companies “at the forefront of the dynamic crypto economy”. It invests in up to 50 crypto companies including Coinbase and MicroStrategy.  

NFT craze  

Towards the backend of 2021, Non-Fungible Tokens (NFTs) were all the rage. In fact, data from Google search trends shows that searches for the term ‘NFT’ surpassed searches for ‘crypto’ and ‘Bitcoin’ terms in October. NFTs are unique digital collectibles that are an application of blockchain technology and therefore their digital scarcity can be easily verified. They can represent something unique like pieces of art, digital files, music and in-game collectibles.  

Some examples of NFTs that have made headlines in 2021 include the first tweet, made by Twitter co-founder and former CEO, Jack Dorsey, which sold for $2.9 million USD and ‘Everydays: the first 5000 Days’ which was an artwork created Mike Winklemann, sold for an enormous $69 million USD. The emergence of collectible NFT sets, which combines multiple NFTs that share similar features, has been huge for the cryptocurrency sub-sector. Bored Ape Yacht Club and Crypto kitties are two examples of NFT sets that have had huge growth in 2021.  

Play-to-earn gaming  

Play-to-earn games have been one of the top trending topics in the cryptocurrency industry in 2021. Play-to-earn games allow users to earn cryptocurrency and NFTs by participating in on blockchain-based games. Axie Infinity is one of the most notable play-to-earn games as it has a built a strong community of users who actively play the game. As it stands, Axie infinity has over 2 million daily users and has become especially popular in countries like the Philippines and Venezuela. This widespread adoption played a key role in the price of AXS increasing by over 5000% in just 5 months.  

Following the success of Axie Infinity, there has been an emergence of several other successful crypto play-to-earn games.  

Summary

2021 has been an amazing year for the cryptocurrency market and all the companies that operate within the crypto industry. From record breaking all-time highs to major crashes and mass adoption, the crypto market has left its mark in 2021. But the question is, can it do it again in 2022? With many pundits, influencers and investors predicting vastly different outcomes, only time will tell what next year will look like for the crypto industry.