In terms of price, bitcoin climbed from around $29,000 at the start of the year to a fresh all-time high of nearly $69,000 in November, and in the process, it reached a market cap of more than $1 trillion for the first time. Bitcoin began the year being the institutional favorite, with multinationals and hedge funds massively buying for the first time. We also saw the likes of MasterCard and Visa both announced plans to implement bitcoin and other cryptocurrencies into their payment platforms, again showing that cryptocurrency as a whole was finally gaining mainstream acceptance. The biggest news was the adoption by El Salvador, the explosive success of NFTs, some of the usual volatility, and of course China’s bans.
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January: Crypto market cap surges above $1 trillion for the first time
The year opened with a bang with the total market value of all cryptocurrencies rising above $1 trillion for the first time. Bitcoin surged to record highs with three peaks in 2021 and reached its highest of $68,789.63 on Nov 10, 2021. While bitcoin’s performance was impressive, it paled alongside altcoins such as Ethereum, Solana, and Cardano. The number of cryptocurrencies increased to more than 10,000 as of November, which is double that of April 2020.
February: Elon Musk’s Tesla buys $1.5 billion in bitcoin
Tesla revealed that it had bought $1.5 billion worth of bitcoin and said it would accept payment in bitcoin. A number of companies (MicroStrategy, Tesla, Square, and others) are holding bitcoin on their balance sheets for different reasons, some because of inflation and rampant money printing, others because it’s a liquid asset while also generating a return, and a few because of its ability to give economic empowerment to individuals. The entire market witnessed an increased endorsement from some of the world’s most successful investors and hedge fund managers, insurance companies, banks, and payment processors reversing a previous skeptical stance.
March: Beeple sold an NFT for $69 million
NFTs have seen explosive success this year with record-breaking sales and exposure. What was a small crypto niche in the past is now a widely-discussed topic. NFT trading reached $22bn in 2021, compared with just $100m in 2020. The most valuable NFT this year was “The First 5000 Days”, a digital collage by Beeple, the name used by the American digital artist Mike Winkelmann, that was sold for $69.3 million in March. NFTs will have an important role in the metaverse, so tech giants and small developers alike are building a 3D-connected world with crypto powering its economy.
April: Coinbase’s IPO is crypto’s coming-out party
On April 14th, Coinbase was the first major cryptocurrency company to go public, giving the cryptocurrency exchange an initial market cap of $85.8 billion. The listing was a victory for the entire market, as it became a kind of marker of approval and support for the sector from traditional finance. For the industry as a whole, the Coinbase IPO looks like the consent of regulators to work with crypto assets in the legal field and signifies the first step in global acceptance for an industry.
May: China bans cryptocurrency again
It feels like there has been a Chinese bitcoin ban every year of the asset’s existence. In May, China banned financial institutions and payment companies from offering services related to cryptocurrency, with its most recent target being Bitcoin mining. From May to June, the global hashrate roughly halved, as Chinese miners went dark to comply with government orders. The bitcoin hashrate is a measure of computing power on the network. Bitcoin’s hashrate has almost fully recovered from China’s crackdown. China’s hostility to public cryptocurrencies could prove to be one of the biggest economic and geopolitical mistakes in history.
June: a16z triples down on crypto startups
Andreessen Horowitz launched a new $2.2 billion cryptocurrency-focused fund to deploy capital across blockchain and crypto start-ups. In 2021, over 1,700 venture capital deals were completed, with startups, projects, and protocols raising $25.1 billion in financing. Compared to 2020, these figures represent a 719% increase year-over-year in total funding.
July: Bitcoin falls below $30,000
Bitcoin fell below $30,000 as US regulators continued calls for tighter control on cryptocurrencies. While bitcoin has gone mainstream in 2021, it’s just as volatile as ever. Cryptocurrencies trade every day around the clock and around the world, on a number of different exchanges. On weekends, when trading is thin, prices can fluctuate drastically. There are no circuit-breakers or cool-off periods, as there are with equities to help counteract sharp moves. I think investors are starting to accept that its volatility is not a bug, but a feature.
August: $600 million stolen in a huge crypto heist
Poly Network, the crypto platform targeted in an attack, and $600 million was stolen in one of the biggest cryptocurrency heists. Eventually, nearly all the funds were returned by the hackers. This year, an entrepreneur told police he was tortured by masked robbers targeting his bitcoin millions. He was tied, bound, and gagged before the assailants fled with his passwords. Over $7.7 billion was stolen in cryptocurrency scams worldwide in 2021, according to a new report by blockchain analytics firm Chainalysis. That’s an 81% rise compared to 2020. Security will be even more important.
September: El Salvador makes bitcoin a legal tender
El Salvador became the first country in the world where bitcoin is considered legal tender, which means that retailers are legally obliged to accept bitcoin as payment. The government gave away $30 of Bitcoin in celebration to every citizen who downloaded the government’s digital crypto wallet. The initiative was met with fierce support and fierce criticism. Most Salvadorans don’t have access to financial services, and blockchain is a solution to help the unbanked. El Salvador’s move confirmed that crypto can be a way for small economies to bypass a global financial system that is geared towards the world’s richer countries and individuals.
October: A new bitcoin ETF debuted on the NYSE
Bitcoin hit the New York Stock Exchange on Oct. 19 with the introduction of BITO, a new Bitcoin-linked fund by ProShares. The fund quickly grew to over $1 billion in assets, becoming the quickest ETF to reach that threshold. With BITO any investor can buy or sell bitcoin futures like a stock through their brokerage account, without having to create an account at a cryptocurrency exchange or a crypto wallet. Investing in BITO is not the same as investing in bitcoin, but the silver lining is that this ETF will pave the way for a spot bitcoin ETF.
November: Goodbye, Staples Center. Hello, Crypto.com Arena
Staples Center, which is home to the Los Angeles Lakers, will be renamed Crypto.com Arena on Dec. 25 in a 20-year deal for $700 million. This is just another indicator that crypto has gone mainstream this past year. The market has surged to $3 trillion, rivaling the world’s most valuable company, Apple, and amassing more than 200 million users.
December: Congress gets a crash course on cryptocurrency
Early this month, executives of top cryptocurrency companies testified before the House Financial Services Committee about the promises, perils, and uses of stablecoins, or cryptocurrencies that are pegged to the value of stable assets such as the dollar. Apart from the launch of Bitcoin ETFs, there have been regular updates regarding the SEC’s areas of interest. Notably, stablecoins and DeFi are under discussion, as they present more regulatory challenges than cryptocurrencies like bitcoin. More than likely, we will see big announcements coming next year in the regulation of these two areas.
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