Bitcoin peaking at almost $70,000, the rise of meme coins, and the NFT explosion made 2021 one of the wildest years yet for cryptocurrencies, even by the industry’s volatile standards. Here are 4 major trends that dominated crypto this year, reviewed by Reuters.
1. Bitcoin ATH
Between January 1 and mid-April, Bitcoin gained more than 120%, reaching the then-record of almost $65,000. Huge support from institutional investors, an increasing embrace by Wall Street banks, and growing acceptance by major corporations such as Tesla Inc and Mastercard Inc helped fuel its growth.
However, Bitcoin remained volatile. It lost more than a third of its value in May before hitting a new all-time high of $69,000 in November.
2. NFT explosion
Non-fungible tokens (NFTs) exploded in 2021. In March, U.S. artist Beeple sold an artwork for nearly $70 million at Christie’s. It was one of the three most expensive works by a living artist sold at an auction. In the third quarter, NFT sales reached $10.7 billion, which was an eightfold increase from the previous quarter. With a peak of volume in August, some NFTs prices rose so quickly that the digital assets became possible for speculators to “flip” for profit in a matter of hours.
Burberry, Cola, and other top brands may have sold NFTs, but bigger investors remain averse to them due to still-patchy regulation. However, younger people are attracted by their profit potential as inflation puts traditional assets like real estate out of reach.
3. Meme coins are here to stay
Although Dogecoin, Shiba Inu, and other meme coins have little practical use, they took a firm hold of the market this year. Dogecoin gained 12,000%, reaching an all-time high in May. Shiba Inu briefly made the list of the 10 biggest digital currencies.
Traders with spare funds turned to meme coins when they found themselves stuck at home despite warnings about volatility. Joseph Edwards, head of research at crypto broker Enigma Securities, said:
It’s all about the mobilisation of finance. While assets like DOGE and SHIB may in themselves be purely speculative, the money coming into them is coming from an instinct of ‘why shouldn’t I earn on my money, savings?’
4. The rise of the regulators
Watchdogs began to fret over the perceived risk poised by crypto to financial stability and the threat of money laundering, calling for more powers over the sector and issuing dire warnings over volatility. When China cracked down on crypto in May, Bitcoin lost almost half of its value, dragging the broader market down. Stephen Kelso of ITI Capital said:
Regulatory risk is everything because those are the rules of the road that people live by and die by in financial services. The regulators are making good progress, they’re catching up.
