TIMES.KY

Cayman Islands, Caribbeanand International News
Thursday, Mar 28, 2024

Why 2021 was cryptocurrency's wildest year yet

Why 2021 was cryptocurrency's wildest year yet

Bitcoin hit dizzying new heights, NFTs burst onto the scene and memecoins gained ground. All in all, 2021 has been a wild ride for crypto.

Bitcoin close to $70,000 (€61,800), "memecoins" worth billions of dollars, a blockbuster Wall Street listing and a sweeping Chinese crackdown: 2021 was the wildest yet for cryptocurrencies, even by the sector's volatile standards.

Digital assets started the year with a stampede of cash from investors large and small. And Bitcoin and its kin were rarely out of the spotlight since, with the language of crypto becoming firmly entrenched in the investor lexicon.

Here is a look at some of the major trends that dominated cryptocurrencies this year.

Bitcoin is still no.1


The original cryptocurrency held the crown as the biggest and most well-known token - though not without a host of challengers biting at its heels.

Bitcoin soared over 120 per cent from January 1 to a then-record of almost $65,000 (€57,400) in mid-April. Fuelling it was a tsunami of cash from institutional investors, growing acceptance by major corporations such as Tesla and Mastercard, and an increasing embrace by Wall Street banks.

Spurring investor interest was Bitcoin's purported inflation-proof qualities - it has a capped supply - as record-breaking stimulus packages fuelled rising prices. The promise of quick gains amid record-low interest rates, and easier access through fast-developing infrastructure, also helped attract buyers.

Emblematic of Bitcoin's mainstream embrace was major US exchange Coinbase's $86 billion (€75.9 billion) listing in April, the biggest yet of a cryptocurrency company.

"It's graduated into the sphere where it is traded by the sort of people that are taking bets on treasuries and equities," said Richard Galvin of crypto fund Digital Capital Asset Management.

Yet the token stayed volatile. It slumped 35 per cent in May before soaring to a new all-time high of $69,000 (€60,900) in November, as inflation spiralled across Europe and the United States.

Prominent sceptics remain, with JPMorgan boss Jamie Dimon calling it "worthless".

Peaks and troughs: Bitcoin's 2021 rollercoaster


The rise of the memecoins


Even as Bitcoin remained the go-to for investors dipping their toes into crypto, a panoply of new - some would say joke - tokens entered the sector.

"Memecoins" - a loose collection of coins ranging from Dogecoin and Shiba Inu to Squid Game that have their roots in web culture - often have little practical use.

Dogecoin, launched in 2013 as a Bitcoin spinoff, soared over 12,000 per cent to an all-time high in May before slumping almost 80 per cent by mid-December. Shiba inu, which references the same breed of Japanese canine as Dogecoin, briefly muscled its way into the 10 largest digital currencies.

Who let the doge out?


The memecoin phenomenon was linked to the "Wall Street Bets" movement, where retail traders coordinated online to pile into stocks such as GameStop Corp, squeezing hedge funds' short positions.

Many of the traders - often stuck at home with spare cash during coronavirus lockdowns - turned to crypto, even as regulators voiced warnings about volatility.

"It's all about the mobilisation of finance," said Joseph Edwards, head of research at crypto broker Enigma Securities.

"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?'"

Rise of the memecoins


Regulation: The (large) elephant in the room

As money poured into crypto, regulators fretted over what they saw as its potential to enable money laundering and threaten global financial stability.

Long sceptical of crypto - a rebel technology invented to undermine traditional finance - watchdogs called for more powers over the sector, with some warning consumers over volatility.

With new rules looming, crypto markets were skittish to the possible risk of a clampdown.

When Beijing placed curbs on crypto in May, Bitcoin tanked almost 50 per cent, dragging the wider market down with it.

"Regulatory risk is everything because those are the rules of the road that people live by and die by in financial services," said Stephen Kelso, global head of markets at ITI Capital.

"The regulators are making good progress, they're catching up".

NFTs


As memecoin trading went viral, another formerly obscure corner of the crypto complex also grabbed the limelight.

Non-fungible tokens (NFTs) - strings of code stored on the blockchain digital ledger that represent unique ownership of artworks, videos or even tweets - exploded in 2021.

In March, a digital artwork by US artist Beeple sold for nearly $70 million (€61.7 million) at Christie's, among the three most expensive pieces by a living artist sold at auction.

The sale heralded a stampede for NFTs.

Sales in the third-quarter hit $10.7 billion (€9.4 billion), up over eight-fold from the previous three months. As volumes peaked in August, prices for some NFTs rose so quickly speculators could "flip" them for profit in days, or even hours.

NFT sales on OpenSea


Soaring crypto prices that spawned a new cohort of crypto-wealthy investors - as well as predictions for a future of online virtual worlds where NFTs take centre stage - helped fuel the boom.

Cryptocurrencies and NFTs' popularity may also be linked to a decline in social mobility, said John Egan, CEO of BNP Paribas-owned research company L'Atelier, with younger people drawn to their potential for swift gains as soaring prices put traditional assets like houses out of reach.

While some of the world's top brands, from Coca-Cola to Burberry, have sold NFTs, still-patchy regulation meant larger investors largely steered clear.

"I don't see a situation where licensed financial institutions are actively and aggressively trading (these) digital assets in the next three years," Egan said.

Newsletter

Related Articles

TIMES.KY
0:00
0:00
Close
Paper straws found to contain long-lasting and potentially toxic chemicals - study
FTX's Bankman-Fried headed for jail after judge revokes bail
Blackrock gets half a trillion dollar deal to rebuild Ukraine
Israel: Unprecedented Civil Disobedience Looms as IDF Reservists Protest Judiciary Reform
America's First New Nuclear Reactor in Nearly Seven Years Begins Operations
Southeast Asia moves closer to economic unity with new regional payments system
Today Hunter Biden’s best friend and business associate, Devon Archer, testified that Joe Biden met in Georgetown with Russian Moscow Mayor's Wife Yelena Baturina who later paid Hunter Biden $3.5 million in so called “consulting fees”
Singapore Carries Out First Execution of a Woman in Two Decades Amid Capital Punishment Debate
Google testing journalism AI. We are doing it already 2 years, and without Google biased propoganda and manipulated censorship
Unlike illegal imigrants coming by boats - US Citizens Will Need Visa To Travel To Europe in 2024
Musk announces Twitter name and logo change to X.com
The politician and the journalist lost control and started fighting on live broadcast.
The future of sports
Unveiling the Black Hole: The Mysterious Fate of EU's Aid to Ukraine
Farewell to a Music Titan: Tony Bennett, Renowned Jazz and Pop Vocalist, Passes Away at 96
Alarming Behavior Among Florida's Sharks Raises Concerns Over Possible Cocaine Exposure
Transgender Exclusion in Miss Italy Stirs Controversy Amidst Changing Global Beauty Pageant Landscape
Joe Biden admitted, in his own words, that he delivered what he promised in exchange for the $10 million bribe he received from the Ukraine Oil Company.
TikTok Takes On Spotify And Apple, Launches Own Music Service
Global Trend: Using Anti-Fake News Laws as Censorship Tools - A Deep Dive into Tunisia's Scenario
Arresting Putin During South African Visit Would Equate to War Declaration, Asserts President Ramaphosa
Hacktivist Collective Anonymous Launches 'Project Disclosure' to Unearth Information on UFOs and ETIs
Typo sends millions of US military emails to Russian ally Mali
Server Arrested For Theft After Refusing To Pay A Table's $100 Restaurant Bill When They Dined & Dashed
The Changing Face of Europe: How Mass Migration is Reshaping the Political Landscape
China Urges EU to Clarify Strategic Partnership Amid Trade Tensions
Europe is boiling: Extreme Weather Conditions Prevail Across the Continent
The Last Pour: Anchor Brewing, America's Pioneer Craft Brewer, Closes After 127 Years
Democracy not: EU's Digital Commissioner Considers Shutting Down Social Media Platforms Amid Social Unrest
Sarah Silverman and Renowned Authors Lodge Copyright Infringement Case Against OpenAI and Meta
Italian Court's Controversial Ruling on Sexual Harassment Ignites Uproar
Why Do Tech Executives Support Kennedy Jr.?
The New York Times Announces Closure of its Sports Section in Favor of The Athletic
BBC Anchor Huw Edwards Hospitalized Amid Child Sex Abuse Allegations, Family Confirms
Florida Attorney General requests Meta CEO's testimony on company's platforms' alleged facilitation of illicit activities
The Distorted Mirror of actual approval ratings: Examining the True Threat to Democracy Beyond the Persona of Putin
40,000 child slaves in Congo are forced to work in cobalt mines so we can drive electric cars.
BBC Personalities Rebuke Accusations Amidst Scandal Involving Teen Exploitation
A Swift Disappointment: Why Is Taylor Swift Bypassing Canada on Her Global Tour?
Historic Moment: Edgars Rinkevics, EU's First Openly Gay Head of State, Takes Office as Latvia's President
Bye bye democracy, human rights, freedom: French Cops Can Now Secretly Activate Phone Cameras, Microphones And GPS To Spy On Citizens
The Poor Man With Money, Mark Zuckerberg, Unveils Twitter Replica with Heavy-Handed Censorship: A New Low in Innovation?
Unilever Plummets in a $2.5 Billion Free Fall, to begin with: A Reckoning for Misuse of Corporate Power Against National Interest
Beyond the Blame Game: The Need for Nuanced Perspectives on America's Complex Reality
Twitter Targets Meta: A Tangle of Trade Secrets and Copycat Culture
The Double-Edged Sword of AI: AI is linked to layoffs in industry that created it
US Sanctions on China's Chip Industry Backfire, Prompting Self-Inflicted Blowback
Meta Copy Twitter with New App, Threads
The New French Revolution
BlackRock Bitcoin ETF Application Refiled, Naming Coinbase as ‘Surveillance-Sharing’ Partner
×