Cryptocurrency in review 2021
2021 certainly proved to be an incredible year in the world of crypto, with the markets enjoying exponential growth while several high-profile businesses and organisations across the globe warmed up to digital assets with investments at a far greater scale than ever before.
The world’s most popular cryptocurrency — Bitcoin — hit historic highs of $68,000 in early November, while the second biggest cryptocurrency — Ethereum — posted its most impressive gains in the last 12 months to also post all-time highs.
Sophisticated global firms like Fidelity, Goldman Sachs and JPMorgan entered the crypto arena while payment giants like PayPal, Mastercard, Venmo, and even Twitter started allowing customers to transact in Bitcoin.
Elsewhere, El Salvador became the first country in the world to adopt Bitcoin as an official tender in the country, and Tesla acquired US$1.5 billion worth of Bitcoin which they held as reserves. So let’s touch on some of the crypto highlights of 2021.
1 April 2021 was a key moment for Coinbase — one of the world’s largest crypto exchanges — as they announced they would begin to offer publicly-traded shares listed on the Nasdaq under the name $COIN. Such was the impact of this that the valuation of Coinbase soared over $80 billion on its first day of public trading.
The Nasdaq placed a pre-emptive reference price of $250 per share, although they traded at $381 per share when the market opened. While its share price dropped significantly in the months to follow, this successful listing proved to be a feather in the cap of the crypto industry as it indicated approval and support for digital assets from traditional financial institutions.
In essence, the Coinbase IPO was a win for the crypto market as it appears to have gotten the consent from financial regulators to work with crypto assets legally.
Binance ban in the UK and Europe
Binance — a global crypto exchange giant — took a heavy blow on 30 June 2021 when the UK’s financial regulator banned the platform from operating within its borders. The Financial Conduct Authority (FCA) made it abundantly clear that Binance was not permitted to undertake regulated activity in the UK — causing panic amongst investors in the region.
This announcement came as regulators worldwide began to crackdown on Binance, causing prices to nosedive and leaving investors short of breath. The ban on Binance extended to greater Europe on 30 July 2021 as the platform began to suspend services in the European region, starting with Germany, Italy, and Holland due to financial regulators clamping down.
The rest of the world mirrored similar restrictions, with Japan being one such country that warned its citizens that Binance was operating in the country without its permission.
The rise of NFTs
January 2021 saw non-fungible tokens (NFTs) trending around the world. NFTs are digital tokens created on a blockchain and represent something unique or of a limited edition. They cannot be altered or replicated, and their authenticity can be proven relatively easily.
Appearing in the form of music, art, in-game items, and films — amongst others — 2021 saw the most expensive NFT ever sold — Everydays by Beeple that sold for close to 40,000 ETH or US$69 million. Gaming with NFTs also gained traction with Axie Infinity — an NFT-based game inspired by Pokemon — proving extremely popular in the NFT community.
Clothing giants like Adidas and Nike also jumped on the NFT bandwagon in 2021 with their digital versions of limited edition apparel — underscoring the thirst for investors to diversify their portfolios.
Bitcoin made its debut on the New York Stock Exchange in October 2021 as financial firm — ProShares — launched the first exchange-traded fund that was linked to BTC. The ETF with a ticker –BITO — doesn’t invest directly with Bitcoin but is based on futures contracts tied to the world’s biggest cryptocurrency.
Essentially, Bitcoin ETFs sought to be a combination of the best parts of two popular investment choices — exposure to Bitcoin coupled with the ease of ETF investments. This investment was designed to operate like any other ETF. The difference is that Bitcoin ETFs will track the price of Bitcoin — or in ProShares ETF’s case — a related financial product as opposed to tracking a market exchange like the Dow Jones Industrial Average of S&P 500.
El Salvador Adopts Bitcoin
One of the most exciting developments in the history of crypto happened in September 2021 when El Salvador became the first country in the world to adopt Bitcoin as an official tender. The news sent shockwaves across the globe and was met with fierce criticism from governments and financial regulators — especially first world countries.
However, those in the developing world took inspiration from El Salvador’s bold move as it confirmed the value of cryptocurrencies as a means for developing economies to bypass a global financial system that is heavily reliant on unfavourable regulations that suit richer countries.
Citizens of the country were each given $30 worth of Bitcoin, while retailers in the country were legally obliged to accept it as payment. While the price of Bitcoin fluctuates unpredictably, making it a risk to buy groceries and necessities daily with BTC, it did enable people to transact easier — especially the unbanked population that don’t have access to traditional financial services.
Plans are in place to make parts of El Salvador crypto cities that they envisage will become global hubs the crypto enthusiasts.
Looking ahead to 2022
With such unprecedented interest in cryptocurrencies during 2021 from individuals and organisations alike, it’s clear that cryptocurrencies will play a more significant role in 2022. As more companies and countries warm up to cryptocurrencies, there is bound to be greater adoption of digital assets across all areas as this year rolls along.
With Crypto.com buying the naming rights to the Staples Centre in Los Angeles for $700 million in 2021 and renaming the sports stadium to the Crypto.com Arena, it’s certain crypto will be spoken about and explored even more in 2022. More crypto companies will go public this year, and their values are anticipated to explode into the billions in the process.
These are exciting times, indeed, and crypto enthusiasts should certainly be delighted with such a bright horizon to look forward to. As always, Wisly will keep you up to date with the latest developments in the crypto industry.