Without any doubt, this year has been extremely eventful and bullish not only for Bitcoin, but crypto overall. What happened to crypto market in 2021? We take a look at the most memorable events and the most stellar rallies in this crypto recap 2021.
- Bitcoin continued the rally that started late in 2020, gaining over 130% at the latest ATH ($68,789). However, altcoins were where the most price action was happening: some altcoins such as SOL and LUNA gained five-figure profits;
- In September 2021, Bitcoin received the official status of legal tender in El Salvador. In the first half of 2021, China has been cracking down on mining and cryptocurrencies;
- Ethereum also improved massively, rolling out major updates to the legacy chain and Ethereum 2.0, preparing for the merger. The growth of the ecosystem was helped by non-fungible tokens gaining traction in the mainstream;
- 2021 saw trends like NFTs and blockchain gaming rise to unprecedented levels of media attention.
Bitcoin Recap 2021
The first peak of the rally coincided with Coinbase going public in April 2021. On Apr 14, 2021 Bitcoin’s price reached $63,503. The rally was brought to a halt when Tesla CEO Elon Musk announced that the company will step back from their decision to accept BTC for payments. This news was most likely mistaken for a sign that Tesla will start selling their 43,200 BTC on the balance sheet. The current ATH was reached on November 10, 2021: $68,789. The second leg up was boosted by the adoption of Bitcoin as legal tender in El Salvador, the approval of Bitcoin ETFs in the US, and the Taproot upgrade. How did Bitcoin perform in 2021? At the yearly peak, BTC gained 137.25% in comparison to the 2021 opening price. At the moment of writing the crypto recap 2021, it is up 64.86%.
A historic milestone was achieved: Bitcoin became a legal tender currency in El Salvador on Sep 7, 2021**.** The move was made to reduce the nation’s reliance on USD (the other legal tender) and helped to increase accessibility to payments infrastructure The Salvadoran government was not the only ones embracing Bitcoin in 2021. 52,000 BTC were bought by MicroStrategy this year alone, and Grayscale Bitcoin Trust offered exposure to 70,000 BTC more to accredited investors. Grayscale BTC Trust is no longer one of the few ways for institutions to trade Bitcoin. ProShares received the green light to create a spot Bitcoin ETF, which is traded on the New York Stock Exchange. Other major holders of BTC (that we know of) are Block (formerly Square) (8,027 BTC), Galaxy Digital (4,000 BTC) and mining companies: Marathon, Riot, Argo and others.
One of the largest upgrades to the Bitcoin blockchain in years was activated on November 14, 2021. Taproot included three separate proposals:
- Merkelized Abstract Syntax Trees (MASTs) which reduce data footprints of transactions,
- Pay-to-Taproot which made it harder to distinguish ordinary, MultiSig and Lightning transactions, which improves the privacy of Bitcoin users;
- Schnorr signatures, a more advanced cryptographic signing method.
The upgrade came with some potential risks like community fracturing or low adoption, leading to a hard fork in both scenarios. However, prior to the upgrade, the majority of miners signalled support, eliminating these worst-case scenarios.
Ethereum Recap 2021
Ethereum massively outperformed Bitcoin in 2021. More than that, it decoupled from BTC’s price: the first peak occurred for ETH in May, and in November lost less in correction. The peak on May 11 was not long after the correction in Bitcoin, suggesting the flow of capitalization from BTC to alts. The second peak, when the ATH of $4,891 was reached, happened roughly a week later than BTC. At the moment of writing the crypto recap 2021, ETH is 406% up in comparison to 2021’s opening price. ETH outperformed BTC by roughly four times.
Merger with Ethereum 2.0
…didn’t ship this year, though it would have been too early anyway. The closest we got to the merger with Proof-of-Stake was when the Kintsugi public testnet was launched. Prior to that, several other important updates were rolled out for the Ethereum blockchain. The most discussed one was the London hardfork, and its fee burn feature.
Shiba Inu (SHIB)
The memecoin frenzy of 2021 is best illustrated by the ‘dog money’, Dogecoin inspired tokens. Probably one of the most impressive breakthroughs we want to highlight in our crypto recap 2021 was made by SHIB. It happened due to a massive surge in popularity by the hands of the community. The social networks have million followers, and individual token holders are also said to amount to a similar number.
Since it became clear that the Ethereum merger is not happening soon, scaling solutions became as relevant as ever. The one worth highlighting in this crypto recap 2021 is Polygon. Matic Network started 2021 with a rebranding to Polygon to reflect their departure from an Ethereum scaling solution to a platform of a much larger scale. The price of MATIC, which kept its original ticker, reacted accordingly: it is one of the top gainers of 2021 with 14,250% to date.
Axie Infinity (AXS)
Another massive trend of 2021 came to be known as Play-to-Earn or even GameFi. The potential of blockchain games that reward players and incentivize trading manifested in the Axie Infinity’s story. The game came to limelight after stories about how Axie Infinity helped change the lives of Filipino players. It continues to do so even in December, while the community comes together to provide relief to the Odette hurricane victims. Just so you understand how the game blew up: in comparison to the opening price in 2021, the utility token AXS is up by 17,481% at the moment of writing.
Another breakthrough this year was achieved by the Solana team and community, which enjoyed immense attention in 2021. Decrypt even named SOL coin of the year in their cryptocurrency recap 2021. One of the reasons it attracted it was the spectacular alt season rally of SOL in June after BTC corrected 50%. As a result, SOL is 11,403% up from the opening price and by now is consistently in the top-10 cryptocurrencies. Price rallies were not the only reason Solana became the center of attention. The project became known for embracing inevitable challenges and hurdles that innovation has — even at the cost of uptime.
Speaking of DeFi, there was an unexpected dark horse which stormed the top seemingly out of nowhere. The Terra protocol****, usable for stablecoins and digital payments, built up presence over the course of 2021. The protocol received multiple major updates within the year, driving the price of the governance token LUNA up to $86.11 at the time of writing. This is a massive 13,080% profit from the price on Jan 1, 2021. At the time of crypto recap 2021, Terra became the second largest DeFi protocol with a total locked value of $18 billion. It surpassed even the champion of 2020, Binance Smart Chain, even with a far fewer number of protocols and products on the chain (14 vs. 252).
Last but not least, if we talk about crypto breaking into the mainstream, we cannot avoid mentioning Crypto.com in the crypto news recap. Their gargantuan campaigns made sure the concept of “crypto” is burned into the public consciousness. Purchasing naming rights to the Staples Centre is only one of such efforts. The result of their promotion is clearly visible in CRO’s price, which is up 860% this year.
The tech that made crypto go mainstream in 2021 was NFTs. The FOMO started in March with the $69 million dollar Christie’s sale of Beeple’s EVERYDAYS: The First 5,000 Days. This sale solidified the narrative that NFTs can be a novel venue for artists to monetize their art. However, the highest prices overall and the most attention was paid to collectibles. Bored Ape Yacht Club, Lazy Lions and CryptoPunks became the face of the new trend in crypto. So much so, that the floor price (price of the cheapest piece in the collection) served as a metric for the interest in the market. It should be mentioned that NFTs in the mainstream were met with significant controversy. The main points of contempt are lack of explicit ownership of rights, art theft and environmental impact. The last argument is somewhat misinformed, as Proof-of-Stake NFTs are equally, if not more popular, and eventually all Ethereum NFTs will be energy-efficient, too. Nevertheless, it did not stop many celebrities from hopping on the trend: Paris Hilton, Jimmy Falon, Elijah Wood all became proponents of crypto. Even companies with household names like Pepsi and McDonald’s did not miss their chance to take part.
Some More Events of 2021 in Crypto
It can sound like a lie, but the WallStreetBets and GameStop controversy happened this year. Apeing, diamond hands and other bits of WSB sub-culture irreversibly changed the face of crypto. With the summer alt season came innumerable fly-by-nighters: hacks, exploits and rug pulls came up weekly, if not daily. One of such scams was the SQUID token: the developers promised to deliver a game based on a hit Netflix show Squid Game, only to have the token drop from $523 to zero and feign innocence. Poly Network became the subject of a rather unconventional hack this August. The attacker who drained the protocol of $613 million turned out to be a “white hat” and agreed to return the funds.
The most impactful and radical regulatory move of this year came from mainland China, as they prohibited cryptocurrency mining and then trading. This accelerated the correction on the market, as well as was actually positive for mining, reducing its centralization. The infrastructure bill and its definition of “broker” were one of the regulatory fights Americans were most engaged with. In addition to increasing the USD supply by $1 trillion, it would also mean that most crypto transactions would be subject to taxation. India has been on and off regarding crypto this year. As it stands, anything close to certainty can be achieved in 2022.
What to expect in 2022?
Hardly anyone in 2020 could have predicted that DAOs will become a thing again or the impact NFTs would have made this year. One thing is certain — we will be hearing about CBDCs a lot more often next year, as China finalizes the digital yuan and other nations launch pilot programs. Cynthia Lummis, Wyoming senator, has recently announced plans for a bill that is due early 2022 for comprehensive crypto regulation. Americans also have yet to hear about stablecoin regulation or instructions for banks. Europeans will see the start of negotiations on the Markets in Crypto Assets framework. In Asia and Pacific-Asian countries, the most likely nations to propose rules and frameworks are Hong Kong and India. The merger with Ethereum 2.0 is expected by mid-2022 if all goes well. Shifting such a huge chunk of the crypto market to a completely new economic model will definitely send shock waves across the space. Finally, no one could have seen El Salvador adopting Bitcoin as legal tender, but by 2022, there are already a few candidates to make such a move soon. One of them is Colombia, and the LATAM region seems to be generally more inclined to offer favorable regulations for Bitcoin and crypto.
It is no understatement to say that 2021 has been a massively eventful year for crypto. From China’s complete ban to El Salvador making Bitcoin legal tender, all kinds of historic news and events have been happening to Bitcoin, cryptocurrencies and blockchain. We hope you enjoyed our crypto recap 2021! To see how 2022 will unfold for crypto and blockchain, keep an eye on our blog and follow ChangeHero on Twitter, Facebook, Reddit and Telegram.