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In 2021, the new COVID-19 pandemic has continued to affect the world. In addition to our daily life and social methods slowly changing, many significant changes have also occurred worldwide. The Tokyo Olympics, which was postponed for another year, was finally held. The global central bank has finally released the inflation rate, and Bitcoin price broke a new record. Although the worldwide cryptocurrency market began to decline towards the end of the year, the overall cryptocurrency market in 2021 is still relatively optimistic. Let's review the significant changes in the cryptocurrency market in 2021.
Cryptocurrency Market Value
At the beginning of 2021, the total market value of cryptocurrencies is approximately 770 billion U.S. dollars and set a new record of 3 trillion U.S. dollars on November 10
Bitcoin is in an upward trend throughout 2021, and it recorded a new high of close to $69,000 in November. The highest point is around 135% higher than the price on January 1st. Although the price has risen, Bitcoin's dominance in the cryptocurrency market has continue to decline, falling from around 70% at the beginning of the year to below 40%, which is also the lowest value recorded since 2018.
In 2021, Ethereum outperformed Bitcoin in general, with an increase of approximately 580% from the highest price point (~US$4,900) on January 1st.
In addition to the excellent price-performance, based on the continuous increase in ETH2.0 pledge amount, Ethereum also launched the London hard fork in 2021 and introduced EIP-1559. The introduction of EIP-1559 modified the basic transaction fees originally owned by miners into a destruction mechanism. According to ultrasound data, more than 1.27 million ETH has been destroyed, worth about $5.1 billion.
In 2021, the market value of stablecoins has increased explosively, a 400% increase from the beginning of the year. USDT still occupies a dominant position in the stable currency market, but its proportion has declined, with the fastest growth being USDC and TerraUST. In particular, UST has grown rapidly as a decentralized stable currency and replaced DAI as the leader of decentralized stable currency.
If retail investors drove the cryptocurrency bull market in 2017, then the bull market in 2021 was driven by institutional investors. Many listed companies such as MicroStrategy, Tesla, Square, etc., began to add Bitcoin to their company portfolio in 2021.
Top 10 Cryptocurrency
The top 10 cryptocurrency market capitalization has undergone tremendous changes compared to 2020. The rankings of BCH, Link, UNI, etc., continue to fall. The emerging public chain platforms represented by Solana, Polygon, Terra, Avalanche, etc., have risen rapidly and have entered the top 10 rankings, and their prices have increased by dozens of times or even more than a hundred times compared with the beginning of the year.
In 2021, the hot cryptocurrency primary market has allowed VC and other investment institutions to reap considerable profits in the bull market. This year, the encryption industry publicly disclosed more than 1,500 primary market financings, with a total financing amount of more than 32 billion U.S. dollars, an increase of more than 800% compared to 2020. Among them, NYDIG completed a $1 billion financing led by WestCap; FTX raised $900 million in round B and $420 million in round B1; USDC Development Corporation raised $440 million, and so on.
In 2021, NFT overwhelmed the momentum of DeFi with rapid development and led to the rapid growth of blockchain games, metaverse, digital collectibles, and others. In March 2021, artist Beeple's NFT work "Everydays: The First 5000 Days" was sold for US$69.346 million. In December, artist Pak's "Merge" was on sale at Nifty Gateway, with a final total of nearly US$91.81 million. With the deployment of hot and large companies in the NFT market, Tencent, Alibaba, Adidas, Nike, Coca-Cola, McDonald's, Disney, etc., have all begun to issue or enter NFT. OpenSea, the world's largest NFT trading market, has exponentially increased its trading volume and currently has more than 750,000 users, with a total trading volume of up to 16 billion U.S. dollars.
Although the metaverse is still in a stage where the concept is vague and the technology is new, the development momentum of the metaverse is unstoppable. As FaceBook renamed itself to Meta and shifted its focus to the metaverse direction, the total weekly sales of the four metaverse virtual lands, The Sandbox, Decentraland, CryptoVoxels, and Somnium Space, exceeded 100 million U.S. dollars. Industries such as virtual real estate developers/contractors, NFT producers in the metaverse, and AR/MR visual effect enhancement service providers have followed one after another, bringing more cross-field compound talents and new forces to the crypto world.
With the rapid development of the global cryptocurrency industry, various countries have successively introduced policies and guidelines for cryptocurrencies.
China issued the "Notice on Further Preventing and Disposing of the Risk of Hype in Virtual Currency Transactions" on September 24 after announcing the full-scale withdrawal of the domestic mining industry on May 21. Many exchanges around the world have begun to rectify and clear out mainland Chinese traders and completely withdraw from the Chinese market.
The US Congress proposed the "Infrastructure Investment and Employment Act", which requires "brokers" to report transaction information of more than US$10,000 to the US Internal Revenue Service. But because the bill's definition of "brokers" was "too broad and vague," some crypto-friendly senators began to propose new amendments to try to fix the problem, but they were ultimately rejected. At present, the bill's signing will be formally implemented next year.
El Salvador fully embraced Bitcoin and became the first country in the world to designate Bitcoin as legal tender.
The relevant financial departments of South Korea have strengthened the supervision of cryptocurrency exchanges. All South Korean cryptocurrency exchanges must be registered with the financial sector before a specific time. This regulation has caused hundreds of cryptocurrency exchanges in South Korea to close their services.
At the same time, the SEC's listing and trading of Bitcoin futures ETFs and the listing of compliant exchanges such as Coinbase have laid a more solid foundation for future cryptocurrency compliance.
2021 is also a year of heavy losses for the cryptocurrency industry. The Poly Network hacking incident alone, the loss amounted to as high as $610 million. According to Rekt's statistics, 161 hacking incidents occurred in the DeFi field in 2021, with losses amounting to $1.86 billion. In addition, the centralized exchanges were not immune to the loss of $91 million, $150 million, and $77 million in encrypted assets in 2021, respectively, on the Liquid, BitMart, and AscendEX exchanges. These events remind investors that it is vital to confirm the background and safety of the project party before investing in cryptocurrencies.
Throughout 2021, Bitcoin, Ethereum, DeFi, NFT, Meta Universe, and other fields all performed well, which will bring a perfect end to the cryptocurrency market in 2021. It is believed that the cryptocurrency industry in 2022 will bring more innovation and development.
Perhaps in 2022, Web 3.0, DAO, Metaverse, and NFT will still have a greater degree of development and be applied in real life. Bitcoin spot ETF may finally be approved, and various countries will have a more friendly and clear regulatory policy on cryptocurrencies. Furthermore, Bitcoin can finally realize clean energy mining, the popularization of CBDC in our lives makes funds more efficient, and creators can truly own content ownership through NFTs.
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