Tuesday Talks: Recapping 2021 in Crypto

Last edited: Jan 4, 2022

2021 was perhaps the greatest year for crypto since its inception. This is the year where crypto really attained public appeal, whether it may be massive crypto exchanges such as Binance, Huobi, BTCC, and Crypto.com that made trading coins easy, memecoins that rallied from social media frenzy, such as Dogecoin and Shiba Inu, or the exploding hype of NFTs and the metaverse that made the world of Web 3.0 much more accessible to the public. With the exponential growth in awareness and reach of crypto, so did the prices of coins, as many coins reached all-time highs, either in May or early November. Looking back, there were several themes that dominated the headlines over 2021.

Bitcoin Establishing Itself as a Recognized Asset Class

Bitcoin had an excellent year, reaching nearly $69,000 in early November. Many investors flocked to BTC due to its anti-inflationary nature of fixed supply, and its track record of retaining value. Apart from the fact that investors treated BTC as “digital gold” to hedge against inflation, SEC also approved Bitcoin futures ETF, officially opening exposure of BTC to traditional investors and fund managers. Despite the fact that there were many obstacles to overcome this year, including COVID-19’s many mutations and China’s crackdown on crypto mining, its improvements on scaling solutions and cost and speed of payment through the lightning network have kept it afloat, and its continued growth in adoption rate means that 2022 should be another great year for BTC bullish investors.

DeFi’s Exploding Growth in Demand

Total value locked (TVL) of all combined DeFi protocols grew more than twelve-fold, from nearly $20 billion at the end of 2020 to over $250 billion at the end of 2021. This means that there was tremendous growth in liquidity in the DeFi world, which expedites coin swapping and encourages DeFi users to stake in lesser-known coin pairings, given that users understand there is massive liquidity in the pools and high incentives in interest rates to support the more obscure coin pairs. Despite rug pulls and hacks that occasionally disrupted the reputation of DeFi, its security has also been greatly improved to prevent potential massive losses that could have occurred, re-ensuring investors’ confidence in the protocol’s ability to protect funds staked within the liquidity pools.

NFTs and Metaverse Attain Mainstream Status

NFTs, similar to crypto, was also a massive winner in 2021. All sorts of NFT collections proved to be popular amongst crypto enthusiasts, including art pieces, creative content, sports following, and cult brands (Bored Apes and Crypto Punks being prime examples). NFT trading activity remained high throughout the year, peaking at $3 billion a month in trading volume. NFTs led to a surge in interest in the metaverse, since they enable the displaying of NFTs as private collections in a virtual universe, among many other potential business opportunities that traditional corporations are exploring, such as Visa, Mastercard, Nike, Adidas, etc. The metaverse is mostly focused on the blockchain gaming industry, though 2022 is expected to expand the use cases of the metaverse to appeal to a wider audience.

Outlook on What to Expect in 2022

2022 is already here, and we at BTCC cannot be more excited about what this year will bring us in terms of growth in cryptocurrency and Web 3.0 in general. With adoption rates of cryptocurrencies, DeFi, NFT, and the metaverse all growing at tremendous rates, 2022 should be yet another great year for the entire blockchain and crypto space.

BTC price chart over the past year (weekly intervals)

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