Crypto News
30 Dec 2021

2021 Year-End Crypto Market Review: Where Do We Stand?

Deepan Datta

2021 has been a crazy year for the cryptocurrency market. Although the market has corrected a lot from its peak level, the enthusiasm has not decreased. We witnessed how new verticals that emerged during the latter half of the year kept the market busy and attracted new investors. 

It has been the year of many new hits and misses, learnings, and insights that helped overcome the fear of investing in crypto assets.

Here are some of the great moments of 2021 that dominated the news you shouldn’t miss before moving into 2022. 

More Than 1.5 crore Indians Invested in Cryptocurrencies in 2021

In 2021, more than 15 million Indians took their first step towards investing in cryptocurrencies. Interestingly, 55% of the investors are from Tier 2 and Tier 3 cities, and the rest are from the metros and tier 1 cities. 

As per Chainalysis’s Global Crypto Adoption Index 2021, India is ranked second in terms of crypto adoption rate, followed by Vietnam.

On CoinSwitch Kuber, one in every eight users is a woman. And, in 2021, 1.4 crore users spread across 4000+ cities have traded over 1.58 lakh crore in crypto assets through our platform. 

Cryptocurrency Market Crossed $3 Trillion Market Cap for a Brief Moment

The cryptocurrency market continued its bullish momentum through 2021, as Bitcoin and other cryptocurrencies continued upward. 

In 2021, the market capitalisation of the cryptocurrency market has more than tripled, from $779 billion to $2.4 trillion. On 10th Nov 2021, the market touched the $3 trillion market cap for the first time, a key milestone in the evolution of the cryptosphere. 

crypto market cap
source: coinmarketcap.com

The growth in the crypto market also benefited the bitcoin miners, in addition to the investors. As per a report published by theblockcrypto.com, bitcoin miners generated $15 billion in revenue in 2021, increasing 206% year-over-year. 

El Salvador Accepts Bitcoin as Legal Tender

El Salvador, a small country in Central America, became the first country to accept Bitcoin as legal tender. On June 9th, 2021, El Salvador passed the bill that recognised bitcoin as their legal tender, allowing people to use bitcoin for making payments for goods and bank loans. 

Since then, El Salvador has been slowly building its Bitcoin reserve and currently holds 1,391 BTC. President Nayib Bukele has announced plans to make the world’s first Bitcoin City funded by Bitcoin-backed bonds. 

El Salvador also uses USD as a legal tender within the country. The move to recognize Bitcoin as legal tender is aimed to reduce the influence of the US economic policies and save on remittance costs, as remittance to the country accounts for almost one-third of the GDP.

Launch of Bitcoin Futures ETF

October 19th, 2021, is a monumental day in the history of the cryptosphere. On this day, SEC, the US securities regulator, had approved the world’s first bitcoin-linked exchange-traded fund. 

The fund invests in bitcoin futures contracts and allows investors to directly benefit from the price movement of bitcoin without holding them. It was launched by ProShare, the 8th largest specialized ETF provider in the U.S, and listed on New York Stock Exchange (NYSE). 

ProShare Bitcoin Strategy ETF made history for being the second-most highly traded ETF on its debut day, with shares worth over $981 million changed hands over the session. 

The launch of ETF charged up the market sentiment that helped bitcoin and the crypto market to scale new highs. 

Altcoins Biggest Gainers in 2021

Altcoins dominated the crypto market in 2021. In the list of top 10 biggest gainers in 2021, altcoins like SOL, MATIC, DOT, GALA, etc; outperformed bitcoin in terms of returns and shifted investors’ focus from the mainstream cryptocurrencies that used to dominate the market.

In terms of market dominance, bitcoin’s dominance level shrank from over 70% to 40% in less than a year’s time frame. Ethereum increased to 20.50% from 10% level, and other altcoins market dominance level increased to 40% from 20%. 

altcoins
source: coinmarketcap.com

It is a good indication of the long term growth of the crypto market. As the price influence of big coins on other smaller coins decreases, it will result in lower volatility and increased mainstream adoption. 

Polygon (MATIC) Breaks Into the List of Top 20 Most Valuable Cryptocurrencies

India-based cryptocurrency project, Polygon, took the crypto market by surprise and is one of the top-performing altcoins. Polygon is a layer 2 scaling solution provider that provides cheaper and faster transactions on the Ethereum blockchain, and it helps in building and connecting Ethereum-compatible blockchain networks. 

During the year, the price of MATIC has grown from 1.3 to 230.40, giving a return of over 15,000%, outperforming many leading cryptocurrencies. It is currently ranked 14th most valuable cryptocurrency and has a market cap of $20.4 billion. 

MATIC
MATIC 1 yr Price Chart

NFT Boom- The Boom Sent the Market North

Have you ever thought a piece of digital art on the internet could be valued in millions and sell like hotcakes? That actually happened in 2021. 

Mike Winkelmann, a digital artist known as Beeple sold his digital artwork as an NFT for $69 million at Christie’s auction house on 11th March 2021. Since then, NFTs are breaking the internet with artists and celebrities jumping the bandwagon to sell their artwork as NFTs. 

NFT or Non-fungible Tokens are unique and non-interchangeable tokens stored on the blockchain. It can be any form of digital artwork, including drawing, animated GIFs, songs, items in video games, virtual assets, etc. 

Tokens that are dealing in the creation, buying, and selling of NFTs have seen a meteoric rise in popularity and value this year. Decentraland, Axie Infinity, The Sandbox, GALA Games are some of the top gainers in the segment, witnessing 50-100 times growth in value in 2021. 

DeFi- The New Buzzword in the Crypto Space

DeFi or Decentralised Finance existed in the crypto market for a long time, but due to legacy issues like lack of scalability and high transaction fees of blockchain networks, it couldn’t reach the level it was anticipated to reach. 

However, in 2021, we saw a change in the tide towards DeFi, becoming one of the key drivers of the cryptocurrency market. The emergence of the layer 2 scaling solution helped DeFi projects scale up their operations and made it affordable for end-users to take advantage of the system. 

Total Value Locked on different DeFi protocols, including lending, borrowing, and staking has surpassed $300 billion. 

Popular DeFi tokens like Terra (LUNA), Avalanche (AVAX), Uniswap (UNI) made headlines with their record mainstream adoption rate and returns during 2021. LUNA, the utility token of Terra blockchain, has given a return of over 14,000% in 2021, making it one of the top-performing coins in the market. 

Metaverse Just Got Real- Adidas, Snoop Dogg Buy Virtual Assets

The second half of the year witnessed growth in the Metaverse space, where it combines multiple elements of blockchain technology, virtual reality, augmented reality, and internet technologies to create a virtual world, where people can interact virtually. 

Banking on the concept, platforms like The Sandbox and Decentraland created a virtual world on blockchains, where users can buy, sell, and own virtual assets in the form of NFTs and trade them. 

For instance, American Rapper Snoop Dogg, in partnership with The Sandbox, bought a piece of virtual land on the platform for $450,000 (approximately ₹3.3 crores). He is investing in developing the virtual land on the metaverse, where he plans to connect with fans through virtual hangouts, NFT drops, and exclusive concerts. It’s not just Snoop Dogg, even sports giant Adidas bought a piece of virtual land on The Sandbox. Amazing, right?

With Web 3.0 marking the beginning of the new revolution in the internet space, Metaverse is going to make more noise in the market in the coming year.

On CoinSwitch Kuber, we recently listed five new coins from the Metaverse, NFT segment to allow you to take benefit from the growth of this segment. The coins include MANA, SAND, COTI, REQ, and GALA. 

IMAI and BACC Joined Hands to Self-Regulate Crypto Trading in India

In the absence of any government regulation for crypto trading in India, the Internet and Mobile Association of India and Blockchain and Crypto Asset Council joined hands to set up a regulatory code for crypto exchanges in India. 

For instance, voluntarily complying with the KYC norms, AML, taxes, and other norms to prevent users from utilizing crypto exchanges for undertaking illegal financial transactions. Thus setting up ethical and professional standards for the crypto industry. 

This helped in raising awareness and greater acceptance among the public for this newest asset class. The government is also proactively working towards the regulation of the sector with a bill to regulate crypto assets in India. This bill is expected to be passed in the upcoming parliament session. 

The Road Ahead…

Although the crypto market is not closing the year 2021 on a high like it did the previous year, it has been a very positive year for the entire crypto sphere. Multiple all-time highs by bitcoin, and the DeFi, NFT, and Metaverse revolution, are some landmark developments that characterised the crypto market in 2021. 

Looking ahead, 2022 seems exciting too!  There are multiple things lined up, for example, Etheruem’s migration to proof-of-stake consensus mechanism, the launch of CBDCs, and whether BTC will hit the magical $100k mark! 

One thing is for sure, things are looking very interesting for the crypto market with loads of opportunities for investors. 

Excited about crypto in 2022? Download the CoinSwitch Kuber App and start your investment journey at ₹100.

Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.

writer

Deepan Datta

Content Writer

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