Cryptocurrency news seeped in through general conversations like never before. 2021 had some of the most defining moments in the history of the cryptocurrency industry.
El Salvador adopted Bitcoin (BTC)
One of the most crucial developments that paved the way for Bitcoin (BTC) adoption was El Salvador recognizing the flagship cryptocurrency as a legal tender in September. The Central American country became the first country to do so. The event added significant credibility to the entire industry beyond the hype.
With the latest law in place, El Salvadoreans can use Bitcoin as payment for goods and services. Cryptocurrency exchanges will not be imposed tax on capital gains.
U.S. futures-based bitcoin ETF
One of the dramatic moments in the industry was the approval of first-ever approval of the U.S futures-backed Bitcoin exchange-traded fund (ETF). After analyzing growing pains and problems in terms of volatility, manipulation concerns, and thin liquidity, the regulatory watchdog gave a green signal to the ProShares Bitcoin Strategy ETF in October. The crypto community and the investors in Wall Street saw a stellar debut. In anticipation, the price of Bitcoin also rose significantly. While SEC Chairman Gary Gensler has been open-minded when it comes to the launch of a futures-backed Bitcoin fund, however, a spot ETF is yet to see the light of the day.
Hype of blockchain games and NFTs
Blockchain games and non-fungible tokens dominated cryptocurrency news in 2021. The pivot towards the utility of non-fungible tokens in play-to-earn or (P2E) gaming could transform the world of blockchain gaming. In terms of demographics, Asia ranks top that has boosted the already existing hype, thanks to the emergence of the P2E model. Another factor that weighed in is China’s step toward creating its own NFT ecosystem that does not include cryptocurrency.
The early adopters of this vertical are Gen Z and millennials. 2021 will go down in the history when crypto and blockchain gaming collided to create opportunities never thought of before and a broader promise into the limelight. Factors such as free-to-play, pay-to-win, loot boxes as well as microtransactions have become quite effective in keeping games profitable and active. Despite detractors, the confluence of these two sectors has become Silicon Valley’s latest obsession as investors continue to pour in the capital.
Tesla Accepts Bitcoin (BTC)
Tesla accepting Bitcoin was undoubtedly one of the biggest catalysts for Bitcoin’s unprecedented rally in the first quarter of the year. In February 2021, the electric-car maker had purchased $1.5 billion worth of BTC. The bold vision to add the cryptocurrency was followed by many institutions that further boosted its price.
However, in the same quarter, Tesla slashed its Bitcoin position by 10%. Additionally, it also backtracked from the earlier announcement of accepting payments in Bitcoin for its electric cars from buyers in the US citing environmental concerns. While the news was enough to make the community furious ultimately leading to significant losses, this did not deter other high-profile companies such as MicroStrategy to jump the bandwagon.
DeFi makes its way
From being a niche in the cryptocurrency realm to a full-fledged industry, decentralized finance flourished paving the way for an open economy. Beyond the initial hype, DeFi went on to offer financial tools that removed the need for third-party or intermediaries in a truly peer-to-peer way. Decentralized exchanges (DEX) offered users a cheaper alternative to their centralized counterparts in terms of trades and derivatives. Lending and borrowing platforms provided better rates. But DeFi came in with its own baggage in terms of security lapses, hacks – some of which could have been avoided with proper audits, rug pulls, and other scams.
China vs Bitcoin
Bitcoin’s crash in the latter part of the year can be attributed to China’s central bank, PBoC declaring cryptocurrency transactions illegal. The effective ban on Bitcoin and other tokens along with an intense crackdown on mining activities further added to the downfall. Bitcoin’s hash rate was slashed in half as a result since China accounted for 75% of the world’s Bitcoin energy use. This led to miners’ exodus to other nations in search of cheaper electricity and friendlier regulation.
Bitcoin hits a new ATH
After years of speculation, Bitcoin finally hit an ATH. The premier cryptocurrency rose to an all-time high of $68,000 in November after recovering from yearly lows of $33,000. The impressive feat came in the backdrop of rising inflation, unremarkable recovery in the job market, and the Fed’s hinting on relaxing COVID measures to support the pandemic-wracked economy. Bitcoin was significantly down from its peak, but experts believe the market recover.
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