Cryptocurrencies have had an outstanding year with two peaks, one in April and a subsequent all-time high in late November that saw bitcoin touch $67,549 (£50,294). Throughout the year the crypto-space has made steady progress with Coinbase (COIN) becoming the first major crypto company to go public with its debut in April, and increased participation from institutional finance.
The first US exchange-traded fund (ETF) linked to bitcoin was also announced in 2021. However, uncertainty surrounds how regulators are going to act towards the sector in 2022. Below are 12 charts that mark the significant points in the trajectory of the cryptocurrency market throughout the year.
After an early December flash crash, some experts warn the market could be heading towards a downturn similar to that experienced in early 2018. Although other experts are more bullish and describe the overall crypto landscape as being markedly different to that in late 2017 and early 2018. Currently, the prices of cryptocurrencies are buoyed by institutional investment and the potential of Web 3.0 is being seriously considered by venture capitalists, global fintech operations and even governments.
The amount of capital pouring into the cryptocurrency market soared throughout 2021. The total market capitalisation of the cryptocurrency sector has now surged to $2.4tn.
Bitcoin (BTC-USD) began the year in a sluggish momentum but reached an early year all-time-high of approximately $64,800 on 14 April. The all-time high was due to events involving Tesla (TSLA) stating it would accept bitcoin as payment and Coinbase listing as a publically traded company on NASDAQ (^IXIC).
The price of bitcoin began to escalate in the lead up to El Salvador's Bitcoin Law going into effect on 7 September.
Read more: Bitcoin: 2021 in 12 charts
Bitcoin rose throughout October and early November, taking other cryptocurrencies along with it on the bull-run.
Cryptocurrency investors poured money into the market to boost the price of offerings past their former all-time highs in May. Bitcoin reached a new peak of nearly $70,000 in October. The cryptocurrency market correlated with the S&P 500 (^GSPC), Dow (^DJI), Nasdaq, and Stoxx Europe 600 (^STOXX). These markets had impressive runs throughout, with most of these charts hitting all-time highs on 1 November. The below chart is of the S&P 500, which tracks the performance of 500 large companies listed on stock exchanges in the US.
2021 was the year for memecoins With heavy-weights dogecoin and shiba inu making serious gains throughout the year. Shiba inu (SHIB-USD) gained 47,500,000% this year, despite losing more than half its value in December.
Read more: 2021: The year when memes humbled hedge funds
Shiba inu gained 777% throughout October. Shiba Inu’s market cap is now over $20bn.
Another big gainer this year was polygon. This ethereum-based token improves the speed and cost of transactions on the ethereum blockchain. The cryptocurrency is a layer-2 network, meaning it acts as an add-on layer to the ethereum blockchain. Polygon has risen by 9,372% since January 2021.
Some market analysts see similarities between current cryptocurrency charts and those from early 2018. From early January 2018 to September 2018 cryptocurrencies plummeted 85%. The crash has been dubbed the "Great Crypto-Crash" and is cited as being worse than the dot-com bubble's 78% collapse in 2000.
However, according to Gunnar Jaerv, COO of First Digital Trust, the 2017 bubble was created by retail investors who eventually lost their exuberance after “wide investment in unsustainable projects lacking real technological infrastructure”. Now the cryptocurrency market is more mature and less volatile, Jaery said. The increased demand and adoption by retail investors is backed by “millions of dollars of investment from major players and institutions who recognise blockchain technology and crypto is here to stay”.