In one year, the crypto market cap has hit $ 3 trillion, the SEC has approved its first bitcoin ETF and the NFT fever has driven digital doodles to millions of dollars, crypto is finally going mainstream.
Here are six metrics that defined crypto in 2021 and what they mean for the year ahead.
The estimated portion of the $ 11 trillion market cap of gold reached by Bitcoin at the height of its bull run on November 10, 2021. On that date, Bitcoin hit an all-time high of $ 68,721, which represents a 120% increase for the year and a market capitalization of $ 3 trillion. Three years ago, Bitcoin’s total market cap was around 2.8% that of gold. Yet bitcoin was far from the top performing crypto asset in 2021. Ethereum, a versatile platform capable of handling any type of transaction, is up 443% since last year, and it has even been overtaken by many competitors as well as decentralized finance (DeFi) tokens and non-fungible tokens (NFT).
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That said, while Bitcoin’s ‘digital gold’ narrative has found a receptive audience, as its skyrocketing has coincided with record inflation levels, it is still trading wildly, which makes it widely tradable. untouchable for anyone looking for the security of getting a good night’s sleep in their asset purchases. As the Fed seeks to accelerate its reduction schedule in response to November’s 6.8% price increases, the highest in 40 years, bitcoin will need to find a new value proposition that does not rest on the crutch of the easy money from Washington.
The estimated annual energy consumption of Bitcoin miners, 123.02 terawatt-hours (TW / h), a measure of electrical energy. According to the University of Cambridge’s Bitcoin Electricity Consumption Index, which maintains a model used to track electricity consumption, this is roughly the same amount of energy Argentina uses, Colombia, Norway, Sweden and Ukraine in a given year. As the price of Bitcoin rose this year, the hash rate (the amount of computing power on the network) increased dramatically to reach many all-time highs in the spring. As you can see in the graph below, the hash rate suffered a substantial drop following China’s exile of its entire mining industry over the summer. However, the network has recovered from these losses and is poised for further growth. Plus, top miners plan to add hundreds of thousands of new machines in 2022, so this is just the start. Bitcoin’s carbon footprint is set to grow as major parties reject the shift to more energy-friendly alternatives over concerns about weaker security or centralization of the network, which are critical to the value proposition of Bitcoin. In many cases, the industry’s response has been to seek renewable sources of electricity or to purchase carbon credits.
The floor price for a Bored Ape Yacht Club monkey. Founded in 2021 respectively, the Bored Ape Yacht Club Monkeys and CryptoPunks are ‘pfp’ collections, which means owners like to display their punk or monkey as a profile picture or avatar. You may have seen one of the 10,000 CryptoPunks or BAYC monkeys available as a Twitter avatar, Gmail icon, Facebook profile picture, or even a LinkedIn portrait. In the world of NFT, the “floor price” of NFTs (non-fungible tokens) is exactly what it sounds like: the lowest price to buy that asset class. Most sales of one of NFT’s oldest and most revered collections, CryptoPunks, also exceed that number. Floor prices, perhaps even more than digital artist Beeple selling a piece of art for $ 69 million, sum up what has been a hot 2021 for the NFT market.
In 2021, NFTs are set to become even more mainstream as leading exchanges such as Coinbase, FTX, Crypto.com, and Blockchain.com launch their own markets. That said, overall success will also require finding ways to make them more accessible to everyday investors, who make up 80% of all NFT buyers, who can’t afford the six, seven, or eight-figure spend. .
The total amount of funding cryptocurrency companies raised from venture capitalists in 2021, more than the previous 10 years combined. In addition, almost all of the top 10 investment rounds this year, which grossed more than $ 6.3 billion, were the largest in the industry. never at the time of closing. The two biggest were crypto service provider NYDIG which raised $ 1 billion this month and a $ 900 million Series B round, which the FTX crypto derivatives exchange completed in July. Then just three months later, the Bahamas-based company raised an additional $ 420,690,000, increasing its valuation by 20 – from $ 1.2 billion just a year ago to $ 25 billion – perhaps. one of the most striking examples reflecting the meteoric growth of the industry over the past 12 years. month. FTX’s rapid success also made 29-year-old founder Sam Bankman-Fried the richest person under 30 on the planet, with a fortune of $ 26.5 billion.
In addition, appetites for business are only growing. Last month, crypto investment firm Paradigm announced a $ 2.5 billion venture capital fund, edging out Andreessen Horowitz’s $ 2.2 billion Crypto Fund III as the largest war chest of this type.
Source: Dove Metrics and Pitchbook
$ 12 billion
Approximate level of capital raised in 2021 to build the metaverse, a layer of virtual reality to the Internet. Leading the pack was Epic Games, which earlier this year raised $ 1 billion to ensure its games are not replaced by open source competitors built on blockchains. According to venture capital data site Crunchbase, more than 700 Metaverse-related deals have been completed this year in areas as diverse as online gaming and augmented reality (there was likely some overlap with blockchain as well). . In April, Forbes sold the first cover of NFT magazine for $ 333,333. Called Masters of the Metaverse, the cover showed Tyler and Cameron Winklevoss, who then raised $ 400 million to develop their cryptocurrency exchange and invest in a number of Metaverse-related projects.
The metaverse is sure to be one of the hottest topics in 2022, as Google search interest in the term has grown by 1000% over the past two months and significant vertical-related tokens such as AXS, MANA and SAND, are recording record growth. That said, real questions will need to be answered, such as when users will see the utility and if the metaverse really needs a blockchain. Keanu Reeves expressed the sentiments of many cryptopians when Facebook announced its rebranding to Meta, saying in an interview with The Verge, “Can’t we just make the Metaverse like Facebook invented. “
The surge in open interest (OI), the amount of unpaid contracts at CME, so far in the fourth quarter of this year. Despite the 2020 bull run continuing through early 2021, OI turned negative in the spring as institutions cut some of their bets. The launches of ether futures and then micro-bitcoin futures did little to spur new growth in OI. Nine months after 2021, crypto OI was down 14%.
But then came the fourth trimester. The main catalyst was the US SEC’s approval of bitcoin futures ETFs, which only trade at CME. The dollar value of CME crypto futures reached around $ 4.7 billion per day in October 2021, a volume of 783% year-on-year, and temporarily made CME the largest crypto derivatives exchange in the world. After the launch of the three bitcoin ETFs, the CME’s crypto OI was now up 12% from its 2020 high, and the dollar value of those contracts had risen 351% to $ 5 billion. With this momentum, the CME rises high through 2022. However, it expects a much more crowded competitive landscape in 2021, and part of its “monopoly” positioning could be shaken if the SEC approves a long-awaited spot ETF. next year.