Year of the Dog(e)? The Cryptocurrency Market of 2021

Photo by Executium on Unsplash

This post contains sponsored advertising content. This content is for informational purposes only and not intended to be investing advice.

In the world of cryptocurrency, people have come to expect the unexpected. Even by the unique standards of the crypto market, this year has been a wild one to witness.

The market saw a huge influx of institutional capital, and in many ways is becoming more resilient and mature. But this same market saw a dog meme amass a market cap of almost $100 billion with thousands of copycats — excuse the mixed metaphor — nipping at its tail.

One thing is clear: Crypto has gone mainstream and become a key part of the zeitgeist. While there is so much more room for people to enter the market — only 16% of Americans say they have ever invested in crypto — it’s embedded in the popular consciousness and isn’t just some hot new trend. Everyone is talking about it, from American media personality and businesswoman Paris Hilton to your crazy uncle at Thanksgiving.

Here are a few key takeaways from the year.

All Hail the King(s)

Bitcoin BTC/USD remains on top and surpassed a $1 trillion dollar market cap. After starting the year in the middle of a major runup from about $10,000 in October 2020, Bitcoin hit what was an all-time high of about $65,000 in April this year before settling back down around $30,000 for a few months this summer. It reached its current all-time high of $68,789 on Nov. 10 and, at the time of this article, is sitting at about $50,000.

Ethereum ETH/USD had a huge year as well, with some thinking the great “flippening” (Ether surpassing Bitcoin’s market cap) might occur. Although this did not come to pass, it made some serious ground. Ether started the year off with a market cap of $83.4 billion that grew 6.5 times to today’s $544.4 billion. Bitcoin roughly doubled its market capitalization in the same time period.

DeFi Growth

Much of Ethereum’s success came from the hundreds of decentralized finance (DeFi) projects built on its platform. And DeFi projects have driven the success of so-called “Ethereum-killers” like Solana SOL/USD or Polkadot DOT/USD. DeFi apps have matured and people are starting to see the disruptive potential of this space. The larger DeFi market cap grew exponentially this year to reach $180 billion.

NFTs Gone Wild

The market for non-fungible tokens exploded. OpenSea, the largest NFT marketplace, topped $3 billion in volume in the 3rd quarter. That’s closing in on the likes of eBay Inc. EBAY. Jack Dorsey, former Twitter Inc. TWTR CEO, sold the 1st tweet ever for $2.9 million. Sotheby’s just auctioned a CryptoPunk for $11.75 million.

Puppy Power

You can’t talk about Crypto in 2021 without talking about Dogecoin DOGE/USD and Shiba Inu SHIB/USD. The former rocketed to the top 10 with help from the Dogefather, Tesla Inc. TSLA CEO Elon Musk, and rode a wave of internet-flavored populism bleeding over from the GameStop Corp. GME saga. Determined to follow suit, SHIB raced to the top, surpassing DOGE for a time.

Here To Stay

One of the most exciting and hopeful signs for the continued growth of the market has been the influx of institutional capital. Huge traditional players are investing in the space, and many more are close to following suit. Large institutions like UBS Group AG UBS and Citigroup Inc. C have Bitcoin holdings. And this trend is accelerating. According to Bloomberg, more than $17 billion of institutional capital has been invested this year alone. A survey by Nickel Digital Asset Management showed 82% of those investors are looking to increase their exposure in the next 2 years.

Democratizing Access

Cryptocurrency has always had a populist flair. It was intended to circumvent the traditional power structures and bring financial freedom to the people. Many crypto projects and companies that service the market still believe in that goal. Companies working in ancillary areas of this democratization and access to cryptocurrency have also become stars in the year. One example could be Bitcoin Depot — the world’s largest operator of Bitcoin ATMs, which believes it can help more people access the power of crypto that wouldn’t otherwise with over 6,500 crypto ATMs located throughout the US and Canada.