Elizabeth Howcroft and Tom Wilson

LONDON, (Reuters) – Nearly $70,000 in “memecoins”, worth billions, a massive Wall Street listing, and a sweeping Chinese crackdown. 2021 was by far the most wild year for cryptocurrencies. Even considering the volatile nature of the industry, it still managed to be the largest.

With a flood of cash coming in from small and large investors, digital assets began the year. With the crypto language becoming an established part of the investor lexicon, bitcoin and its siblings have not been far from the limelight since.

This is an overview of some major trends which dominated cryptocurrency in 2018.

1/Bitcoin: Still no.1

Although the original cryptocurrency was known as the most popular and well-known, it still held that title. However, there were many challengers to its position.

Bitcoin rose more than 120% between Jan 1 and a record of nearly $65,000 by mid-April. It was fuelled by a tsunami cash injection from institutional investors and growing acceptance by large corporations like Tesla (NASDAQ:) Inc. and Mastercard Inc. (NYSE:) as well as an increase in embrace by Wall Street banks.

Bitcoin’s claimed inflation-proof characteristics – there is a limit to its supply – attracted investor interest. This was in response to record-breaking stimulus package that fueled rising prices. Buyers were attracted by the promise of rapid gains and low interest rates. They also appreciated easy access to Bitcoin’s infrastructure.

Coinbase’s (NASDAQ) April 2019 listing for $86 Billion was an emblem of bitcoin’s acceptance in mainstream markets. This is the most significant cryptocurrency company ever to be listed.

Richard Galvin from crypto fund Digital Capital Asset Management stated that it has “graduated into the realm where it can be traded by the kind of people that take bets on Treasury equities.”

But the token did not stay stable. The token fell 35% in May, before rising to $69,000 in November as inflation surged across Europe and America.

Jamie Dimon, JPMorgan’s boss (NYSE:), still considers it a major skeptic. Graphic: Peaks and troughs: Bitcoin’s 2021 rollercoaster, https://graphics.reuters.com/FINANCE-YEARENDER/mypmnaljavr/chart.png

2. The rise of memecoins

Bitcoin remained the most popular crypto-currency for investors. However, new tokens – many would call them jokes – have made their way into the space.

“Memecoins”, loose collection of coins, ranging from dogecoin and Shiba Inu to the squid-game that has its roots in web culture. They are often not practical.

The bitcoin-based spinoff ‘inu’ was launched in 2013. It soared to over 12,000% in May and then fell almost 80% in December. Inu refers to the same Japanese breed as dogecoin and briefly climbed its way up into the top 10 most popular digital currencies. Graphic: The doge was let out! https://graphics.reuters.com/FINANCE-YEARENDER/gdvzymlzkpw/chart.png

Memecoin was connected to “Wall Street Bets”, where online retail traders gathered to buy stocks like those listed below. GameStop Corp (NYSE:) squeezing the short positions of hedge funds

Many of these traders found themselves stuck at home, with little cash to spare during coronavirus lockdowns. They turned to crypto even as regulators raised concerns about volatility.

Joseph Edwards is the head of research at Enigma Securities. He said, “It’s all about mobilisation of funds.”

Assets like DOGE or SHIB are speculative. However, their money comes from the instinct that ‘Why shouldn’t my money, savings, earn?’ Graphic: Rise of the memecoins, https://graphics.reuters.com/FINANCE-YEARENDER/klpyknyxwpg/chart.png

3.Regulation: There is a large elephant in the room

Regulators worried that crypto could allow money laundering and compromise global financial stability as money began to pour into it.

Crypto – an innovative technology that was created to disrupt traditional finance – has been long questioned by watchdogs. Some have warned consumers about volatility and sought more power over it.

New rules were looming and crypto markets were nervous about possible clampdowns.

Bitcoin tanked nearly 50% after Beijing enforced crypto restrictions in May. This brought down the overall market.

Stephen Kelso from ITI Capital, global head for markets, stated: “Regulatory risk can be everything. “Regulators have made good progress and are now catching up.”

4/NFTs

Memecoin trading became so popular that another part of crypto-complex was also in the spotlight.

In 2021, non-fungible tokens or NFTs were a string of code that was stored on the Blockchain digital ledger and which represent unique ownership rights to artworks, videos, or tweets.

The digital art of Beeple, a U.S. artist, was auctioned at Christie’s in March for $70 Million. This is among the highest-priced pieces ever sold by a living artists at an auction.

This sale sparked a frenzy of NFTs.

In the third quarter, sales exceeded $10.7 million. That’s eightfold more than in the prior three months. Volumes peaked in August and prices for NFTs shot up so fast that speculators were able to “flip” them for profits in days or hours.

    Soaring crypto prices that spawned a new cohort of crypto-wealthy investors – as well as predictions for a future of online virtual worlds where NFTs take centre stage – helped fuel the boom.

    Cryptocurrencies and NFTs’ popularity may also be linked to a decline in social mobility, said John Egan, CEO of BNP Paribas-owned research company L’Atelier, with younger people drawn to their potential for swift gains as soaring prices put traditional assets like houses out of reach.

    While some of the world’s top brands, from Coca-Cola (NYSE:) to Burberry, have sold NFTs, still-patchy regulation meant larger investors largely steered clear.

    “I don’t see a situation where licensed financial institutions are actively and aggressively trading (these) digital assets in the next three years,” Egan said. Graphic: NFT sales on OpenSea, https://graphics.reuters.com/FINANCE-YEARENDER/CRYPTO-CURRENCY/gdpzymljbvw/chart.png