55 percent of the current owners have made their first BTC investments in 2021.

An important portion of new investors have never heard of digital currency. This is a market that saw dramatic rallies and stunning crashes in 2018.

Let’s take a look at what the biggest lessons in the cryptocurrency space were in 2021.

Lesson 5: Crypto Lesson for Retail Traders

The crypto market has been called the Wild West since its inception and the spectacular Bitcoin rally that took place at the end 2017 A wild market that offered huge gains at the expense of institutional investors, but with no regulation has lured thousands into it.

At the close of 2020 things changed. In times of growing inflation, institutional money and corporate capital shifted to cryptocurrency as a more reliable store of value than other assets.

It was not just recognition, but market manipulations. Large investors possess the capital, knowledge, and tools to influence the markets in their favor.

Professionals were always stronger than retailers. That is, until the very beginning of 2021, when a Reddit-based online community of investors united to form a critical force and “short squeeze” the Wall Street professionals.

Thousands of individuals invested in GameStop’s stock and set Wall Street short sellers trapped. Heavy losses were suffered by professional investors.

Although the iconic story happened on the stock market, it has a lot of similarities with the crypto space, where individual investors are still considered “dumb money” by big capital funds and their well-trained and equipped wealth managers. But retailers can unite to make the odds against them.

Crypto Lesson 4: Free & Easy Comes With a Cost

Robinhood (NASDAQ) is a popular and free investing app that has brought financial freedom to millions of people, particularly to young investors.

Commission-free and easy-to-use, the Robinhood app came with the mission to “de-mystify finance for all”. It simplified and gamified trading, which brought relatively young and inexperienced users to make unlimited and daily trades – something that investment professionals warned should not be practiced without know-how.

Robinhood saw twice the number of new users in 2021 than it did five years ago. However, the results were swift.

This app caused a lot of outrage because it failed to monitor its services, such as the customer identification program. It also provided false and misleading information about a range of critical issues. System shut-offs occurred during market crashes, which led to huge losses.

Unable to trade options, which allows for greater investment returns but magnifies the losses of investments, led to a student at 20 years old to commit suicide.

Later in 2021 Robinhood received a historic $70 million fine from the Financial Industry Regulatory Authority (FINRA) for “system supervisory failures and significant harm suffered by millions of customers”.

The crypto space, in the meantime, got the lesson that nothing is what it seems; it’s not always a game. Although investment products may appear simple, their complexity does not disappear.

Related:Crypto traders need to be aware of the simple rules for risk management

Crypto Lesson #3: The Players Have Control

Gamers have long been the perfect audience. They spend huge amounts on assets that never belonged to them, and they are a great target market. The game developers made a lot of money and held all ownership rights.

With NFT, blockchain and decentralized play to earn, things began to shift. This revolutionized the billion-dollar online gaming market. Gamers gained the ability to control their game assets, and earned crypto rewards just for playing. Real trading capabilities were available to gamers on both the inside and the outside marketplaces.

One of the biggest play-to-earn games of 2021 emerged. This game allows players to raise, trade, and breed tokenized digital pets (Axies), on the metaverse. It has seen a rapid rise in popularity and traded at the highest NFT level ever.

Many thousands of people joined the game to grow Axies, and then trade them online. This phenomenon was especially evident in emerging countries like the Philippines where large numbers of gamers jumped on Axie Infinity to make more money than their jobs.

Honesty is the best way to win in play-to earn. The minimum daily wage is approximately 540 Philippine pesos ($10).

However, this doesn’t deny the tectonic shift that NFT games brought into the gaming industry and the mindset of players. By allowing gamers to own and control in-game assets, tokenized games opened up a new revenue stream.

Crypto Lesson 2; Influencers are The New Fundamentals

Meme coins have become a serious business. This once-exotic fun asset has become one of the top crypto assets to make money in 2021.

Since May 1, the iconic DOGE has risen by 147,000% to surpass the record. The rival meme coin, SHIB, soared to more than 58,000% in the same period. SHIB maintained its rally throughout the year, with another 1025% in autumn.

This incredible surge in sales was made possible by Elon Musk, the CEO of Tesla (NASDAQ:) and SpaceX. SpaceX CEO Elon Musk (NASDAQ:) regularly supported one of the meme coins in his tweets. This caused their rapid price swings and wild repercussions.

A powerful combination of a highly reactive, sentiment-driven, cryptocurrency market and an influencer that has 67 million followers and a high level of speculative and sentimental cryptocurrency trading created the meme coin trend.

Crypto Olympus topped dog coins; their market capitalizations surpassed those of big companies. Global brands began accepting mem coins for payment of merchandise, and even crypto analytics that was reputable included them in their reports.

It became obvious: it’s not fundamentals that bring you sympathies and wild rides to the moon, it’s a single man from SpaceX.

Crypto Lesson 1: Centralization Hasn’t Gone Anywhere

Bitcoin was founded more than a decade ago as a way to create a completely new form of money.

Open-source protocols were intended to be managed by their users all over the globe. Twelve years later, things have changed.

Back in the late spring of 2021, the historical floods in China’s Sichuan province devastated numbers of Bitcoin mining farms and caused about 20% hashrate losses for Chinese Bitcoin miners.

At the time, the Sichuan region alone accumulated over 50% of Bitcoin’s total power. Bitcoin’s price dropped respectively to the yearly low of $29K.

Months later the country’s communist government initiated a crusade against all digital currencies except its own national digital currency issued by the central bank.

The Chinese Bitcoin miners have left China. Hashpower concentration has been split, dispersed and restored a healthier balance.

However, Bitcoin’s dependence on external big factors has not ended. The crypto market was overrun by institutional and corporate whales. Inflation hedge funds were bought by all sorts of firms and funds.

MicroStrategy spent more than $3.1 million to acquire 122,478 Bitcoins. It is followed by Tesla (38.3K Bitcoin), Galaxy Digital Holdings (14.9K), Square (8.5K), Coinbase, NASDAQ:) (4.5K), among others.

Bitcoin’s supply is limited to 21 million BTC in total and almost 20% of existing coins are already lost forever. The risk of centralization is possible due to Bitcoin’s concentration in many large-scale hands.

Since it’s always the whales who control the market and create price patterns, for individual investors centralization simply means more vulnerable Bitcoin and higher chances of market manipulation.

Related: How to Learn About Central Bank Digital Currency (CBDC).

Why you should care

In terms of adoption, 2021 was a significant year for cryptocurrency. The $2.3 trillion cryptocurrency market may seem innocent to newcomers, but it is far from simple. As any other financial market it is just like every other, with its own shakers and risk takers. Thus for any newcomer, it’s critical to see the picture of the cryptocurrency market as fully as possible.

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