The yr 2021 is coming to an in depth, and if there’s one method to describe how the cryptocurrency trade fared prior to now 12 months, it might be momentous progress.
Main cryptocurrencies shattered earlier data, adoption grew, new sectors sprouted and novel blockchain use instances made important breakthroughs.
The Market Perception’s newest version recollects the occasions lined in previous points in addition to deep-dive subjects in Cointelegraph Analysis’s trade experiences.
DeFi and Altcoins
Two of the highest gainers of 2021 have been Solana (SOL) and Terra (LUNA). SOL gained 9,500%, whereas LUNA gained 13,000%. Vital investments and ecosystem progress catalyzed the immense features for the 2 tokens. One may additionally argue that the 2 being billed as potential “Ethereum killers” had an element in contributing to their huge rallies.
Within the decentralized finance (DeFi) scene, the 2 tokens sit among the many high 5 in whole worth locked (TVL). Solana is at No. 5 with $11.45 billion, and LUNA has lately surpassed Binance Coin (BNB) for the No. 2 spot with $18.9 billion, in accordance with Defi Llama. Furthermore, the rising ecosystems of Solana and Terra deserve a deeper look, which is why they’re the topic of Cointelegraph Analysis’s upcoming experiences.
Competitors has undoubtedly elevated for Ethereum. Its TVL share was 97% in January however is at the moment all the way down to 62.54%, per Defi Llama. The following section of improvement for the sector comes into query in 2022, particularly for the reason that progress of DeFi this yr has been so substantial that authorities have switched from denying the trade to grappling with methods to take care of it.
The DeFi market capitalization stays a small fraction of the general cryptocurrency market cap, nevertheless it underwent the identical progress trajectory. Some imagine that integration with legacy banking could possibly be one of many major focuses for DeFi in 2022.
Nonfungible tokens, or NFTs, discovered their breakout yr in 2021 regardless of present since 2014. The majority of gross sales got here prior to now 12 months, surpassing $14 billion in December. Digital artwork collections and digital collectibles dominate 91% of those gross sales volumes, which is among the key information revealed on this report.
The gross sales within the first half of the yr have been pushed primarily by particular person artists becoming a member of the area with their respective collections and a few high-profile gross sales, whereas the second half introduced in additional mainstream manufacturers.
As an example, Coca-Cola auctioned a wearable bubble jacket pores and skin in Decentraland, and Visa bought its first NFT. Such participation from these manufacturers enabled the NFT market to come back into full bloom. The report additionally revealed that probably the most worthwhile NFT assortment in 2021 was “CryptoPunks.” A “CryptoPunk” NFT presents a greater all-time common return on funding in comparison with NFTs on different in style collections, comparable to “CryptoKitties” and “Bored Ape Yacht Membership.”
NFTs have additionally disrupted the gaming trade and turn out to be key to totally realizing the idea of metaverses via their blockchain properties. Nonetheless, some critics doubt that the parabolic surge in 2021 will play out in 2022, particularly with extra regulatory scrutiny.
Nonetheless, this yr’s quantity of enterprise capital investments funneled into NFT corporations is past sizable. NFT funding in 2021 is already at $2.1 billion as of Q3, but practically 40% of VC deal actions contain solely a single agency in Andreessen Horowitz, in accordance with PitchBook. Due to this fact, as gross sales and curiosity for NFTs proceed to develop, it could be tough for companies with a thirst for prime progress potential to withstand NFTs.
2021 has been progressive within the cryptocurrency regulatory entrance. The 117th United States Congress has launched 35 payments that concentrate on cryptocurrency regulation, blockchain coverage and central financial institution digital currencies. Federal Reserve Chair Jerome Powell expressed his views that cryptocurrency just isn’t a big risk to the U.S. monetary market’s stability. Nonetheless, a possible dialogue that might seep into subsequent yr is the regulation on stablecoins.
The President’s Working Group on Monetary Markets has acknowledged in a report that stablecoins could possibly be a useful different fee possibility however are “topic to applicable oversight.” At the moment, there aren’t any laws on stablecoins, at the same time as their market capitalization handed $162 billion as of this writing, however a invoice proposed by Wyoming Senator Cynthia Lummis could possibly be a step in that route.
Lummis plans to introduce a complete invoice in 2022 that can present regulatory readability on stablecoins, information regulators round asset courses and supply shopper protections. Cryptocurrency regulation will likely be a speaking level in 2022 and also will be a subject that the Cointelegraph Analysis group will likely be inspecting additional.
It’s nearly sure that everybody within the area agrees that Axie Infinity revolutionized gaming. The play-to-earn mannequin was an enormous hit, because it added actual revenue potential to enjoying video video games. Information reveals how play-to-earn decentralized purposes (DApps) dominated the latter half of 2021 by way of related, distinctive, lively pockets addresses. And since September, gaming tokens comparable to The Sandbox (SAND), Axie Infinity (AXS), Enjin (ENJ), Illuvium (ILV) and Extremely (UOS) have even beat out Bitcoin in features, as revealed on this e-newsletter’s earlier challenge.
The gaming sector took the helm from DeFi that noticed probably the most addresses related within the first seven months of the yr. The 2 DApp classes birthed a brand new sector, GameFi, which is believed to be the subsequent logical step in blockchain improvement. Crypto-based video games already allow customers to have management over their in-game property by way of NFTs, however the parts of DeFi may take it to a different degree. Incorporating DeFi would imply that options comparable to staking could be obtainable to customers the place they will earn curiosity of their tokens.
But, the sector remains to be in its early levels, however its enchantment lies inside its attractiveness to customers who could not essentially be cryptocurrency holders. Attracting such customers may additional contribute to extra cryptocurrency adoption, which can doubtless be its focus for GameFi in 2022.
With the developments in 2021, cryptocurrencies have been capable of captivate a much wider viewers in comparison with the yr earlier than. In simply the second quarter, international adoption has grown 880% since 2020, Chainalysis information reveals. And the important thing occasions talked about above are doubtless contributing components to cryptocurrencies going extra mainstream. The NFT enterprise capital actions acknowledged earlier symbolize solely 7% of the $30 billion poured into crypto-related investments in 2021.
However regardless of the obvious progress, cryptocurrency possession stays comparatively low. TripleA estimates the worldwide cryptocurrency possession fee to be at a median of three.9%. Ukraine, Russia and Venezuela are the highest nations, with at the very least 10% of their inhabitants proudly owning cryptocurrencies.
The low possession charges indicate substantial room for progress, which is why a CAGR of 60.8% from 2021 to 2026 for the cryptocurrency market could have some advantage. This yr, the worth of the cryptocurrency market has already grown from $364.5 billion final yr to greater than $2.5 trillion — a 586% surge. And within the coming yr, the brand new sectors in GameFi and maybe property associated to Web3 may probably be new avenues for continued progress.
Tokenization of sure securities may additionally occur on a a lot bigger scale, and it’s even predicted to be the norm by 2030. Moreover, the prevalence of cryptocurrencies for funds is also one other space with untapped potential, which will likely be explored additional in one other upcoming report.
Predicting what sectors in 2022 are poised for a similar breakthrough that NFTs had this yr could be tough, if not, inconceivable. Nonetheless, experiences that rigorously research and go in-depth about sure subjects would supply a greater manner of understanding the nuances of a selected sector.
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