The year 2021 is ending, and if there’s one method to explain how the cryptocurrency market fared in the previous 12 months, it would be memorable development.
Major cryptocurrencies shattered previous records, adoption grew, brand-new sectors grew and unique blockchain usage cases made considerable developments.
The Market Insight’s most current edition remembers the occasions covered in previous concerns along with deep-dive subjects in Cointelegraph Research’s market reports.
DeFi and Altcoins
Two of the leading gainers of 2021 were Solana (SOL) and Terra (LUNA). SOL acquired 9,500%, while LUNA acquired 13,000%. Significant financial investments and community development catalyzed the enormous gains for the 2 tokens. One might likewise argue that the 2 being billed as possible “Ethereum killers” influenced adding to their enormous rallies.
In the decentralized financing (DeFi) scene, the 2 tokens sit amongst the leading 5 in overall worth locked (TVL). Solana is at No. 5 with $11.45 billion, and LUNA has actually just recently exceeded Binance Coin (BNB) for the No. 2 area with $18.9 billion, according to Defi Llama. Moreover, the emerging environments of Solana and Terra should have a much deeper appearance, which is why they are the topic of Cointelegraph Research’s upcoming reports.
Competition has actually unquestionably increased for Ethereum. Its TVL share was 97% in January however is presently down to 62.54%, per Defi Llama. The next stage of advancement for the sector enters concern in 2022, specifically given that the development of DeFi this year has actually been so significant that authorities have actually changed from rejecting the market to coming to grips with methods to handle it.
The DeFi market capitalization stays a little portion of the total cryptocurrency market cap, however it went through the exact same development trajectory. Some think that combination with tradition banking might be among the primary focuses for DeFi in 2022.
Nonfungible tokens, or NFTs, discovered their breakout year in 2021 regardless of existing given that 2014. The bulk of sales was available in the previous 12 months, going beyond $14 billion in December. Digital art collections and digital antiques control 91% of these sales volumes, which is among the crucial information revealed in this report.
The sales in the very first half of the year were driven mainly by specific artists signing up with the area with their particular collections and some prominent sales, while the 2nd half generated more traditional brand names.
For circumstances, Coca-Cola auctioned a wearable bubble coat skin in Decentraland, and Visa acquired its very first NFT. Such involvement from these brand names allowed the NFT market to come into maturity. The report likewise exposed that the most rewarding NFT collection in 2021 was “CryptoPunks.” A “CryptoPunk” NFT provides a much better all-time average roi compared to NFTs on other popular collections, such as “CryptoKitties” and “Bored Ape Yacht Club.”
NFTs have actually likewise interfered with the video gaming market and end up being crucial to totally recognizing the principle of metaverses through their blockchain homes. However, some critics question that the parabolic rise in 2021 will play out in 2022, specifically with more regulative analysis.
Nonetheless, this year’s quantity of equity capital financial investments funneled into NFT business is beyond large. NFT financing in 2021 is currently at $2.1 billion since Q3, yet almost 40% of VC offer activities include just a single company in Andreessen Horowitz, according to PitchBook. Therefore, as sales and interest for NFTs continue to grow, it might be challenging for companies with a thirst for high development capacity to withstand NFTs.
2021 has actually been progressive in the cryptocurrency regulative front. The 117th United States Congress has actually presented 35 costs that concentrate on cryptocurrency policy, blockchain policy and reserve bank digital currencies. Federal Reserve Chair Jerome Powell revealed his views that cryptocurrency is not a substantial risk to the U.S. monetary market’s stability. However, a most likely conversation that might permeate into next year is the policy on stablecoins.
The President’s Working Group on Financial Markets has stated in a report that stablecoins could be a beneficial alternative payment option but are “subject to appropriate oversight.” Currently, there are no regulations on stablecoins, even as their market capitalization passed $162 billion as of this writing, but a bill proposed by Wyoming Senator Cynthia Lummis could be a step in that direction.
Lummis plans to introduce a comprehensive bill in 2022 that will provide regulatory clarity on stablecoins, guide regulators around asset classes and offer consumer protections. Cryptocurrency regulation will be a talking point in 2022 and will also be a topic that the Cointelegraph Research team will be examining further.
It is almost certain that everyone in the space agrees that Axie Infinity revolutionized gaming. The play-to-earn model was a massive hit, as it added real income potential to playing video games. Data shows how play-to-earn decentralized applications (DApps) controlled the latter half of 2021 in regards to linked, special, active wallet addresses. And given that September, video gaming tokens such as The Sandbox (SAND), Axie Infinity (AXS), Enjin (ENJ), Illuvium (ILV) and Ultra (UOS) have even vanquish Bitcoin in gains, as exposed in this newsletter’s previous concern.
The video gaming sector took the helm from DeFi that saw one of the most addresses linked in the very first 7 months of the year. The 2 DApp classifications birthed a brand-new sector, GameFi, which is thought to be the next rational action in blockchain advancement. Crypto-based video games currently make it possible for users to have control over their in-game properties through NFTs, however the components of DeFi might take it to another level. Incorporating DeFi would suggest that functions such as staking would be readily available to users where they can make interest in their tokens.
Yet, the sector is still in its early phases, however its appeal lies within its beauty to users who might not always be cryptocurrency holders. Attracting such users might even more add to more cryptocurrency adoption, which will likely be its centerpiece for GameFi in 2022.
With the advancements in 2021, cryptocurrencies had the ability to mesmerize a much more comprehensive audience compared to the year prior to. In simply the 2nd quarter, international adoption has actually grown 880% given that 2020, Chainalysis information programs. And the crucial occasions pointed out above are most likely contributing aspects to cryptocurrencies going more traditional. The NFT equity capital activities specified previously represent just 7% of the $30 billion poured into crypto-related financial investments in 2021.
But regardless of the evident development, cryptocurrency ownership stays fairly low. TripleA approximates the international cryptocurrency ownership rate to be at approximately 3.9%. Ukraine, Russia and Venezuela are the leading nations, with a minimum of 10% of their population owning cryptocurrencies.
The low ownership rates imply significant space for development, which is why a CAGR of 60.8% from 2021 to 2026 for the cryptocurrency market might have some benefit. This year, the worth of the cryptocurrency market has actually currently grown from $364.5 billion in 2015 to more than $2.5 trillion — a 586% rise. And in the coming year, the brand-new sectors in GameFi and possibly properties connected to Web3 might perhaps be brand-new opportunities for ongoing development.
Tokenization of specific securities might likewise take place on a much bigger scale, and it is even anticipated to be the standard by 2030. Furthermore, the prevalence of cryptocurrencies for payments could also be another area with untapped potential, which will be explored further in another upcoming report.
Predicting what sectors in 2022 are poised for the same breakthrough that NFTs had this year would be difficult, if not, impossible. However, reports that carefully study and go in-depth about certain topics would offer a better way of understanding the nuances of a specific sector.
Cointelegraph’s Market Insights Newsletter shares our knowledge on the fundamentals that move the digital asset market. The newsletter dives into the latest data on social media sentiment, on-chain metrics and derivatives.
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