Crypto has been many things in its short history. 2021 was the year it became part of the mainstream.
tweeted about it, often. It was parodied on "Saturday Night Live". Collins Dictionary nicknamed "NFT", short for non-fungible tokens, your word of the year.
Institutional investors looked for ways to get in and the first bitcoin ETF went public. Individual traders bought cryptocurrencies on their phones when they weren't buying
About 16% of the US population owns or has owned cryptocurrencies, according to the Pew Research Center. In 2015, Pew found that only 1% of Americans owned or had had cryptocurrencies. The number of people who own cryptocurrency globally doubled in 2021 to roughly 220 million, according to crypto.com.
Cryptocurrency prices remained as volatile as ever. From January to April, the price of bitcoin doubled. From April to July, it fell more than 50%. It doubled again a few months later, hitting a record high of nearly $ 70,000 in November. On Friday it was trading at around $ 46,000, still 60% higher than its price of roughly $ 29,000 at the beginning of the year.
In percentage terms, bitcoin's earnings actually represent one of its weakest years. In 2020, the digital currency was up more than 300%. However, in dollar terms, 2021 was by far the biggest year for cryptocurrencies.
The total value of cryptocurrencies more than tripled at its peak in 2021, reaching $ 2.98 trillion from less than $ 1 trillion in January, according to CoinMarketCap. Recently, it has dropped to about $ 2.2 trillion.
, which operates the second largest crypto exchange, it became public with much fanfare in April. It became the foremost of a crop of publicly traded crypto-focused companies, including
,
Marathon Digital Holdings Inc.
Y
Coinbase Global, which operates the second largest cryptocurrency exchange, went public in April.
Photo:
Michael Nagle / Bloomberg News
Yet Coinbase's stock has been as volatile as its listed assets. After closing at a high of $ 357.39 in November, it closed at $ 252.37 on Friday.
Two notable new uses for crypto technology fueled interest in crypto.
The first were the NFTs, which are digital tokens like bitcoin but different in that each one is unique. Artist Beeple caught the attention of the art world with the sale of $ 69 million of a digital image and associated NFT in March. Artists, musicians, celebrities like Martha Stewart, and companies including
all created non-fungible tokens.
NFT's sales totaled about $ 14.4 billion last year, according to nonfungible.com, up from $ 65 million the year before.
The recent rise of Shiba Inu Coin, and the subsequent drop in value, is part of a growing trend of meme coins competing with some of the largest digital tokens in the world. WSJ Retail Investment Reporter Caitlin McCabe explains why investors are pouring money into this meme-based cryptocurrency. Photo: Amber Bragdon / Getty Images
The other popular use was decentralized finance, or DeFi for short. DeFi is a broad and general phrase for what are essentially banking services, primarily cryptocurrency loans or loans, offered on blockchain-based platforms. The total amount of money on DeFi platforms, a figure called total locked value, rose to $ 243 billion from $ 19 billion earlier in the year, according to the DeFi Llama website.
Those two uses have given a great boost to the Ethereum network, which works as an open version of an application platform such as Android or iOS. Numerous DeFi and NFT services operate on Ethereum. The network processed more than $ 2 trillion of transactions in each quarter of 2021, according to research firm IntoTheBlock. That's triple the amount in the fourth quarter of 2020.
All of this activity has attracted venture capital. Venture capitalists, who first invested in bitcoin in 2013, invested more money in the sector in 2021 than in every two years combined. In the US alone, hedge funds invested $ 7.2 billion in the crypto space in 2021, according to data from PitchBook. Globally, venture capital invested $ 29.4 billion.
Write to Paul Vigna at Paul.Vigna@wsj.com
Copyright ยฉ 2021 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8
