LONDON: Investing in cryptocurrencies is not for the faint of heart – bitcoin had another volatile year, dropping from $ 29,405 at the start of the year to $ 67,554 in November and was trading at $ 50,908 Friday.
Yet 2021 was the year more people were exposed to the world of crypto than ever before. Most famous is that El Salvador became the first country to make bitcoin legal tender, while as part of a huge development for financial markets, the first exchange-traded fund linked to bitcoin futures contracts has also started to be negotiated.
Studies show that about 13% to 14% of Americans own or have owned cryptocurrency.
It has caught the attention of regulators in a major way. Treasury Secretary Janet Yellen was asked about bitcoin during her confirmation hearing. The chairman of the Securities and Exchange Commission (SEC), Gary Gensler, called it the “Wild West.”
At the start of the year, around $ 25 billion had been invested in decentralized finance projects, such as decentralized exchanges and lending / borrowing platforms. Now it’s $ 100 billion.
The market capitalization of the top five stablecoins – Tether, UDS Coin, Binance USD, Terra USD, and Dai – is $ 152 billion.
Central bank digital currencies (CBDCs) have advanced, reconciling payments in real time.
Leading the pack is the digital Chinese yuan, which has rolled out of testing and is slated to launch for the Beijing Winter Olympics in February. Although not the first country to have a CBDC – the Bahamian dollar came first – but China’s project has moved other central banks and now 87 institutions, including the European Central Bank and the Bank. from England, explore theirs.
However, US Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell are not yet convinced of the need for a digital dollar.
China has also entered the crypto markets by banning the trading and mining of crypto, forcing companies and investors to move en masse to other countries.
Non-fungible tokens (NFTs) hit the mainstream with the $ 69 million sale of NFT collages by artist Beeple at Christie’s in May. Since then, sports brands, including football and basketball clubs and brands such as Adidas, have launched with their own tokens that give ownership of digital images and videos.
U.S. cryptocurrency exchange Coinbase launched its IDO – an initial direct offering, similar to an initial public offering (IPO) but without financial intermediaries – on the Nasdaq in April, making it the industry’s first company. of crypto to go public without using a reverse merger, known as a SPAC.
The industry most threatened by the rise of cryptocurrencies is finance, so it’s remarkable how many banks have started dipping their toes into the market this year. Big banks and other financial institutions have started offering crypto investments to high net worth clients while starting to look at real-time payments from custodial services using cryptos or CBDCs.