The 12 months 2021 is coming to a detailed, and if there’s one option to describe how the cryptocurrency business fared up to now 12 months, it might be momentous progress.
Main cryptocurrencies shattered earlier data, adoption grew, new sectors sprouted and novel blockchain use circumstances made important breakthroughs.
The Market Perception’s newest version recollects the occasions coated in previous points in addition to deep-dive subjects in Cointelegraph Analysis’s business 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 good points for the 2 tokens. One may additionally argue that the two 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 prime 5 in complete worth locked (TVL). Solana is at No. 5 with $11.45 billion, and LUNA has not too long ago 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 right down to 62.54%, per Defi Llama. The subsequent section of improvement for the sector comes into query in 2022, particularly because the progress of DeFi this 12 months has been so substantial that authorities have switched from denying the business to grappling with methods to cope with it.
The DeFi market capitalization stays a small fraction of the general cryptocurrency market cap, nevertheless it underwent the identical progress trajectory. Some consider that integration with legacy banking might be one among the main focuses for DeFi in 2022.
Nonfungible tokens, or NFTs, discovered their breakout 12 months in 2021 regardless of current since 2014. The majority of gross sales got here up to now 12 months, surpassing $14 billion in December. Digital artwork collections and digital collectibles dominate 91% of those gross sales volumes, which is without doubt one of the key knowledge revealed on this report.
The gross sales within the first half of the 12 months have been pushed primarily by particular person artists becoming a member of the house with their respective collections and a few high-profile gross sales, whereas the second half introduced in additional mainstream manufacturers.
As an illustration, Coca-Cola auctioned a wearable bubble jacket skin in Decentraland, and Visa purchased 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 gives a greater all-time common return on funding in comparison with NFTs on different standard collections, comparable to “CryptoKitties” and “Bored Ape Yacht Membership.”
NFTs have additionally disrupted the gaming business and develop into key to totally realizing the idea of metaverses by 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 12 months’s quantity of enterprise capital investments funneled into NFT firms 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, according to PitchBook. Subsequently, 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 is not a significant threat to the U.S. financial market’s stability. However, a likely discussion that could seep into next year is the regulation on stablecoins.
The President’s Working Group on Financial Markets has stated in a report that stablecoins might be a helpful different cost choice however are “topic to acceptable oversight.” Presently, there are not any laws on stablecoins, whilst their market capitalization handed $162 billion as of this writing, however a invoice proposed by Wyoming Senator Cynthia Lummis might be a step in that path.
Lummis plans to introduce a comprehensive bill in 2022 that may present regulatory readability on stablecoins, information regulators round asset lessons and provide client protections. Cryptocurrency regulation shall be a speaking level in 2022 and also will be a subject that the Cointelegraph Analysis group shall be analyzing additional.
It’s virtually sure that everybody within the house 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. Knowledge shows how play-to-earn decentralized purposes (DApps) dominated the latter half of 2021 by way of linked, 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 good points, as revealed in this newsletter’s previous issue.
The gaming sector took the helm from DeFi that noticed probably the most addresses linked within the first seven months of the 12 months. 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 through NFTs, however the components of DeFi may take it to a different degree. Incorporating DeFi would imply that options comparable to staking could be out there to customers the place they will earn curiosity of their tokens.
But, the sector continues to be in its early phases, however its attraction lies inside its attractiveness to customers who might not essentially be cryptocurrency holders. Attracting such customers may additional contribute to extra cryptocurrency adoption, which is able to doubtless be its focus for GameFi in 2022.
With the developments in 2021, cryptocurrencies have been in a position to captivate a much wider viewers in comparison with the 12 months earlier than. In simply the second quarter, world adoption has grown 880% since 2020, Chainalysis knowledge reveals. And the important thing occasions talked about above are doubtless contributing elements to cryptocurrencies going extra mainstream. The NFT enterprise capital actions acknowledged earlier signify 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 mean of three.9%. Ukraine, Russia and Venezuela are the highest nations, with at the least 10% of their inhabitants proudly owning cryptocurrencies.
The low possession charges imply substantial room for progress, which is why a CAGR of 60.8% from 2021 to 2026 for the cryptocurrency market might have some advantage. This 12 months, the worth of the cryptocurrency market has already grown from $364.5 billion final 12 months to greater than $2.5 trillion — a 586% surge. And within the coming 12 months, 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. 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.
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