Ai Master

From Bitcoin's market value breaking through $1 trillion to Elon Musk's Dogecoin tweet: 12 Key cryptocurrency Moments in 2021

#News Center ·2021-12-27 13:55:01

2021: A Record-Breaking Year for the Cryptocurrency Market

This year marked a record-breaking period for the cryptocurrency market, with its total market capitalization surpassing $3 trillion in November. The two largest cryptocurrencies, Bitcoin and Ethereum, both hit all-time highs, while meme-inspired altcoins such as Dogecoin also saw a surge in popularity.

Other digital assets, like non-fungible tokens (NFTs), were sold alongside fine art at major auction houses such as Sotheby’s and Christie’s for millions of dollars. Beyond artwork, NFTs representing in-game assets and digital land also soared in value.

Blockchain-based applications, including decentralized finance (DeFi), captured the attention of both retail and institutional investors, fueling the development of Web3 — the decentralized iteration of the internet built on blockchain technology, which underpins both NFTs and cryptocurrencies.

All of this contributed to making cryptocurrency mainstream in 2021.

Despite countless defining moments this year, here are 12 major highlights:

1. Bitcoin’s Market Cap Surpasses $1 Trillion for the First Time

On February 19, Bitcoin’s market capitalization exceeded $1 trillion for the first time.

This milestone came after major institutional investors and well-known financial companies began backing the cryptocurrency earlier in the year. Companies such as Tesla, Square, and MicroStrategy added Bitcoin to their balance sheets.

2. NFT Interest Explodes After Beeple’s $69 Million Sale

In March, artist Mike Winkelmann, known as Beeple, sold his work Everydays: The First 5000 Days as an NFT for $69 million — a historic event for several reasons.

First, it made Christie’s the first major auction house to sell a fully digital, NFT-based artwork. It also marked the first time Christie’s accepted Ethereum as payment for the principal amount of an artwork. The $69.3 million sale set a then-record for NFTs.

This event triggered unprecedented mainstream media coverage of NFTs.

A report by analytics platform DappRadar found that 2021 was the “best year ever” for the NFT market, with over $23 billion in trading volume. Blockchain-based metaverse trades exceeded $500 million, while in-game asset NFT transactions reached $4.5 billion.

3. Elon Musk Drives Dogecoin to Record High

In May, just before Elon Musk’s appearance on Saturday Night Live, the price of Dogecoin skyrocketed. According to CoinGecko, the cryptocurrency reached an all-time high of about $0.73 on May 8 — the day Musk appeared on the show.

However, the price quickly fell from its peak. During the episode, Dogecoin dropped by 29.5%, falling to $0.49.

This reflected Dogecoin’s rollercoaster performance throughout the year, much of which was influenced by Musk. The Tesla and SpaceX CEO has been a vocal supporter of the meme-inspired coin. The rally began in February with a series of Musk’s tweets and continued as he persistently promoted the digital currency.

4. El Salvador Adopts Bitcoin as Legal Tender

In June, El Salvador passed a new law recognizing Bitcoin as legal tender, becoming the first country to do so.

The law allowed Bitcoin to be used for payments for goods and taxes. According to CNBC, businesses could price goods in Bitcoin, and exchanges were exempt from capital gains taxes.

5. Ethereum Launches EIP-1559 and Prepares for Merge with Eth2

In August, Ethereum implemented a major upgrade named “London,” which included the Ethereum Improvement Proposal (EIP) 1559. This changed how transaction fees (or “gas fees”) are estimated and began reducing the overall supply of Ether.

Throughout the year, Ethereum developers rolled out multiple upgrades in preparation for the network’s shift from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus model.

Currently, Ethereum uses PoW, where miners compete to solve complex problems to validate transactions — a process criticized for its high energy consumption.

In 2022, Ethereum plans to transition to PoS, where transactions are validated based on the amount of cryptocurrency held, eliminating the need for energy-intensive mining. This is part of the Ethereum 2.0 (Eth2) merge.

Eth2 is expected to dramatically reshape Ethereum’s infrastructure and eventually render mining obsolete.

6. Record DeFi Hack Results in Over $600 Million Initially Stolen

In August, DeFi platform Poly Network was hacked, with over $600 million initially stolen.

Experts said the hacker exploited a vulnerability in the platform’s code. Although the hacker eventually returned the stolen funds, the incident remains one of the largest crypto thefts in history.

Such frauds were rampant throughout the year. According to blockchain analytics firm Chainalysis, over $7.7 billion was stolen in crypto scams globally in 2021 — an 81% increase from 2020.

Chainalysis noted that “rug pulls” — where developers abandon projects and run off with investors’ funds — became a common DeFi scam. In 2021, rug pulls accounted for over $2.8 billion in stolen funds, or 37% of all crypto scam revenue, compared to just 1% in 2020.

7. China Bans Cryptocurrency (Again)

In September, the People’s Bank of China reaffirmed its crackdown on cryptocurrencies.

In a Q&A posted on its website, the bank declared all crypto-related activities illegal, including digital asset trading, order matching, token issuance, and derivative services. It also said that overseas exchanges providing services to mainland Chinese users were operating illegally.

China’s year-long crackdown on Bitcoin mining led operations to move elsewhere. In October, Cambridge University data showed the U.S. had become the top destination for Bitcoin miners.

As of July, 35.4% of the global Bitcoin hash rate was located in the U.S., overtaking China for the first time. Cambridge also found that China’s monthly average hash rate share dropped to zero in July — a dramatic shift from 67% in September 2020.

8. First U.S. Bitcoin Futures ETF Launches

In October, the first U.S. Bitcoin futures ETF launched on the New York Stock Exchange under the ticker “BITO,” managed by ProShares.

Bitcoin futures ETFs track contracts that speculate on the future price of the asset, rather than its current or “spot” price. As a result, ETF prices don’t always align directly with Bitcoin’s spot price.

Nevertheless, CNBC reported that ProShares’ Bitcoin futures ETF had one of the most successful first days in ETF history.

9. First Major Bitcoin Upgrade in Four Years Goes Live

In November, Bitcoin’s highly anticipated Taproot upgrade went live — its first major update since 2017.

Taproot introduced so-called Schnorr signatures, which improve privacy and efficiency in Bitcoin transactions and reduce costs. Most importantly, the upgrade enables Bitcoin to better execute smart contracts — self-executing code stored on the blockchain.

10. Lawmakers Focus on Regulation as Crypto Lobby Rises

Regulatory scrutiny of cryptocurrencies intensified throughout the year.

SEC Chairman Gary Gensler advocated for establishing a regulatory framework for the industry. Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen repeatedly warned investors about crypto risks, particularly stablecoins, citing volatility and speculation.

In November, President Joe Biden signed a bipartisan infrastructure bill that included tax reporting provisions for digital assets like cryptocurrencies and NFTs.

Crypto “brokers” — primarily exchanges — would be required to issue 1099-like forms to disclose customer identities. Businesses and exchanges would also need to report crypto payments over $10,000.

This raised significant concern within the crypto community, sparking a wave of lobbying for clearer definitions of “broker.”

11. Ethereum Rivals Gain Market Share

As demand surged for Ethereum — the most widely used blockchain — rival platforms emerged to compete.

Two notable examples were Avalanche and Solana, both launched in 2020 as platforms for smart contracts and decentralized applications. Their tokens, AVAX and SOL, entered the top 10 cryptocurrencies and captured market share from other projects.

According to DappRadar, the total value locked (TVL) in DeFi grew sevenfold year-over-year to over $200 billion. However, nearly 60% of TVL remained on Ethereum.

12. DAOs Enter the Mainstream

In November, DAOs (Decentralized Autonomous Organizations) gained widespread attention when ConstitutionDAO raised over $40 million to purchase a rare copy of the U.S. Constitution at auction.

Though billionaire hedge fund manager Ken Griffin of Citadel outbid ConstitutionDAO, the initiative spotlighted DAOs — previously known only in crypto circles — and hinted at the innovative potential for 2022.