INSUBCONTINENT EXCLUSIVE:
Digital assets started the year with a stampede of cash from investors large and small.Bitcoin close to $70,000, "memecoins" worth billions
of dollars, a blockbuster Wall Street listing and a sweeping Chinese crackdown: 2021 was the wildest yet for cryptocurrencies, even by the
sector's volatile standards.Digital assets started the year with a stampede of cash from investors large and small
And bitcoin and its rivals were rarely out of the spotlight since, with the language of crypto becoming firmly entrenched in the investor
lexicon.Here is a look at some of the major trends that dominated cryptocurrencies this year.1
challengers biting at its heels.Bitcoin soared over 120 per cent from January 1 to a then-record of almost $65,000 in mid-April
Fuelling it was a tsunami of cash from institutional investors, growing acceptance by major corporations such as Tesla Inc and Mastercard
Inc and an increasing embrace by Wall Street banks.Spurring investor interest was Bitcoin's purported inflation-proof qualities - it has a
capped supply - as record-breaking stimulus packages fuelled rising prices
The promise of quick gains amid record-low interest rates, and easier access through fast-developing infrastructure, also helped attract
buyers.Emblematic of bitcoin's mainstream embrace was major United States exchange Coinbase's $86 billion listing in April, the biggest
yet of a cryptocurrency company."It's graduated into the sphere where it is traded by the sort of people that are taking bets on
treasuries and equities," said Richard Galvin of crypto fund Digital Capital Asset Management.Yet the token stayed volatile
It slumped 35 per cent in May before soaring to a new all-time high of $69,000 in November, as inflation spiralled across Europe and the
United States.Prominent sceptics remain, with JPMorgan boss Jamie Dimon calling it "worthless".Peaks and troughs: Bitcoin's 2021
rollercoasterPhoto Credit: Reuters2
The rise of the memecoinsEven as bitcoin remained the go-to for investors dipping their toes into crypto, a panoply of new - some would say
joke - tokens entered the sector."Memecoins" - a loose collection of coins ranging from dogecoin and shiba inu to squid game that have their
roots in web culture - often have little practical use.Dogecoin, launched in 2013 as a bitcoin spinoff, soared over 12,000 per cent to an
all-time high in May before slumping almost 80 per cent by mid-December
Shiba inu, which references the same breed of Japanese canine as dogecoin, briefly muscled its way into the 10 largest digital currenciesWho
let the doge out?Photo Credit: ReutersThe memecoin phenomenon was linked to the "Wall Street Bets" movement, where retail traders
coordinated online to pile into stocks such as GameStop Corp, squeezing hedge funds' short positions.Many of the traders - often stuck at
home with spare cash during coronavirus lockdowns - turned to crypto, even as regulators voiced warnings about volatility."It's all about
the mobilisation of finance," said Joseph Edwards, head of research at crypto broker Enigma Securities."While assets like DOGE and SHIB may
in themselves be purely speculative, the money coming into them is coming from an instinct of 'why shouldn't I earn on my money,
fretted over what they saw as its potential to enable money laundering and threaten global financial stability.Long sceptical of crypto - a
rebel technology invented to undermine traditional finance - watchdogs called for more powers over the sector, with some warning consumers
over volatility.With new rules looming, crypto markets were skittish to the possible risk of a clampdown.When Beijing placed curbs on crypto
in May, bitcoin tanked almost 50 per cent, dragging the wider market down with it."Regulatory risk is everything because those are the rules
of the road that people live by and die by in financial services," said Stephen Kelso, global head of markets at ITI Capital
the crypto complex also grabbed the limelight
Non-fungible tokens (NFTs) - strings of code stored on the blockchain digital ledger that represent unique ownership of artworks, videos or
even tweets - exploded in 2021.In March, a digital artwork by United States artist Beeple sold for nearly $70 million at Christie's ,
among the three most expensive pieces by a living artist sold at auction.The sale heralded a stampede for NFTs.Sales in the third-quarter
hit $10.7 billion, up over eight-fold from the previous three months
As volumes peaked in August, prices for some NFTs rose so quickly speculators could "flip" them for profit in days, or even hours.Soaring
crypto prices that spawned a new cohort of crypto-wealthy investors - as well as predictions for a future of online virtual worlds where
NFTs take centre stage - helped fuel the boom.Cryptocurrencies and NFTs' popularity may also be linked to a decline in social mobility, said
John Egan, CEO of BNP Paribas-owned research company L'Atelier, with younger people drawn to their potential for swift gains as soaring
prices put traditional assets like houses out of reach.While some of the world's top brands, from Coca-Cola to Burberry, have sold NFTs,
still-patchy regulation meant larger investors largely steered clear."I don't see a situation where licensed financial institutions are
Reuters(Except for the headline, this story has not been edited by TheIndianSubcontinent staff and is published from a syndicated feed.)
