The yr 2021 is coming to an in depth, and if there’s one technique to describe how the cryptocurrency business fared up to now 12 months, it could 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 lined in previous points in addition to deep-dive matters in Cointelegraph Analysis’s business experiences.
DeFi and Altcoins
Two of the highest gainers of 2021 had been Solana (SOL) and Terra (LUNA). SOL gained 9,500%, whereas LUNA gained 13,000%. Vital investments and ecosystem progress catalyzed the immense positive aspects for the 2 tokens. One might additionally argue that the two being billed as potential “Ethereum killers” had an element in contributing to their large rallies.
Within the decentralized finance (DeFi) scene, the 2 tokens sit among the many high 5 in complete worth locked (TVL). Solana is at No. 5 with $11.45 billion, and LUNA has just lately surpassed Binance Coin (BNB) for the No. 2 spot with $18.9 billion, based on 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 presently all the way down to 62.54%, per Defi Llama. The following part of improvement for the sector comes into query in 2022, particularly because the progress of DeFi this yr 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, however it underwent the identical progress trajectory. Some consider that integration with legacy banking may very well be considered one of the principle focuses for DeFi in 2022.
Nonfungible tokens, or NFTs, discovered their breakout yr 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 among the key information revealed on this report.
The gross sales within the first half of the yr had 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 pores and skin in Decentraland, and Visa bought its first NFT. Such participation from these manufacturers enabled the NFT market to return 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 well-liked collections, akin to “CryptoKitties” and “Bored Ape Yacht Membership.”
NFTs have additionally disrupted the gaming business and turn out to be key to completely realizing the idea of metaverses by their blockchain properties. Nevertheless, some critics doubt that the parabolic surge in 2021 will play out in 2022, particularly with extra regulatory scrutiny.
Nonetheless, this yr’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 almost 40% of VC deal actions contain solely a single agency in Andreessen Horowitz, in accordance to PitchBook. Due to this fact, as gross sales and curiosity for NFTs proceed to develop, it might be troublesome 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 target cryptocurrency regulation, blockchain coverage and central financial institution digital currencies. Federal Reserve Chair Jerome Powell expressed his views that cryptocurrency shouldn’t be a big risk to the U.S. monetary market’s stability. Nevertheless, a possible dialogue that would seep into subsequent yr is the regulation on stablecoins.
The President’s Working Group on Monetary Markets has acknowledged in a report that stablecoins may very well be a useful various fee choice however are “topic to acceptable oversight.” At present, 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 may very well be a step in that route.
Lummis plans to introduce a complete invoice in 2022 that may present regulatory readability on stablecoins, information regulators round asset courses and supply client protections. Cryptocurrency regulation might be a speaking level in 2022 and also will be a subject that the Cointelegraph Analysis group might be inspecting 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 taking part in video video games. Knowledge reveals how play-to-earn decentralized purposes (DApps) dominated the latter half of 2021 when it comes to related, distinctive, energetic pockets addresses. And since September, gaming tokens akin to The Sandbox (SAND), Axie Infinity (AXS), Enjin (ENJ), Illuvium (ILV) and Extremely (UOS) have even beat out Bitcoin in positive aspects, as revealed on this e-newsletter’s earlier difficulty.
The gaming sector took the helm from DeFi that noticed probably the most addresses related within the first seven months of the yr. The 2 DApp classes birthed a brand new sector, GameFi, which is believed to be the following 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 might take it to a different stage. Incorporating DeFi would imply that options akin to staking could be out there to customers the place they will earn curiosity of their tokens.
But, the sector remains to be in its early levels, however its enchantment lies inside its attractiveness to customers who could not essentially be cryptocurrency holders. Attracting such customers might additional contribute to extra cryptocurrency adoption, which is able to doubtless be its focus for GameFi in 2022.
With the developments in 2021, cryptocurrencies had been capable of captivate a wider viewers in comparison with the yr earlier than. In simply the second quarter, international adoption has grown 880% since 2020, Chainalysis information reveals. And the important thing occasions talked about above are doubtless contributing components to cryptocurrencies going extra mainstream. The NFT enterprise capital actions acknowledged earlier symbolize 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 price to be at a mean of three.9%. Ukraine, Russia and Venezuela are the highest nations, with at the very least 10% of their inhabitants proudly owning cryptocurrencies.
The low possession charges suggest substantial room for progress, which is why a CAGR of 60.8% from 2021 to 2026 for the cryptocurrency market could have some benefit. This yr, the worth of the cryptocurrency market has already grown from $364.5 billion final yr to greater than $2.5 trillion — a 586% surge. And within the coming yr, the brand new sectors in GameFi and maybe property associated to Web3 might probably be new avenues for continued progress.
Tokenization of sure securities might additionally occur on a a lot bigger scale, and it’s even predicted to be the norm by 2030. Moreover, the prevalence of cryptocurrencies for funds is also one other space with untapped potential, which might be explored additional in one other upcoming report.
Predicting what sectors in 2022 are poised for a similar breakthrough that NFTs had this yr could be troublesome, if not, unimaginable. Nevertheless, experiences that fastidiously research and go in-depth about sure matters would supply a greater means of understanding the nuances of a particular sector.
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