The yr 2021 is coming to a detailed, and if there’s one strategy to describe how the cryptocurrency trade fared up to now 12 months, it will be momentous development.
Main cryptocurrencies shattered earlier data, adoption grew, new sectors sprouted and novel blockchain use circumstances made vital breakthroughs.
The Market Perception’s newest version remembers the occasions coated in previous points in addition to deep-dive matters in Cointelegraph Analysis’s trade studies.
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 development catalyzed the immense good points for the 2 tokens. One might additionally argue that the 2 being billed as potential “Ethereum killers” had a component in contributing to their huge rallies.
Within the decentralized finance (DeFi) scene, the 2 tokens sit among the many high 5 in whole 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 response to 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 studies.
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 growth for the sector comes into query in 2022, particularly for the reason that development of DeFi this yr has been so substantial that authorities have switched from denying the trade to grappling with methods to cope with it.
The DeFi market capitalization stays a small fraction of the general cryptocurrency market cap, but it surely underwent the identical development trajectory. Some consider that integration with legacy banking may very well be one of many essential focuses for DeFi in 2022.
NFTs
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 likely one of the key information revealed on this report.
The gross sales within the first half of the yr 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 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 essentially 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, corresponding to “CryptoKitties” and “Bored Ape Yacht Membership.”
NFTs have additionally disrupted the gaming trade and develop into key to totally 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 corporations 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 troublesome for companies with a thirst for top development potential to withstand NFTs.
Regulation
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 shouldn’t be a major menace 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 stated in a report that stablecoins could be a beneficial alternative payment option but are “subject to appropriate oversight.” Currently, there are no regulations on stablecoins, even as their market capitalization passed $162 billion as of this writing, but a bill proposed by Wyoming Senator Cynthia Lummis could be a step in that direction.
Lummis plans to introduce a comprehensive bill in 2022 that will provide regulatory clarity on stablecoins, guide regulators around asset classes and offer consumer protections. Cryptocurrency regulation will be a talking point in 2022 and will also be a topic that the Cointelegraph Research team will be examining further.
GameFi
It is almost certain that everyone in the space agrees that Axie Infinity revolutionized gaming. The play-to-earn model was a massive hit, as it added real income potential to playing video games. Data shows how play-to-earn decentralized functions (DApps) dominated the latter half of 2021 when it comes to linked, distinctive, energetic pockets addresses. And since September, gaming tokens corresponding to The Sandbox (SAND), Axie Infinity (AXS), Enjin (ENJ), Illuvium (ILV) and Extremely (UOS) have even beat out Bitcoin in good points, as revealed on this e-newsletter’s earlier challenge.
The gaming sector took the helm from DeFi that noticed essentially the most addresses linked 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 growth. Crypto-based video games already allow customers to have management over their in-game belongings by way of NFTs, however the parts of DeFi might take it to a different stage. Incorporating DeFi would imply that options corresponding 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 might additional contribute to extra cryptocurrency adoption, which is able to possible be its point of interest for GameFi in 2022.
Adoption
With the developments in 2021, cryptocurrencies have been capable of captivate a wider viewers in comparison with the yr earlier than. In simply the second quarter, world adoption has grown 880% since 2020, Chainalysis information exhibits. And the important thing occasions talked about above are possible contributing elements to cryptocurrencies going extra mainstream. The NFT enterprise capital actions said earlier signify solely 7% of the $30 billion poured into crypto-related investments in 2021.
However regardless of the obvious development, cryptocurrency possession stays comparatively low. TripleA estimates the worldwide cryptocurrency possession price to be at a median of three.9%. Ukraine, Russia and Venezuela are the highest nations, with a minimum of 10% of their inhabitants proudly owning cryptocurrencies.
The low possession charges imply substantial room for development, which is why a CAGR of 60.8% from 2021 to 2026 for the cryptocurrency market might have some advantage. 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 belongings associated to Web3 might probably be new avenues for continued development.
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 will likely 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, unattainable. Nevertheless, studies that rigorously research and go in-depth about sure matters would supply a greater method of understanding the nuances of a particular sector.
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