2021 Year-End Crypto Retrospective

2021 Year-End Crypto Retrospective

2021 was a big year for cryptocurrency. While market fluctuations were particularly noteworthy this past year, a lot of the biggest news for crypto in 2021 went beyond updates on the coin prices themselves. Pioneers in the crypto sector have brought exciting new features, and crypto has begun to gain more institutional legitimacy through increased partnerships with businesses and even governments. The world saw the rise (and sometimes fall) of so-called “meme coins” based on popular internet jokes, which changed the way people viewed the cryptocurrency sphere, and to many people, brought cryptocurrency further into the spotlight.

Also, crypto investors now have more opportunities to take advantage of decentralized currency through new offerings such as a Bitcoin ETF and the Alt401(k) through ForUsAll, the first 401(k) plan to offer cryptocurrency, powered by Coinbase Institutional, as an investment option.

Bitcoin, the world’s first cryptocurrency, has seen particularly rapid growth in 2021. While it’s definitely seen its pitfalls, both in 2021 and earlier, it remains the most popular coin on the market.

Here’s a look at some of the top moments in the world of crypto for 2021:

Dizzying new highs…and lows

Cryptocurrency has seen a lot of value changes this year, including several record highs for popular coins. Some key players in the financial sphere have attributed the growth of cryptocurrency this year to younger generations favoring cryptocurrency as a means to diversify their portfolios over more traditional commodities, such as gold.

Bitcoin, the world’s first cryptocurrency, has seen particularly rapid growth in 2021. While it’s definitely seen its pitfalls, both in 2021 and earlier, it remains the most popular coin on the market. Bitcoin’s value spiked multiple times throughout the year, including reaching an all-time high of $68,000 per coin in November, beating a previous all-time high that was also set this year.

However, it wasn’t all good news for Bitcoin and other cryptocurrencies these last 12 months. Along with those record highs came some crushing lows. In July alone, Bitcoin lost over half of its value and fell to around $30,000, but was able to shoot back up again by the end of the year. Regarding what to do when Bitcoin rises and falls sharply, many experts advise against hasty action. In fact, personal finance advisor Humphrey Yang says, “just don’t check on it. That’s the best thing you can do.”

El Salvador and public figures embrace crypto

In one of the biggest moves towards creating institutional legitimacy for cryptocurrency, El Salvador made history in 2021 by adopting Bitcoin as a federally-accepted form of payment and even purchased some using federal funds. This news came with some market instability due to the uncertainty of crypto’s future after this adoption event, and El Salvador’s government is still actively working towards integrating Bitcoin into its economy, but many officials remain optimistic about what cryptocurrency can bring to the nation.

As more public servants begin to consider cryptocurrency, it seems inevitable that governments around the world will at least begin considering it as a potential national asset.

In addition, some US public figures, such as New York City’s next mayor, Eric Adams, who stated earlier this year that he would like to receive his first three paychecks in Bitcoin, have added to the conversation about cryptocurrency’s place in institutional finance. As more public servants begin to consider cryptocurrency, it seems inevitable that governments around the world will at least begin considering it as a potential national asset.

Meme coins go viral

Meme coins are cryptocurrencies created with some aspect of a popular online meme or joke as their inspirations, but despite having their origins in humor, some of them have become significant players in the world of crypto investing. Meme coins like Shiba Inu, which rose in price by 777% percent in one month, and Doge have attracted a lot of attention and seen rapid growth. Some investors are sinking significant funding into these currencies, and they’re beginning to make their place on the financial horizon. However, even compared to other cryptocurrencies, which are already considered highly volatile, meme coins tend to fluctuate wildly. While it’s unlikely that a meme coin will ever reach the prices of, say, Ethereum or Bitcoin, the fact that these currencies are able to emerge and make such financial waves so quickly means they’re definitely worth keeping an eye on.

From Venmo to (maybe) Amazon: new payment options

One of the largest criticisms of cryptocurrency is of its practicality because so many vendors are hesitant to accept it. Crypto-savvy investors will be happy to know that numerous major companies, such as AMC, are in the process of developing ways to accept cryptocurrency as payment. In addition, Amazon made waves earlier this year with a job posting for a digital currency and blockchain expert, leading many to speculate that the online retailer is gearing up to begin integrating crypto as a payment option. Money transfer services such as Venmo and Paypal have also been rolling out new features that allow users to purchase and store cryptocurrency on their exchanges. With more retailers at least considering crypto as a payment option, it looks like the practicality argument against cryptocurrency may soon be moot.

What a difference a tweet makes

As a purely digital currency class for a tech-savvy generation, Cryptocurrency is uniquely influenced by, and tied to, social media. 2021 demonstrated this through some particularly disruptive moments with staggering results, particularly in the cases of popular meme coins. These meme coins gained popularity organically through social media as everyday investors and fintech innovators began to communicate.

However, social media also played a part in market forces because of just a handful of individual tweets. When Elon Musk tweeted that Tesla would begin accepting cryptocurrency payments, the price of Doge coin, a meme coin Musk often champions on his Twitter account, rose by 20%. Conversely, Musk later tweeted that he personally held no Shiba coins, and the market responded with a 20% reduction in the price of Shiba.

2022 may hold a clearer picture of how regulations will affect cryptocurrency investments, but one thing is clear: regulation is coming.

Regulators step in

In a move that brings relief to some investors and reticence to others, the United States federal government has had a lot to say about cryptocurrency in 2021. Specifically, much upcoming legislative inquiry is aimed at clarifying how crypto investments fit into current tax laws, and if adjustments need to be made. The future of cryptocurrency as a taxable investment is still in flux, but it’s becoming a bigger priority for many legislators.

2022 may hold a clearer picture of how regulations will affect cryptocurrency investments, but one thing is clear: regulation is coming, so investors should stay up-to-date to make sure they’re aware of how these laws may affect their assets.

Crypto comes to the 401(k)

Crypto is often seen as a short-term investment option due to its volatility. But in 2021, ForUsAll announced that its newest product, the Alt401(k), will be the first 401(k) to allow participants to dedicate a portion of their retirement savings to cryptocurrency. Crypto contributions are capped at 5% of the initial balance, and 5% of ongoing contributions. All crypto assets are accessible via ForUsAll's self-directed cryptocurrency window, powered by Coinbase Institutional.

Though investors have already seen crypto available in Individual Retirement Accounts, no employer-sponsored retirement accounts have featured cryptocurrency until now.

Set to fully launch in Q1 of 2022, the Alt401(k) has already made waves among investors and fintech entrepreneurs. Though investors have already seen crypto available in Individual Retirement Accounts, no employer-sponsored retirement accounts have featured cryptocurrency until now. The Alt401(k) brings a new opportunity for businesses to offer cutting-age benefits to their employees.

Looking ahead

Overall, 2021 was a significant year for crypto-savvy investors and fintech companies. Though the world still struggles with the widespread effects of the COVID-19 pandemic, especially as new variants emerge and adjustments must be made, not all sectors of the economy are taking the same hits. 2022 is still uncertain territory in the financial sector overall, but it’s clear that with the strides forward that many have been taking this past year, there are some big changes on the horizon for the world of crypto.