Top 10 events in the crypto field in 2021

2021 is a year of ups and downs for the crypto market. Data shows that venture capital funds invested about 30 billion U.S. dollars in cryptocurrencies this year, almost four times the record year in 2018, and injected more funds into the industry than all previous years combined. In terms of market conditions, after the new high, as the governments of China, the United States and other governments strengthened supervision, they fell rapidly from the peak they set. However, since the second half of the year, the concept of NFT, DeFi, and Metaverse has come out of the circle, and the crypto market has returned to its enthusiasm. In general, 2021 is definitely a year of continuous record-breaking in the history of encryption, and also a year in which encryption continues to mature. Standing at the time node of the end of the year and New Year, reviewing the major events in the field of encryption in 2021 can better distinguish gains and losses.

New highs and flash crashes

Since 2021, Bitcoin has continued to set new highs. At the same time, the profit margin of mining continues to rise. Data shows that the total revenue of Bitcoin miners in February exceeded $1.36 billion, breaking the record high set in December 2017. Total mining revenue in February increased by 21.4% from January’s 1.12 billion U.S. dollars. Only a small part of February’s total revenue (186.4 million U.S. dollars, or 13.7%) came from transaction fees.

Entering April, with the launch of a new generation of ASICs, the earnings of Bitcoin miners hit a record high, and the difficulty of Bitcoin mining also hit a record high on April 2. The mining market continues to “heat up.”

Subsequently, Coinbase, the largest compliant cryptocurrency exchange in the United States, landed on the Nasdaq market, and its listing undoubtedly injected a “bolster” into the entire cryptocurrency exchange market.

However, with China’s supervision of mining withdrawals and transactions, as well as the advancement of various countries’ regulatory policies, the crypto market has ushered in a deep decline. Subsequently, after the listing of the ProShares Bitcoin Strategy ETF, the first U.S. exchange-traded fund linked with Bitcoin, Bitcoin rose to a high point again.

With the retreat of exchanges at the end of the year, the crypto market ushered in a shocking decline.

China further advances regulation

On May 18, the China Payment and Clearing Association, the Bank of China Association and the Mutual Finance Association jointly announced that financial institutions and payment institutions must not conduct virtual currency-related businesses.

On the evening of September 24, the National Development and Reform Commission, the Central Bank, etc. issued a series of notices mentioning rectification of mining and virtual currency trading hype. Among them, the National Development and Reform Commission and other departments issued a notice on the rectification of virtual currency “mining” activities, mentioning strengthening the dual control of energy consumption for new virtual currency “mining” projects. The notice also pointed out that virtual currency “mining” activities are classified as an obsolete industry. It is strictly forbidden to carry out virtual currency “mining” activities in the name of a data center. Strengthen the credit supervision of data center enterprises. Strictly restrict the use of telegraph equipment and energy by virtual currency “mining” enterprises. It is strictly forbidden to provide fiscal, taxation and financial support for new virtual currency “mining” projects.

In addition, it is necessary to speed up the orderly withdrawal of stock projects, and investigate and deal with illegal power supply activities in accordance with the law. Implement differential electricity prices. Virtual currency “mining” projects are not allowed to participate in the electricity market. Stop all financial and taxation support for virtual currency “mining” projects. Stop providing financial services for virtual currency “mining” projects. In accordance with the “Industrial Structure Adjustment Guidance Catalog”, it will be eliminated within a time limit.

In addition, on the evening of the 24th, the People’s Bank of China, the Central Cyberspace Administration of China, the Supreme People’s Court, the Supreme People’s Procuratorate, the Ministry of Industry and Information Technology, the Ministry of Public Security, the General Administration of Market Supervision, the China Banking Regulatory Commission, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange issued a Notice on preventing and disposing of the risk of speculation in virtual currency transactions.

The notice highlights that virtual currency does not have the same legal status as legal tender. Virtual currency-related business activities are illegal financial activities. Carrying out legal currency and virtual currency exchange business, virtual currency exchange business, buying and selling virtual currency as a central counterparty, providing information intermediary and pricing services for virtual currency transactions, token issuance financing, virtual currency derivative transactions and other virtual currency related Business activities suspected of illegal sale of tokens and coupons, unauthorized public issuance of securities, illegal operation of futures business, illegal fund-raising and other illegal financial activities are strictly prohibited and resolutely banned in accordance with the law. If carrying out related illegal financial activities constitutes a crime, criminal responsibility shall be investigated in accordance with the law.

The provision of services by overseas virtual currency exchanges to Chinese residents through the Internet is also an illegal financial activity. For domestic staff of relevant overseas virtual currency exchanges, as well as legal persons, unincorporated organizations and natural persons who know or should know that they are engaged in virtual currency-related businesses and still provide them with services such as marketing promotion, payment and settlement, technical support, etc., they shall be investigated in accordance with the law. responsibility. There are legal risks involved in virtual currency investment transactions.

After the announcement, the relevant person in charge of the People’s Bank of China responded to reporters’ questions and further pointed out that virtual currency exchange, virtual currency trading as a central counterparty, provision of matching services for virtual currency transactions, token issuance financing, and virtual currency derivative transactions, etc. All currency-related businesses are illegal financial activities, which are strictly prohibited and resolutely banned in accordance with the law; the provision of services by overseas virtual currency exchanges to residents of my country through the Internet is also an illegal financial activity.

Mining focus shift

Data on October 14 showed that the United States has become the global Bitcoin mining center. As of the end of August, the hash rate of the United States accounted for 35.4% of the global hash rate, more than twice the figure in April.Followed by Kazakhstan and Russia. Kazakhstan has ranked second in global Bitcoin mining, second only to the United States, accounting for 18.1% of global Bitcoin mining power, up from 8.8% in June.

The proportion of China’s hash rate has dropped from 44% in May to zero in July, and the proportion was as high as 75% in 2019. The researchers of the report collected data on the IP addresses of mining operators from mining pools such as, Poolin, ViaBTC, and Foundry.

The rise of Hundred Coin Dogecoin

Gougou, a memetic digital currency marked by the image of Shiba Inu, has risen by more than 11,000% this year, and has ranked among the top ten most valuable digital assets this year. It can be said that it has caught up with one of the best years in the recent history of cryptocurrency. . Musk’s support for Dogecoin is also one of the reasons. People’s criticism of Dogecoin’s boom is mixed. Proponents strive to push the value of this altcoin to close to $1, while critics warn that the asset has all the characteristics of an asset bubble. This bubble will definitely When it breaks, it will be full of grief. After Dogecoin, various animal coins and shit coins took turns in the battle, setting off an upsurge.

Musk and Bitcoin two or three things

Tesla’s record profit in the first fiscal quarter was mainly due to the speculation of bitcoin and the sale of regulatory points, rather than the sale of cars. In addition, Musk revealed that he and his rocket company Space Exploration Technologies Corp. (SpaceX for short) hold Bitcoin. Despite concerns about Bitcoin’s environmental impact, Musk generally supports this cryptocurrency.

Bitcoin becomes El Salvador’s legal tender

On June 9, 2021, El Salvador’s Congress voted to approve the proposal of Bitcoin as legal tender submitted by the President. El Salvador became the first country in the world to recognize Bitcoin as legal currency. On September 7, 2021, Bitcoin officially became the legal tender of El Salvador.

NFT out of the circle

Entering the second half of 2021, NFT can definitely be the leader in the crypto market. Many well-known companies have successively released NFT products, keeping up with the trend of the Internet era and attracting a large amount of traffic.First, Ali, Netease, Tencent, etc. have entered the game; then Audi released a series of NFT works of art; Burberry cooperated with American game companies to launch a limited edition game character, players can collect and sell NFT in the game; LV launched NFT games… …At the same time, the concept of NFT in fields such as encrypted artwork, games, and digital certificates has exploded.

It is worth noting that since the end of July, the volume and price of CryptoPunks have reached new highs, and a “sky-priced” avatar once appeared. In addition, many digital art works have also seen transactions worth millions of dollars.With the fire of NFT, many works were sold at “sky prices”.

The explosion of the Metaverse

In 2021, “Metaverse” can definitely be called a waver in the field of technology and even capital. In March of this year, Roblox went public with a market value of close to US$30 billion, directly leveraging the capital market and stimulating the influx of major capital, manufacturers and entrepreneurial teams. In July, Facebook CEO Mark Zuckerberg introduced an ambitious new plan to his employees. He said that Facebook will work hard to build a collection of maximal, interconnected experiences of the kind of science fiction-a world called the Metaverse.

Subsequently, Bytedance, a subsidiary of South Korean mobile game giant Netmarble, companies such as Nike, Adidas, NetEase, Disney, and A-share Metaverse concept stocks all entered the game. Including the field of encryption, the application of the Metaverse concept has also appeared.

Metaverse (English: Metaverse), Meta means “yuan”, “transcendence”, verse refers to the universe. In 1992, science fiction writer Neal Stephenson published the book “Avalanche”. The book first proposed the concept of metaverse. The metaverse described in the book is the perception and understanding of two parallel worlds of a generation of Internet people born out of the real world. In the context of development to 2021, Metaverse refers to a virtual world that is parallel to the real world supported by AR (augmented reality), VR (virtual reality) and other technologies.

On December 6, the Commercial Press announced the “Top Ten Internet Terms in 2021” issued by the National Language Resources Monitoring and Research Center. The top ten internet terms released this time include Metaverse. The Commercial Press article stated that the “Metaverse” originated from the sci-fi concept of the novel “Avalanche”, and now refers to the virtual reality formed under the advancement of technologies such as XR (extended reality), digital twins, blockchain and AI (artificial intelligence). Integrated Internet applications and social life patterns. At this stage, the Metaverse is still an evolving and evolving concept. Facebook (Facebook) announced that it has changed its name to “Meta”, which is derived from “Metaverse”.

The Biden government intends to regulate stablecoins

The Biden administration took its first important move in November to implement bank-like supervision of cryptocurrency companies participating in stablecoin issuance, outlining a process that may shape the future of this digital currency. A committee led by the U.S. Department of the Treasury recommended that Congress implement a new regulatory framework around stablecoins and limit the issuers of such digital assets to banks. In view of the small difference in the number of parties between the two houses of Congress, this legislative requirement is a difficult task.

The U.S. Treasury Department further hinted at a new law on stablecoins on December 17. Nellie Liang, the Deputy Secretary of the U.S. Department of Treasury for Domestic Finance, said that there are potentially huge risks when investors use stablecoins, which has further contributed to regulatory speculation on stablecoins. A senior U.S. Treasury Department official in charge of financial supervision said: “If Congress does not enact legislation, regulators will try to use the powers they have. The Treasury Department’s powers are limited, because without the support of congressional authorized agencies, it is impossible to conduct stablecoins. Extensive regulation. They can do a little here and a little there, but if these are the foundation of crypto assets and they are unstable, it may be a big risk. In terms of stablecoin regulation, Congress and the Treasury Department may happen Dispute. In the November report, the Financial Stability Oversight Board stated that if Congress fails to pass legislation, it is prepared to take measures to resolve the stablecoin issue on its own.

In addition, Forbes released its forecast for the crypto market and blockchain in 2022. The article stated that stablecoins will become mainstream. According to a report by the President’s Working Group, the utilization rate of stablecoins increased by 500% between October 2020 and October 2021, and this rate of adoption does not seem to be decreasing.

Interest rate hikes are expected to affect the future trend of the crypto market

The unprecedented fiscal and monetary stimulus measures led by the Federal Reserve have ignited a boom in crypto investment for some time. However, as discussions on interest rate hikes near the end of the year heat up and many countries have strengthened the supervision of cryptocurrencies, the crypto market has generally fallen. In fact, the crypto boom since the second half of 2020 is closely related to the Fed. Loose monetary policy usually contributes to financial prosperity, and the Fed has kept interest rates close to zero for the past year. This has brought about the prosperity and development of the capital bond market, including encryption. Then the inflation problem caused by continued easing had to be resolved.

Entering December, the expected rise in interest rate hikes is mainly affected by rising inflation. If the U.S. inflation level continues to rise rapidly, it may, to a certain extent, prompt the Fed to tighten its ultra-loose monetary policy and even start raising interest rates ahead of schedule. The warming of interest rate hikes will naturally affect the crypto boom brought about by loose policies. However, the boots have not yet landed, and crypto investors should continue to pay attention to the Fed’s judgment on the trend of U.S. inflation.

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