2021 Crypto Year in Review
2021 was a banner year for crypto and web3. As we prepare the new year, it felt like a good time to recap some of the biggest topics.
Let’s start with the enormous increase in the prices of many cryptocurrencies. $BTC moved from $30K to start 2021 and ended just under $50K, a somewhat pedestrian move for the biggest crypto compared to smaller tokens. The second biggest token $ETH made a more impressive jump from $750 to $3,750 (5x) during 2021. If you want bigger movers, check out $SOL rising from $1.65 to $173 (105x) or $AVAX moving from $3.60 to $103 (29x). Many other smaller cryptos had huge gains minting millionaires across the ecosystem.
2021 was also the year that crypto crossed over into the mainstream in several ways. Big companies like Tesla and MicroStrategy allocated billions of cash on their balance sheets to Bitcoin. El Salvador adopted $BTC as an official currency for their country. ProShares launched the first Bitcoin ETF ($BITO) linked to the futures contract, and its AUM quickly passed the $1Bn mark. NFL players like Russell Okung and Odell Beckham Jr. converted portions of their compensation into $BTC. Crypto even made it to network TV with Elon Musk’s appearance on Saturday Night Live and mentions of NFTs on Brooklyn Nine Nine. If you hadn’t thought much about crypto before 2021, there was no hiding from it now.
People were bombarded by advertisements from crypto exchanges this year as well. Exchanges have quickly become the one of the top brands spending on sports broadcasts, alongside sports betting operators. Major celebrities like Tom Brady and Matt Damon are representing crypto exchanges on national ad campaigns. Exchanges have also bought up stadium naming rights with Crypto.com taking over the Staples Center in LA and FTX renaming the Miami Heat’s arena. The arms race to acquire new customers is just getting started. Expect to see much more of this in 2022.
One of the premier events of 2021 for the crypto markets was the Coinbase IPO ($COIN) in April. The company’s stock has seen some heavy volatility since launch. Quickly moving from the IPO price of $250 up to $350 before retesting the $240 area a few months later. The stock rocketed above $340 again in November but quickly lost those levels and sits at $250 again at year’s end. Even so, the company has a $55Bn market cap and a powerful currency for acquisitions and growth. I expect we will see other exchanges following Coinbase into the public markets in 2022.
Any review of 2021 needs to talk about the astronomical rise of Non-Fungible Tokens or NFTs. I will be covering this market in more detail on this newsletter soon, so don’t worry if this is a new concept for you. The main thing to know is that in 2021 the focus of NFTs was on digital collectibles in sports and art. Dapper Labs launched digital basketball highlight cards with the NBA called NBA Top Shot. Nearly 500,000 people spent over $750MM on this platform in 2021. OpenSea, basically eBay for NFTs, saw an explosion in volume reaching over $10Bn in sales in 2021. Digital artist Beeple sold one of his pieces as a NFT in partnership with Christie’s for a record $69MM to a crypto whale. Athletes, musicians, and other celebs completed multimillion-dollar sales to fans. NFTs even invaded the video game world, with Axie Infinity seeing over $3.5Bn in blockchain gaming assets purchased in 2021. The list goes on and NFTs will remain a super-hot topic next year for sure.
The rapid growth of revenue in the NFT and web3 space brought massive attention from venture capital firms. VCs poured around $30Bn into companies in the sector in 2021. Dozens of new crypto unicorns were created — Dapper Labs, OpenSea, Bakkt, Binance, BlockFi, Ripple, Axie Infinity, and many more. VCs also raised dedicated crypto funds at a dazzling pace, led by Andreessen Horowitz announcing a $2.2 billion crypto fund this summer. Tons of money and smart people are racing into the sector, and this will continue in 2022.
I’m going to wrap up this post with a quick discussion of Decentralized Autonomous Organizations (DAOs), which is the crypto equivalent of an LLC or C Corp. These are companies created on the blockchain. Sometimes these have parallel US registered entities with a proper bank account, and sometimes they only live on chain. I’ll be covering this in more detail in a full post soon, but this was an important development in 2021 that deserved some mention here. A group came together quickly in November call Constitution DAO that raised over $40MM in one week to try and buy an authenticated copy of the US Constitution at auction. The group lost the bid, but this showed the power of DAOs. Shortly after, a group called Krause House DAO started attracting money to attempt to purchase an NBA team. This is unlikely to work, but it is another proof of the possible applications of DAOs. Smaller efforts have been executed where DAOs have purchased digital collectibles with price points in the $100–500K range via fractionalized ownership. Keep an eye on this newsletter for more on DAOs in 2022.
Wow, 2021 was a huge year for the crypto and web3 community. Everything is setting up for another big leap in 2022. Stay tuned.
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