By: Jonathon Davidson
Bitcoin accounts with over USD$400K rose in early Jan as Covid encouraged interest in alternative finance
In Week 2 of this year in January, I highlighted reports from crypto finance outlets indicating the number of institutional investors buying Bitcoin had jumped higher than ever before. We were just entering a second year of Covid, stimulus checks were rife, and existential panic had sparked interest in a new class of financial assets—this went beyond the retail investor community.
The report included data from providers Glassnode indicating that when a price correction occurred in early January, the number of investors holding bitcoin wallets worth over USD$400,000 at the time had jumped up over 2,000, the assumption being that such large purchases hinted at banks and capital managers.
This indicated for the first time in 2021 that large-scale players had bought large quantities of Bitcoin during a price reversal event, effectively highlighting the entrance of more and more 'institutional' players into the crypto space—a theme that carried throughout the year.
Bitcoin's first-of-many 2021 price reversal events occurred in mid-late January, the first expression of a newfound volatility
In mid-late January, the price of Bitcoin dropped from the then-record-high of USD$40K down to USD$29K, wiping USD$100 billion in market capitalisation off the market.
I highlighted reports from the time in Week 3 of 2021 which ultimately treated the digital asset with great skepticism—aptly warranted at the time.
Regulatory concerns on crypto popped up immediately as US Treasury enforcement division proposed to de-anonymise market
In my round-up for the month of January published in Week 4 of 2021, I highlighted that the US Treasury's enforcement unit had released a proposed draft ruling that sought to de-anonymise the crypto market by naming and identifying crypto 'wallet' holders with their legal names.
By March, that proposal had been scrapped.
VISA and Mastercard both announced Cryptocurrency functionality in Q1 of 2021
In Week 6, I highlighted announcements from finance giants VISA and Mastercard stating the two players would begin to expand cryptocurrency functionality with certain products.
While we have not seen Bitcoin harmonise with the current landscape of the debit system, the move did indicate at the time a reputational shift for the cryptocurrency market into a more sober and professional lens.
Bitcoin price hit its first all-time-high over USD$60,000 in mid-April
In Week 15 of this year, which took place in mid-April, I noted that Bitcoin had hit a contemporaneous all-time-high of USD$62,000.
The lift also brought up the price of the second most popular competitor cryptocurrency Ethereum, and this uplift would continue into mid-May, where another correction event saw the price drop by up to $15,000.
Mastercard user survey from mid-May showed social impact of Covid was driving participation in crypto markets
Following the announcement in April regarding expanded functionality of crypto assets in its product offerings, I highligthed that Mastercard released a user survey in Week 18 gauging user interest in new payment methods.
What was most interesting about that survey is that one question asked respondents if they would consider using 'next-gen' finance payments in a world not beset by Covid lockdowns—63% said no.
Ebay also announced for first time in May it was working on expanding crypto-payment functionality
In the same week as the above, Ebay also said it was working internally on inspecting crypto payment functionality for its web platform—another large-scale and respected player to give serious attention to the emerging cryptocurrency asset class.
Texas state Government classified cryptocurrency as legal financial assets in May 2021
In Week 19 of this year, I flagged that lawmakers in the US state of Texas had officially passed amendments to finance laws allowing for bitcoin, ethereum, and other major cryptocoins to be recognised as legal tender.
The market cap of Ethereum surpassed the total worth of JP Morgan in May
While it would not last for too long, the market cap for ETH hit USD$500B in Week 19 of this year, seeing the emerging asset class aggregate market capitalisation overtake that of JP Morgan, and the China Construction Bank, something I flagged at the same time as the above.
Crypto markets experienced first 2021 crash event in early-mid June
In week 24 of this year, I highlighted that cryptocurrency markets had taken a beating as widespread confidence in the asset class dissipated around the world, leading to a sweeping reduction in value for the market caps of all leading coins.
This happened again in December, following another revival of the May-April 2021 high prices in November.
Sotheby's allowed cryptocurrency payments for an extremely expensive diamond in June
One week later, in Week 25 of 2021, I noted that world-class auction house Sotheby's were allowing cryptocurrency payments in the auction of a 101 carat flawless diamond—even while the market reeled at a steep correction that led to dramatic drops in the price of bitcoin and ethereum.
In August, cryptocurrency exchanges unsuccessfully lobbied against Biden's 2023 crypto tax reporting laws
In Week 31 of this year, I noted that Biden's infrastructure bill had come to include crypto tax reporting law changes, which will see exchange owners liable to report to US tax regulators from 2023 onwards.
Multiple entities operating in the crypto space attempted to see those changes removed from the then-proposed legislation. All failed.
PayPal joined its counterparts in August by announcing cryptocurrency functionality
Several weeks later, I noted in Week 35 of 2021 that Paypal had joined Ebay, Mastercard, VISA, and Sotheby's, in announcing that it would allow cryptocurrency payments for some services.
While this announcement took place during the middle of the first 'crash' for the market of 2021, it nonetheless continued to impress upon participants and observers alike a reputational shift for the class of assets.
Ethereum recovered its losses back to AUD$5,000+ in early September
At the start of September, I published a watchlist note indicating that the price of Ethereum was recovering from the first cryptocurrency 'crash' event of 2021 and had once again risen back to $5,000 Australian dollars.
While this would not last, the news did provide a relief to cryptocurrency market participants.
The nation of El Salvador made bitcoin legal tender in September 2021, triggering another price crash
In September, the country of El Salvador—under the helm of a newly elected president in his 30s—made bitcoin a legal currency.
El Salvador, a nation embattled by controversy and poverty, seemed an unusual place to do this. That sentiment was reflected in the market at large, seeing as the price of bitcoin suffered a huge drop in the days following; something I noted in Week 36.
China banned cryptocurrency for a second time in late September, extending downward pressure
The El Salvador move and its impact on cryptocurrency prices was worsened in the same month when Chinese financial regulators announced the country was banning trades of the assets, again, for a second time. I flagged this in Week 38 of this year.
Australian Senate issue paper encouraging tax benefits for cryptocurrency holders in October
In Week 42 of this year, I highlighted that part of the Australian senate had issued a crypto-friendly report recommending the government adopt tax benefits for cryptocurrency holders in the Jurisdiction that saw Australia compete with the UK, US, and Singapore, as an attractive destination to hold cryptocurrency assets.
ASX trading records were broken by Australian investors in November purchasing shares in first crypto ETF
In Week 44 of this year, I highlighted that the ASX saw one of its highest ever daily trading volumes on record for a Cryptocurrency exchange traded fund product on the very first day the option was listed, indicating an extremely healthy appetite for cryptocurrency assets in the Australian market landscape.
Australia's Finance Minister contradicted the RBA in Nov, says crypto legit
In Week 47 of the year, I noted Australia's federal finance minister had contradicted statements made by the RBA the week before suggesting investors treat cryptocurrenies cautiously.
The federal finance minister told leading newspapers instead that cryptocurrencies were legitimate, increasingly in-use around the world, and that Australia ought to 'keep up.'
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