2021: Year in review
Views expressed in this article are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.
We’ve lived many lives this year, as VALR soared along with an exponential boom in the crypto industry. Let’s take a look at the highlights that defined 2021.
The Elon Musk Experience
From Sam Bankman-Fried to Max Keiser and Michael Saylor, influential crypto powerhouses have come to the fore over 2021. Despite SBF entering the Forbes List at the age of 29, with a net worth of $26B, one highly controversial crypto-adjacent figure has dominated this year’s narratives – Elon Musk. The world’s wealthiest individual flexed his influence to questionable extremes – sending shockwaves through the digital asset market on multiple occasions. Starting in late January, Musk briefly moved the price of BTC by 20% by simply adding “#Bitcoin” to his Twitter bio, followed by February’s announcement that Tesla would be adding BTC to its balance sheets.
While it’s undeniable that Tesla’s adoption of BTC proved a catalyst for the continuation of the current bull run, his back-and-forth on the subject is clearly visible on Bitcoin’s charts. Musk injected a sizeable dose of FUD to the market in May, as the tech mogul voiced misguided concerns regarding the energy expended in powering the BTC network.
Nothing to see here
El Salvador adopts Bitcoin
In the midst of Musk’s controversy, El Salvador defiantly embraced BTC as legal tender in June to reduce the island nation’s dependence on the US petrodollar. The country made an impactful statement by harnessing geothermal power from an active volcano to mine bitcoin, validating the position that cryptocurrency mining incentivizes the use of clean, renewable energy. The bold legislation was championed by Salvadorian president Nayib Bukele, despite stern threats from the IMF that doing so could add increased risk to the country’s fragile economy. Subsequently, Bukele has doubled down, continuing to amass BTC for El Salvador’s treasury during market dips.
Read: BTC THE STANDARD
The Meme Coin Renaissance
In addition to Musk’s influence on the leading crypto, the self-proclaimed “Dogefather”’s affinity for the eight-year-old meme coin played a primary role in catapulting Dogecoin more than 8,000% in the first quarter of the year. Doge’s surge to a $60B valuation was aided by the WallStreetBets community, which set its sights on Doge, after having forced institutions invested in GameStop (GME) into a historical short squeeze.
On the back of Doge’s parabolic run came a new, fluffy, contender – Shiba Inu (SHIB). SHIB garnered record gains this year, with one investor’s $8k buy in August 2020 yielding in excess of $5B as SHIB peaked in October.
After SHIB came FLOKI – naturally named after Musk’s own dog. The project embarked on a marketing blitz rarely seen before, plastering major cities like London, Amsterdam, and Dubai, in addition to TV marketing across the US. The campaign proved so aggressive that it prompted UK regulators to clamp down on crypto advertising.
Influencers aside, the meme sector’s explosive gains have been propelled by a new type of entrant- Gen-Z has arrived, with limited capital but the full force of TikTok and collective organisation. And many of these new investors have outperformed the rest of the market in a matter of months, flexing a chaotic might of their own.
Read: Dogecoin.D – How a meme moved markets
NFTs
No talk of memes would be complete without a mention of the most disruptive blockchain technology to steal the limelight in 2021 - non-fungible tokens. Crypto’s rabbit hole grew even deeper this year, as NFT fervour captured the public’s ire and imagination. Beeple’s landmark $69m sale at Sotheby’s sparked a flurry of renewed interest in the trade of digital collectibles, on a scale dwarfing 2017’s CryptoKitties frenzy.
Generative profile picture (PFP) collections emerged as a rapidly growing digital asset class this year, with CryptoPunks commanding hair-raising bids to the value of millions of dollars. There’s little doubt, however, that Bored Ape Yacht Club sees out 2021 as the industry’s most prominent NFT collection. Having been minted for a mere 0.08 ETH, items from the 10k-strong collection now regularly command prices upwards of 50 ETH, recently flipping Punks as the most valuable non-fungible project.
Read: How much is that JPEG in the window?
It hasn’t all been obscenely priced JPEGs though – GameFi rose in parallel with NFTs as the fresh metaverse narrative took hold. Play-to-Earn metaverse gaming projects have boomed over 2021, with the likes of Axie Infinity (AXS), Sandbox (SAND), and Decentraland (MANA) boasting eye-watering parabolic gains.
Read: Things are getting meta
Layer-1 Wars
While Bitcoin remains the market leader, Ethereum stole headlines throughout 2021, as the network became the primary site for major NFT and DeFi innovation. However, Ethereum’s slow speed and prohibitively expensive fees gained fresh urgency as increased demand on the network strained its capacity, causing major congestion. A host of smaller, novel smart-contract protocols sought to capitalize on ETH’s limitations, promising lightning-fast transactions at a fraction of the cost on highly scalable networks.
Of the many contenders that have flooded the market, Solana (SOL) exploded with the greatest momentum, soaring over 200x to a $60B valuation in a matter of months. Supported by FTX chief, Sam Bankman-Fried, Solana has carved out a niche as a low-cost alternative to Ethereum, enjoying its own NFT boom as dissatisfied retail investors migrate to the network. Alongside Solana, Binance’s BNB observed exponential gains, while DAG-based protocols Avalanche (AVAX) and Fantom (FTM) similarly surged as DeFi users sought fresh farms with lower costs and greener yields.
Read: Ready Layer One
A strange, strange cycle
2021 delivered unprecedented crypto adoption on an institutional scale, as large funds began to amass stores of bitcoin as a hedge against an ever-devaluing dollar. While institutional adoption has long been touted as the holy grail of catalysts for blockchain’s emergence as a major asset class, the entrance of very large players has brought with it a shift in market behaviour that has injected fresh dynamics into what used to be a fairly predictable market (from a macro perspective, of course). Wyckoff theory emerged from obscurity as the model of choice for many traders and analysts this year.
Read: Of Whales and Wyckoff
Analyst-turned-prophet PlanB’s widely popular Stock-to-Flow model faltered for the first time since its inception as BTC fell short of his >$100k predictions for the year’s end – perhaps signaling that the era of clearly delineated bull and bear cycles may finally be drawing to a close. With talk of an extended super-cycle in the air, it’s possible that market maturation could come in the form of lower volatility across longer time horizons. As the expansive web of regulations gains more clarity and direction – as we’ve seen an inkling of this year – crypto is bound to take on a new complexion. While an unfortunate outcome for many traders enjoying their time in the Wild West of global finance, the correct implementation of these regulations is a crucial step towards crypto’s global adoption and continued growth. The approval of the first-ever US Bitcoin futures ETFs in October that propelled BTC to a brief new all-time-high at $69k illustrates this understanding – for crypto to make further inroads into the global economy, regulations need to be introduced, albeit carefully.
Read: Regulation has never looked this good
Read: Whose ETF is it, anyway?
VALR
Crypto may be up over 400% in 2021, but VALR has fared pretty well too. We’ve grown tremendously this year, having rolled out a wealth of new products to better serve you. Over 2021, we’ve distributed over R29 million in rewards to our users through campaigns and referral rewards, and added three new exchange pairs to our offering. Users can now trade SOL/ZAR, BTC/USDC, USDC/ZAR, and even deposit USDC via USD wire transfers.
We’ve also been proud to roll out VALR Pay, offering users an instant, feeless ZAR payment rail – the most seamless way to transact ZAR in South Africa.
As an exchange committed to offering users the best possible trading experience, we launched Simple swaps – allowing for the direct purchase of our 60+ altcoins with ZAR. To provide even more convenience, we implemented Auto-Buy, allowing clients to average out their holdings with regular scheduled purchases of BTC, ETH, and XRP, directly from their bank account!
Along with Auto-Buy, our team launched Subaccounts, allowing users more flexible control of their holdings to separate trading strategies from HODL bags, children’s savings, and much more.
There’s only one super-cycle we at VALR can guarantee with certainty – our own. Regardless of the market, our team continues to build tirelessly to bring you a world-class platform. We’ve got lots in store for 2022, and we can’t wait to share it with you. Here’s to a year of building, growing, and learning, together with you – the loyal community that has supported us since our launch just two years ago. We’ve not consulted the stars lately, but rumour has it that 2022 could be the year of the Valrian.
