Bitcoin nearing $70,000, Dogecoin “memecoins” worth billions of dollars, a spectacular Wall Street IPO, and a sweeping Chinese crackdown are all part of the cryptocurrency boom. Even by the unpredictable standards of the cryptocurrency industry, the year 2021 was the most extreme ever.
The year began with a flurry of investment pouring into digital assets from both large and small investors. As a result, bitcoin and its offspring have remained in the public eye at all times. With the vocabulary of cryptocurrency becoming firmly entrenched in the investment vernacular.
In the meantime, while bitcoin remained the go-to asset for investors just getting their feet wet in the crypto space, an array of novel, some would say joking, tokens hit the market.
In many cases, “meme coins,” a loose collection of coins that include everything from Dogecoin and Shiba Inu to Squid Game and have origins in web culture, are of little practical utility.
After the introduction in 2013 as a bitcoin fork, Dogecoin experienced a meteoric rise to an all-time high in May. Before it plummets by roughly 80 percent by mid-December to its current level. Shiba Inu refers to the same species of Japanese dog as Dogecoin. It momentarily made its way into the top ten most valuable digital currencies.
Many of the traders frequently stranded at home with excess cash during the covid lockdowns, turned to cryptocurrency, despite warnings from regulators about the market’s volatility.
A connection emerged between the Dogecoin phenomenon and the “Wall Street Bets” movement. Retail traders banded together online to pile into companies such as GameStop Corp (GME.N), therefore pressuring the short-term positions of hedge funds.
Dogecoin Imposing Regulations
Regulations were concerned about the potential for cryptocurrency to facilitate money laundering and jeopardize global financial stability as funds flooded into the crypto market. For years, financial watchdogs have been skeptical of cryptocurrency, created to challenge established financial institutions. Now, they are calling for greater regulatory authority over the sector, with some advising customers to beware of volatility.
With new regulations on the horizon, cryptocurrency markets were on edge as they worried about the possibility of a crackdown. When Beijing imposed restrictions on cryptocurrency trading in May, bitcoin plunged over 50%. It was pulling down the rest of the market with it.
Indeed, the importance of regulatory risk cannot be overstated. According to Stephen Kelso, global head of markets at ITI Capital, these are the rules of the road by which individuals live and die in the financial services industry. It appears that the regulators are making significant progress and catching up.
Finally, as Dogecoin trading gained popularity, another previously unknown aspect of the cryptocurrency industry came to the public’s attention. In 2021, the use of non-fungible tokens (NFTs) – strings of code kept on the blockchain digital ledger. It indicates unique ownership of artworks, films, and even tweets – skyrocketed.
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