The fourth quarter is arguably the most volatile time period in the cryptocurrency market place in 2021. The occasion exactly where BTC hit ATH in early November and then all of a sudden dropped beneath $ 50,000 in early December, cost modifications. The market place giants’ amazing technological side and emerging trends are steadily shaping the way traders allocate their assets in emerging economic markets and are attracting a great deal of focus.
Through the Q4 2021 Cryptocurrency Market Report, the analysis group Kyros Ventures hopes to give you an overview of the highlights from the previous three months to make your finest possibilities. Investments and the finest projections for the subsequent 2022!
one. Bitcoin overview in the fourth quarter of 2021
After the recovery time period in the third quarter, in the very first month of the fourth quarter, the cost of Bitcoin and the cryptocurrency market place took a great deal of swings. Many favorable regulatory information as properly as lots of new trends and products launches have fueled the movement of cash in the cryptocurrency market place, assisting BTC’s cost attain an all-time higher of $ 69,000 (in accordance to Binance). Market cap presently hit the $ three trillion mark for the very first time on November ten (in accordance to CoinGecko).
Check out the excellent occasions in the fourth quarter
– October one, 2021: The predicament has enhanced for BTC when rumors of the launch of a Bitcoin ETF are rumored.
– October twenty, 2021: When the very first ProShares Bitcoin ETF was launched, the cost of BTC peaked constantly until eventually eleven/eleven, the very first time in historical past, the cost of BTC reached $ 69,000.
– eleven/twelve/2021: Miami gets to be the very first city to spend dividends to citizens in BTC when they invest in digital currency issued by the city itself
– eleven/15/2021: Taproot, the very first BTC improve given that 2017, officially goes on the web, building it achievable to plan clever contracts on the Bitcoin blockchain
– November sixteen, 2021: BTC begun its “red” day when Twitter CFO Ned Segal explained that “investing in cryptocurrencies is just not right at the moment”. Subsequently, India gets to be the subsequent member of the association of nations to ban BTC as President Biden’s administration is steadily finalizing the law to impose tax on BTC transactions. Even the information of El Salvador’s intention to located a “Bitcoin city” could not strengthen the predicament.
– December 2021: News of the new strain of COVID-19 Omicron the moment once again casts a dark shadow on worldwide economic markets. At the similar time, traders have steadily misplaced persistence with the SEC as it has repeatedly delayed the licensing of BTC exchange-traded money. Perhaps for the reason that of this delay, Fidelity, a economic company headquartered in Boston, USA, quietly launched a spot swap fund in Canada, not the host nation.
The shock of the bitcoin provide continues
At the finish of the fourth quarter of 2021, on-chain indicators carry on to display that the circulating provide of itcoin is now reducing.
The complete provide of Bitcoin on exchanges continues to plummet and hit a three-yr lower in spite of optimistic cost movements in the fourth quarter of 2021. Specifically, at the finish of the third quarter of 2021, the quantity of BTC on exchanges is been recorded at a lower degree two,457,417 BTC on September 29, 2021. Then, involving late October and early November, when the cost of BTC continually hit new highs, there was nevertheless no indicator of BTC getting pushed into trading and reversing the trend. Conversely, the provide on the exchanges continued to decline sharply and reached new lows in December 22, 2021 at two,303,241 BTC.
Meanwhile, the provide of BTC, illiquid and not positioned on exchanges, has continued to enhance drastically and is presently at a lower degree. 76.13%, former it practically hit 76.26% in May this yr. Based on Figure three It can be observed that the correlation involving these two indicators is virtually parallel to each and every other in the previous 18 months.
At the finish of the fourth quarter, the provide of lower-liquidity Bitcoin continued to set new highs as traders who held lengthy-phrase BTC continually purchased new coins amid continued border market place promote-off, tiny positions and lengthy liquidations. .
two. Overview of Ethereum in the fourth quarter of 2021
In 2021 in common and in Q4 in distinct, we have observed lots of “explosions” of new ecosystems: Solana, Avalanche, Fantom … There are lots of opinions that Ethereum dangers getting conquer. So, let us get a search at Q4 2021 to see what Ethereum has?
EIP-1559 was launched with updates that aided alleviate some of the pricey price dilemma on Ethereum with the “base rate” proposal.
In the previous, the base charge has remained somewhat secure.
However, gasoline on Ethereum is nevertheless not quite secure and depends a great deal on the conditions of the market place. If there are occasions when the market place is energetic or vice versa (Panic Sell), the gasoline commissions on Ethereum nevertheless enhance a great deal in contrast to normal.
Almost one.three million ETH has been burned so far, which is really worth about four.9 billion bucks. This is a enormous quantity.
Ethereum’s complete income continues to outperform lots of other leading-tier blockchains (Figure six).
ETH two. Phase
The quantity of men and women who think and help ETH two. continues to enhance, plainly demonstrated by the quantity of ETH participating in staking on the Beacon two. chain. With the launch of ETH two., lots of new tasks have been developed and formulated to remedy the staking dilemma on the ETH chain, of which the most profitable is Lido Finance.
While not owning a prominent boom like other tiny ecosystems in common, Ethereum nevertheless has some development with Total Value Locked (TVL) continuing to hit ATH with more than $ 155 billion. This quantity is approximately 9 occasions larger than the following two ecosystems, Earth ($ 18 billion) and Binance Smart Chain ($ 17 billion). It can be explained that Ethereum nevertheless retains its sure values and maintains a secure place and momentum for development, in spite of there are lots of new competing ecosystems. (Figure eight).
Protocols on Ethereum
We will carry on to dig deeper by observing the evolution of protocols on Ethereum.
The ten finest protocols in accordance to TVL on Ethereum (Figure 9) There has been a marked adjust, with Lending and AMM providing way to the Curve and Convex duo. Curve with its integration, constant growth and ever leaner tokenomics has attracted a significant quantity of customers, with Convex increasing strongly at the finish of 2021.
Lido Finance also entered the leading ten protocols with the highest TVL with the good results of its Liquid Staking products. With gasoline fees nevertheless somewhat higher on Ethereum, DEX AMMs in common have a tough time holding their positions.
Regarding the quantity of customers, in the final three months Ethereum has continued to retain a development price in spite of the pricey gasoline tariffs. To clarify this, we can obtain a quantity of good reasons this kind of as:
- Cryptocurrencies are more and more a mass adoption, so the quantity of participants experimenting with cryptocurrency-linked goods, together with Ethereum, is also escalating.
- Despite the higher price, Ethereum nevertheless hosts a significant concentration of assets in the market place with higher-degree tasks.
Also, there are some protocols like Curve, Sushi and AAVE that are steadily expanding and producing on Layer-two and other ecosystems. This has the two the impact of lowering the load on Ethereum itself, but also produces the danger of liquidity fragmentation and consumer fragmentation. If there was a far more appropriate and productive ecosystem, Ethereum could drop a great deal of market place share.
Explosion of layer-two
To remedy the dilemma of scalability, of gasoline fees on Ethereum, there are lots of approaches. If ETH two. is the on-chain strategy, altering immediately on the Ethereum chain, then Layer-two is the off-chain resolution.
In 2021, we noticed a record enhance in working fees on Ethereum. This is the challenge, as properly as the possibility for the explosion of Layer-two remedies.
Currently, Polygon is nevertheless the most profitable resolution, has finished the ecosystem and continues to strengthen and create, TVL reached more than $ five.five billion at the finish of the fourth quarter of 2021. However, also remedies this kind of as Arbitrum, Boba Network , Optimism or far more a short while ago Metis DAO are producing quickly.
Many men and women also count on new tasks like Starkware or zkSync. In the fourth quarter, Starkware raised $ 50 million in the Series C round with the participation of Three Arrows Capital, a16z, Alameda Research … Meanwhile, zkSync also succeeded in the Series B round with $ 50 million from a16z. , Crypto.com, Bybit … These are all tasks to search forward to in 2022 with the finest of technological innovation and teams.
Major updates coming quickly
In 2022 the most awaited issue is the The Merge phase of ETH two., or the merger involving Beacon and ETH one., which indicates that the complete state of the chain on ETH one. and the chance of launching clever contracts will be carried forward. consent approach. Currently, the merge phase is implementing testnet. If the merger is profitable, it will generate an essential premise for the ETH group to carry on implementing the last phase (Shard Chain), assisting Ethereum enhance scalability when making certain protection and decentralization.
The five finest likely clever contract platforms in 2022
Not only in the fourth quarter of 2021, but also in 2021, we have observed stiff competitors involving clever contract platforms to achieve market place share and local community believe in. In addition to Layer one which exploded in the yr …