This year was very significant for the cryptocurrency market. The capitalization of the global cryptocurrency market exceeded the $3 trillion mark for the first time. Two of the most popular cryptocurrencies, Bitcoin and Ethereum, account for more than half of the capitalization – $1.8 trillion.
Bitcoin is up more than 60 percent this year and has attracted a lot of investor attention, but compared to last year, bitcoin has started to share more attention with other cryptocurrencies such as Ethereum, Binance Coin, and some tokens like Dogecoin. Bitcoin’s share of the cryptocurrency market has shrunk significantly due to other tokens flying in.
According to CoinGecko data, the Total Cryptocurrency Capitalization for 2021 rose by $1.5 trillion and the Total Market Value was $2.3 trillion as of December 17.
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What mainly affects the price of cryptocurrencies
Of course, most cryptocurrencies are directly dependent on Bitcoin. That’s why in order to understand why cryptocurrency exchange rates went up so much in 2021, we need to understand the reasons for bitcoin’s growth.
Bitcoin is the oldest and largest cryptocurrency in the world, and any fluctuations in its exchange rate directly affect smaller cryptocurrencies. The year 2021 was a real record year for Bitcoin, and during that year it rose in value by more than 60%.
Such rapid growth was influenced by a variety of global events, and we will talk about them below.
Elon Musk and Tesla’s investment in bitcoin and its consequences
A good boost to the Bitcoin price was made by Elon Musk, he announced that the Tesla Company had invested $1.5 billion in Bitcoin. This news spread very quickly, as it was the largest investment of any corporation in cryptocurrency.
Tesla also noted in a filing with the U.S. Securities and Exchange Commission (SEC) that in the future it plans to start accepting digital currency as a payment option for its products. Following this news, the bitcoin exchange rate rose to a record $44k.
Also, we can note the famous tweets of Elon Musk, which increased interest in some cryptocurrencies.
In addition to Tesla, many companies such as Mastercard, BNY Mellon, Square, and many others made initial bitcoin purchases in the first half of 2021. Also, major companies such as Substack, WeWork, and AXA began accepting bitcoin payments
All of these events greatly influenced people’s attitudes towards bitcoin, with the example of other companies, people began to buy bitcoin en masse, which influenced the cryptocurrency market as a whole.
How the legalization of Bitcoin in El Salvador affected cryptocurrency
Another landmark event that had a positive impact on the cryptocurrency is that El Salvador (a small country in Central America) made Bitcoin legal. in the last half-year, major banks and vendors in the country have increased acceptance and credit functionality, using Chivo (a special cryptocurrency wallet launched by El Salvador).
Before the official launch of bitcoin, El Salvador purchased 400 Bitcoins, and now the country continues to buy Bitcoins, and President Buquele often announces his purchases on Twitter.
In addition, El Salvador now plans to build an entire city based on the Bitcoin cryptocurrency and El Salvador is already launching a Bitcoin mining station near the Tecapa volcano.
Such a great step of bitcoin development from El Salvador will go down in history and become one of the most significant crypto events of 2021.
COVID-19 impact on the cryptocurrency market
There is no doubt that the coronavirus is having a big impact on the rapid growth of cryptocurrency starting in 2020, and this year was no exception. Unfortunately, there are new coronavirus strains that can both positively and negatively affect cryptocurrency rates.
One of the recent events was the appearance of a new coronavirus strain – “Omicron”. However, even before the appearance of the new strain, there was the “Omicron” cryptocurrency, which appeared in early November. Because of this silly coincidence, Omicron cryptocurrency is rising sharply in price because of news about a new coronavirus strain with a similar name.
Forbes reported a 500% increase in the value of Omicron cryptocurrency
and other cryptocurrencies are also growing in value. Bitcoin increased by 5.5%, Etherium by 6.3%.
This example shows how volatile cryptocurrencies are and can change depending even on small news, but nevertheless, 2021 was very successful for them, what awaits the market next year we will know soon.
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