A Year of Crypto Drama

A Year of Crypto Drama

This year has been full of interesting news in the crypto sphere, from record highs to an entire country adopting Bitcoin as legal tender. One recent moment happened in October, when the first American futures-based Bitcoin ETF (Exchange Traded Fund) was born. Traders were in a bullish mood in the wake of the launch, feeling that it could bring more attention and exposure into the crypto world.

As a result, the price of Bitcoin was pushed up to a six-month high of $64,367.14. Indeed, history was being made when the US Securities and Exchange Commission (SEC) approved the listing of the ETF ProShares Bitcoin Strategy, which ended up higher by 2.59% after its first day of trading, when almost $1 billion worth of its shares changed hands.

The momentum of this development carried over into November, when the prices of Bitcoin and Ethereum ETH kept going upward, doubling their values since June. Early in the month, Bitcoin hit $68,564.40, and Ether $4,842,65, boosted by traders’ sense that global economic prospects looked more positive and by pandemic-inspired anxiousness to save up funds.

Martha Reyes of Bequant commented, “We are far from levels where long-term holders… start taking significant profits so $100,000 is on the horizon.” Hopeful sentiments for sure, but let’s go through some other historical crypto moments this year to get a fuller picture of the world of cryptos at the moment—a must-read before CFD cryptocurrency trading with iFOREX.

El Salvador

In October, a month after El Salvador’s president Nagib Bukele surprisingly decided that the Latin American country would accept Bitcoin as legal tender, 3 million Salvadorans had downloaded the government Bitcoin wallet Chivo. Chivo means “good,” but this wouldn’t accurately describe how many in the country felt about the persistent technical problems that afflicted the app in its first month.

The president said that high demand had overwhelmed the new service, but by this time, only a small percentage of businesses had actually started accepting Bitcoin payments, and some analysts, like Leonor Selva of the National Association of Private Enterprises, were “Still not sure what benefits the government expected.”

NFTs (Non-Fungible Tokens)

Old auction houses Sotheby’s and Christie’s were transformed this year, as previously they had never sold art that doesn’t physically exist. That’s right—we’re talking about NFTs. When collectors buy art as NFTs, they are purchasing a blockchain record of their ownership of a digital image or video, although the item itself can be freely shared like any other document.

Christie’s sold over $100 million worth of NFT art in 2021, and Sotheby’s $65 million. This trend seems to be gaining traction, even though auction houses accepting cryptocurrency payments for artworks will have to figure out how to fulfil the legal requirements of Know Your Customer (KYC) and Anti-Money-Laundering (AMC) in order to be fully compliant going forward.

 

A Peek Ahead

As of November, traders were riding a wave of crypto enthusiasm. “Crypto is where the fast money is at,” said Pepperstone analyst Chris Weston, and gave his view of Ethereum in the months ahead: “[Ether] is trending like a dream and I’d be long and strong here.” Not only that, about Ethereum coin value in the near future, he said “I can sense the $5K party could get going soon.”

Traders, however, also recalled the crypto scam in the same month surrounding the token Squid Game, named after the Netflix TV show. In a frenzy of trading, amounting to a volume of $14 million over a one-day period, the token gathered up a value of $2,800.

All of a sudden, though, its value dropped to almost zero and the crypto’s developers disappeared with millions of dollars in funds, leaving traders with a real-life crypto lesson to remember. Gary Gensler, chairman of the SEC, issued a warning after the ProShares listing that crypto is “Still a highly speculative asset class and investors should understand that underneath, there is the same volatility and speculation.”

Taking stock of the crypto market nearing 2022, we see its market capitalization exceeds $3 trillion. If we compare Bitcoin to its low point in March 2022, it has grown by a giant 1,680%. Despite the blows that cryptos have taken as a result of China’s regulatory crackdowns this year, the two biggest ones, Bitcoin and Ethereum, were looking strong as December rolled closer.

In Bitcoin ETF news, Grayscale, the digital currency manager, is planning to convert its Bitcoin trust (GBTC.PK) into a Bitcoin ETF that will track companies that are a part of the crypto economy. This may draw even more traders in the direction of cryptos in the months ahead.

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