The Rollercoaster Ride of Bitcoin
As we bid farewell to 2021, Bitcoin decided to throw us a curveball just as we were popping champagne to celebrate a robust year. On December 31, Bitcoin (BTC) saw its price dip below $46,000, ending the day at a surprisingly uninspired $45,933. It’s kind of like going to a party and realizing you’re the only one who forgot the snacks. Oops!
Market Overview: More Drama Than a Soap Opera
The cryptocurrency market wasn’t a lone wolf in this downward spiral. Altcoins, too, joined in on the fun of falling prices, with Ether (ETH), Binance Coin (BNB), and Solana (SOL) each taking a hit of over 2%. Meanwhile, Cardano (ADA) decided to join the pity party with a decline of over 4%. Talk about a collective ‘ugh’!
Market Capitalization Takes a Nosedive
The combined market cap of all cryptocurrencies took a significant hit, shedding over $100 billion from its peak, plummeting from a high of $2.4 trillion to a somber $2.27 trillion. That’s a hefty loss that could fund a lot of pizza deliveries (but, like, not the gourmet kind).
The Unexpected Turn of Events
Just hours before this market dive, Bitcoin enjoyed a bit of a relief rally, gaining over $1,500 in under an hour. This sudden surge might’ve been spurred by a whopping $6 billion worth of December options expiry. But alas, it wasn’t meant to last, proving no good deed goes unpunished.
Bitcoin’s Year-to-Date Return: Not Quite What We Expected
By the end of 2021, Bitcoin’s year-to-date price return settled under 60%. The analysts who predicted a sky-high valuation and six-figure prices probably still have their heads spinning from this lackluster finale. But worry not, hardcore Bitcoin fans! Those with a long-term investment mindset are still holding their ground.
Crypto Tourists vs. Long-Term Holders
Much of the recent correction has been attributed to the so-called “crypto tourists” who jumped in during the summer and are now hitting the panic button. Interestingly, long-term holders continue to hoard their Bitcoin, selling it at record-low rates. According to Dylan LeClair, the average on-chain cost basis for long-term holders is $17,825, whereas newer entrants who are cashing out are facing a cost basis of $33,890. So if you’re thinking of selling low, maybe don’t.
Institutional Investors: The Real MVPs of Crypto
While retail investors are sweating bullets, institutional players flexed their muscles throughout 2021. Crypto funds saw net proceeds soar past $9.3 billion with a sizable chunk attributed to Bitcoin. It’s clear these institutional bigwigs aren’t messing around, pulling off 16 consecutive weeks of inflows.
The Bottom Line
So, while Bitcoin might be ending the year with a bit of a fizzle, the adoption of cryptocurrency continues to grow, and the market is proving to be more resilient than a cat with nine lives. Who knows what next year will bring! For now, let’s raise a glass and toast to whatever shenanigans 2022 has in store for us in the crypto world—cheers!
