The final quarter of 2021 was just as dramatic as the others, if not more so. The year ended with a bang, with Mt. Gox victims finally seeing some light at the end of the tunnel, a Bitcoin ETF finally being awarded (sort of), and the end of the Kleiman vs Wright saga.
The concluding part of our four-part review of crypto in 2021 looks at what happened between October and December, so you might want to read parts 1-3 to catch up on the rest of the year’s action before diving into Q4. Snorkel ready? Then off we go.
October
Bitcoin began the quarter bouncing from a crucial $42,000 support, buoyed by news of a potential Bitcoin futures ETF being awarded. Within three weeks it was back at the previous high of $65,000, something few people could have predicted back in July, stoking fears of a double top as it was rejected.
October began with some good news from the notably pro-crypto payment processor Visa who announced plans for Universal Payment Channel, an interoperable payment processing platform that would see digital assets able to be processed alongside fiat currencies. The news followed trials with the USDC stablecoin, with Visa likely to use the stablecoin in forthcoming pilots of the channel.
Not to be outdone, at the end of October Mastercard announced that it too was working on ways to incorporate digital assets into its network, saying that it wanted to “have a role to play to facilitate consumers wanting to do” transact in cryptocurrencies.
Another payment processor boarding the crypto train (or re-boarding) was MoneyGram who announced a partnership with Stellar and Circle that would see USDC coins being transferred on the Stellar network. This news came eight months after MonyeGram ditched its ill-fated deal with Ripple, which saw the xRapid creator paying MoneyGram for the company to use its service.
The good news continued for crypto in October as Mt. Gox victims ended a seven-year wait and voted overwhelmingly for the latest rehabilitation plan to be approved. This cleared the biggest hurdle, with payouts in 2022 suddenly a distinct possibility.
The Bank of England showed just how out of touch it is with itself this month when its deputy governor Sir Jon Cunliffe contradicted a report the bank had released just delays earlier. The report said that a collapse of the cryptocurrency system would have a minimal impact on the British economy but Cuniffe disagreed, comparing Bitcoin to the American subprime mortgage crisis that led to the 2008 global financial crash. Brilliant.
Tether was back in the news in October when a Bloomberg investigation revealed something that almost everyone already knew – it couldn’t back its reserves with cash. This was followed two weeks later by Tether settling with the CFTC for $41 million over an investigation into Tether lying about its backing between 2016 and 2019, bringing to an end its investigations by the U.S. authorities…for now.
By far the biggest news this month was the approval of a Bitcoin ETF…kind of. ProShares was granted a Bitcoin futures ETF and launched on October 19 to record-breaking volume, which many saw as the opening of the floodgates. However, while the news helped Bitcoin break its all-time high and hit $67,000 in the days after the launch, the holy grail for Bitcoin fans remains a spot Bitcoin ETF, which unfortunately seems as far away as ever.
November
November saw the start of the blockbuster Kleiman vs Wright trial, a trial which threatened to set Wright back almost a trillion dollars based on his own inflated valuation of the intellectual property in his holdings. The start of the case coincided with a podcast series on the Craig Wright saga, Dr Bitcoin – The Man Who Wasn’t Satoshi Nakamoto.
Constitution DAO, a decentralized collective established to raise money to buy an original copy of the 1776 constitution, raised over $40 million in the space of a few days but was beaten to the punch by Ken Griffin, the chief executive of the hedge fund Citadel. The movement made news around the world, and raised the profile of DAOs in the process.
November also saw the one millionth ETH burnt thanks to the implementation of the EIP-1559 protocol. The protocol, which was implemented back in August, radically changed the way that Ethereum transactions took place and meant that ETH was burned with every transaction, with the one million figure passed on November 24.
Mt. Gox trustees enjoyed November thanks to the signing of a final and binding contract to repay them a portion of what they lost when the exchange went bust in 2014. After years of wrangling and creditors holding out everyone finally agreed, meaning that payouts can take place in 2022.
Bitcoin saw its first core upgrade since 2017 this month when someone found the Taproot floppy disc, shoved it in and pressed play. The upgrade increased security on the protocol while also allowing for smart contract applications to be created on its blockchain, although how appetising that prospect will be will only be known over time.
The Bitcoin price in November benefited from October’s Bitcoin ETF, hitting an all time high of $69,000 on November 9 before embarking on a downtrend that would eventually see it hit $42,000 ini December, with many predicting that the bull run was over.
December
December started with a verdict in the Kleiman vs Wright trial. Wright was ordered to pay W&K Info Defense $100 million for conversion, a kind of underhand enrichment, but managed to avoid a 12-digit hammering. Wright’s supporters claimed it concreted his claim to be Satoshi Nakamoto but the judges had explicitly stated that the trial was not about this and the jury didn’t rule on it.
December might as well have been called hack-cember, with three hacks taking place in just the first two weeks. First BadgerDAO lost $120 million to hackers, just days before BitMart went one better and was taken for $200 million. A week later AscendEX saw $77 million taken from its hot wallets in what was the bloodiest month for crypto exchanges in the whole year.
Facebook’s (sorry, Meta’s) Libra cryptocurrency project (sorry, Novi) which is operated by the Libra Association (no, Diem…or Diem association?) launched on…hold on, let’s start again. The cryptocurrency that used to be called Libra that was announced in 2019 by what used to be called Facebook finally saw the light of day this month when USDC payments on its network through WhatsApp were trialled in the U.S. The system makes sending money as easy as sending a message and so actually has the potential to make payments easier than ever.
With winter rallies typical in Bitcoin’s history, there was hope for a repeat of November after Bitcoin rallied to $59,000 on December 1. However, with various governments suggesting they were about to start reeling in spending following two years of largesse, the price endured a quick correction to $42,000, ending the prospect of a 2013-style double bull run. The price fluctuated between $46,000 and $52,000 for the rest of the month, ending the year at $47,000, which was suggestive enough of a hope that 2022 would see a continuation of the bull cycle.
More of the Same for Crypto in 2022?
2021 has been another year in the madhouse for crypto lovers, with all time highs matched by spectacular crashes. The adoption of Bitcoin by El Salvador has been a development that has the potential to take Bitcoin to places it has never been before, while trends like the metaverse and NFTs are the perfect gateway drugs to crypto.
Of course no one knows what is in store for cryptocurrency in 2022, but if it’s anything like 2021 then this rollercoaster isn’t stopping anytime soon.
Enjoy the ride…and buy the dip.
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