On November 10, 2021, Bitcoin reached its all-time high of $68,990 per coin. It was the culmination of a 17-month rally that had taken Bitcoin from under $5,000 in March 2020 to nearly $70,000. The total market cap of all cryptocurrencies exceeded $3 trillion — a number that dwarfed many of the world’s largest companies and most national economies. For Bitcoin believers, it was a moment of vindication. For skeptics, it was the latest speculative frenzy in a series they had been predicting would end badly.
The 2021 bull run was driven by several factors that came together simultaneously. Institutional adoption continued accelerating. Tesla announced it had bought $1.5 billion of Bitcoin in February. Coinbase went public in April at a valuation of $86 billion. Bitcoin futures ETFs launched in October. El Salvador made Bitcoin legal tender in September. Each of these events added legitimacy and fuel to the rally.
Retail interest was at an all-time high. Crypto apps like Coinbase and Robinhood topped the iOS download charts. Reddit’s r/WallStreetBets forum, having made GameStop stock famous earlier in the year, turned its attention to crypto. Dogecoin, boosted by Elon Musk’s tweets, briefly reached $0.73, giving it a market cap near $100 billion. Shiba Inu, an even more absurd meme coin, became one of the top 10 cryptocurrencies. It felt like everything crypto-related was going up.
Beyond Bitcoin, the NFT market was experiencing its own speculative frenzy. Bored Apes, CryptoPunks, and hundreds of other collections traded for millions of dollars. Axie Infinity, a play-to-earn game, had 2 million daily users, many in the Philippines earning their livelihood from it. Gaming token prices exploded. Even abstract ideas like “the metaverse” were enough to drive project valuations to billions.
Then it all began to unravel. Inflation concerns mounted throughout late 2021. The Federal Reserve signaled that it would raise interest rates in 2022. Risk assets — including crypto — started declining. By January 2022, Bitcoin was at $35,000. By June 2022, after the Terra/Luna collapse, it was at $20,000. By November 2022, after the FTX implosion, it was below $16,000. The 2021 peak had marked the top of the cycle. Another crypto winter had arrived, harsher than any before.
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