As we are entering the final quarter of the year, the crypto industry finds itself in an interesting place, not only when it comes to its prices, but also development and some potentially game-changing events.
Carlson Capital's Double Black Diamond Fund posted a return of 3.3% net of fees in August, according to a copy of the fund's letter, which ValueWalk has been able to review. Q3 2021 hedge fund letters, conferences and more Following this performance, for the year to the end of August, the fund has produced a Read More
There is a lot going on in regards to all fields, sectors, and aspects of crypto and blockchain, so without further ado, let’s take a look at some of the most important developments at this time.
In terms of price performance and volatility, there was a lot of it this year, and things are taking an interesting turn as we enter into the final act of 2021. Earlier this year, there was a massive rally that brought a lot of cryptos to new all-time highs. Bitcoin, as pretty much everyone is aware, reached an ATH at $64.8k.
The rally also allowed many other coins to hit their own new records, but the situation took a turn in mid-May, causing the prices to crash. The crash was quite severe, often reducing the prices by 50%, sometimes even more. However, the situation once again started to take a turn for the better in August and early September, only for a secondary price drop to take place in the second half of the month.
At the time of writing, another recovery seems to have started, taking Bitcoin — which previously dropped to $40k — back to mid-$40,000s, currently sitting at $44,706. Ethereum also manages to remain above $3,000 even though it dropped below this level a few times.
The rest of the market is mostly following Bitcoin’s lead, with only a handful of coins trying to decouple from the leading cryptocurrency.
The DeFi Sector
The DeFi sector has continued to thrive in 2021, following up on its explosion which started last year. It saw its own fair share of volatility, but thanks to the fact that many are in it for the long run, price movements did not particularly alter the sentiment around DeFi itself.
There has been a noticeable increase of activity on non-Ethereum chains, primarily Binance Smart Chain, Solana, and alike. These projects offer significantly greater speeds than Ethereum, lower transaction fees, greater number of transactions per block, and other advantages that make them more desirable for developers and users alike.
Of course, due to DeFi and NFT activity, Ethereum itself made moves to improve conditions on its network, with the biggest change so far being the introduction of the concept of token burning. However, as of yet, the effects have not been impactful enough to truly make a change.
One more recent thing regarding DeFi is a growing number of exploits affecting a variety of projects. Hacking attacks against these projects have already resulted in a significant amount being stolen, often involving millions of dollars.
Speaking of major trends, NFTs, or Non-Fungible Tokens, have exploded in 2021, similar to how DeFi exploded in 2020. The NFT sector started attracting everyone, including celebrities, major companies, sports stars, and more.
It also spread from Ethereum to every other development platform in the industry, so much so that even Bitcoin — known for being only a distributed ledger, and not a development platform like Ethereum — will soon be getting smart contracts due to Dfinity’s project Internet Computer, and its ambition to include BTC in the growing world of smart contracts.
NFTs have been skyrocketing in terms of price, but also creativity. A few examples of some of the more interesting projects include the likes of CowboyZombies, Sneaky Vampire Syndicate, and CrypToadz.
CowboyZombies is an upcoming game that features cowboys/cowgirls vs zombies, as the name suggests. The project hired expert developers from all over the world, many of which are quite well-known. It also has a very well designed UI from what can be seen right now, and it will feature 4 types of zombies, as well as 5 different classes of cowboys. In later expansions, the project also plans to introduce new characters. The game will have its own NFTs, as mentioned, and one more feature that makes it stand out is the fact that it is using a Shoot-to-Earn model, rather than Play2Earn, like others before it. Right now, the project’s team is preparing to hold a presale that will take place in early October. So, it is safe to say that we are looking forward to seeing how it performs, given its unique gameplay but familiar elements.
Continuing with the theme of the undead, there is also Sneaky Vampire Syndicate — another NFT project that features 8888 unique vampires, professionally designed, and meant to live out their eternity on the blockchain.
And, finally, as a change of pace, there is CrypToadz — a project featuring small amphibious creatures that “roam the swampy basin of what was formerly known as Uniswamp.” The project says that it was made with love by a number of skilled developers and artists, and this can really be seen in the design and dedication to creating countless different CrypToadz which make for rather interesting collectibles.
Finally, let’s talk about crypto regulations. In the US, the situation is not looking too different than before, other than the fact that the Biden Administration made a number of changes. The US SEC’s new chair, Gary Gensler, is quite well acquainted with crypto, given that it taught a crypto course. However, he is by no means a crypto proponent, so the industry’s hopes of seeing an ally in him have already been abandoned.
Worse still, it is rumored that the Biden administration has nominated a very anti-crypto lawyer to be the next Comptroller of the Currency — Saule Omarova. The only positive thing here is that Omarova is equally against big banks and banking as we know it, meaning that the banking sector is likely to lobby quite strongly against her getting the job. So, while the battle is not yet lost, things are not looking great for the crypto industry in the US.
On the bright side, Bitcoin has officially become legal tender in El Salvador, while Cuba made cryptos a legal payment method last week, so the situation in other parts of the world is seemingly improving.
The crypto industry continues to evolve and develop around the world, and within itself. Some regions are friendlier towards it than others, that much is for certain, but overall, its potential continues to grow. NFT and DeFi sectors are thriving, and while the prices are still struggling to grow, they remain significantly higher than they were prior to the summer of 2020. New opportunities continue to emerge, and so we will continue to carefully monitor it and report on any major occurrences.