Boom, bust and stunned: Bitcoin’s year so far

LONDON, June 30 (Reuters) – If you’re a bitcoin investor, your nerves may have taken quite a knock in 2021.

The cryptocurrency’s journey into the investment and commercial mainstream has accelerated, with major financial firms and corporations embracing the emerging assets. read more

Such interest propelled it to an all-time high of just $65,000 in April. But in typically erratic fashion, it’s fallen by nearly half since then.

In the middle of the year, the original and largest cryptocurrency is up about 20% year-to-date. Here are some charts that tell the story of bitcoin’s year so far.

1/Still fledging

Wild price swings have been a defining feature of bitcoin throughout its nearly 13-year lifespan. The first half of 2021 was no different, despite hopes that greater liquidity in the markets and stronger infrastructure would dampen the volatility.

Bitcoin has more than doubled from the start of the year to its all-time high of $64,895 in mid-April, before collapsing by more than half in just five weeks as regulators around the world — especially China — crack down on cryptocurrencies.

In May alone, bitcoin lost 35%, its worst month since 2018. Last week, it fell below $30,000 for the first time since January, briefly negating the gains for the year thus far.

According to JP Morgan analyst Nikolaos Panigirtzoglou, much larger investors also exited the bitcoin market after prices rose in the first quarter, with a shift to gold.

“What we found in Q2 was that bitcoin demand is actually price sensitive,” he said. “Some institutional investors started to exit bitcoin in April… they thought bitcoin prices were too high compared to gold.”

2/BITCOINS OR ALTCOINS?

Bitcoin has made the lion’s share of the headlines so far this year. Still, many of its smaller digital currency rivals – known as the altcoins – have posted bigger gains.

Ether, the second-largest cryptocurrency, has nearly tripled so far this year, supported by a wave of the so-called decentralized financial sector. “DeFi” often uses its underlying blockchain technology to provide financial services without traditional intermediaries such as banks.

Signs of the ethereal blockchain gaining traction among mainstream financial firms have also generated profits.

XRP, the seventh largest coin, has won a similar amount. Other once-obscure coins such as dogecoin, started in 2013 as a joke, have also far surpassed bitcoin, with investors drawn to the prospect of quick profits. Dogecoin is up more than 5,000% so far this year.

3/TRANSFER THROUGH MEME STOCK

Retail investors have embraced bitcoin this year, attracted by stories that it could act as a hedge against inflation and as a future payment method.

Also driving profits is the perception that it is a vehicle for quick profits – a perceived quality shared by another phenomenon in the financial markets in 2021: ‘meme’ stocks, whose value is driven by social media buzz. .

GameStop Corp (GME.N) and AMC Entertainment Holdings (AMC.N), two of the leading meme stocks, rose along with bitcoin in the first quarter, fueled by retail investors with extra cash and time off due to the lockdowns from the coronavirus stimulus.

Still, the assets have since decoupled, with bitcoin’s gains for the year so far surpassed by GameStop – up more than 1,000% – and AMC Entertainment, up more than 2,500%.

“It’s just an extension of free money just going crazy and so I think you can kind of see that rippling in cryptocurrencies,” said Joel Kruger, a strategist at crypto exchange LMAX Digital.

Reporting by Tom Wilson; Editing by Pravin Char

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