From unpredictable price movements to the relocation of miners from China, Bitcoin (BTC) has had a year of ups and downs.
Despite the price drops at the end of 2021, Bitcoin (BTC) managed to end the year with a gain of more than 60%, and for the second year in a row, outpacing all other asset classes in the major leagues.
The biggest cryptocurrency started off on the right foot in 2021, routinely setting new all-time highs before a big fall in the middle of the year due to China’s crackdown on anything crypto and the expulsion of miners to other countries of the world. On news that the US had finally approved its first Bitcoin (BTC) Futures ETF, Bitcoin (BTC) extended its bull run early in the fourth quarter and yet again marked another new high of $69,000.
Bitcoin (BTC), on the other hand, has been on the decline since then, losing more than $20,000 by the end of 2021 and closing at around $48,000. Despite this, it managed to enhance its USD worth by 62% for the entire year.
Thus, even though it had a somewhat slow return, the biggest cryptocurrency outpaced all of the major asset classes, such as crude oil with 58% rise, the S&P 500 which increased by 29%, NASDAQ which increased by 23%, and the US Dollar Index or DXY which incurred a 6% rise.
Surprisingly, gold, which is widely regarded as the ideal hedging instrument in times of economic instability, fell by 6% last year.
In 2020, Bitcoin (BTC) outperformed all other asset classes as well. Its domination was far greater back then, with an annual increase of 281%, relative to 42% for NASDAQ and 24% for gold.
As previously stated, China pushed its cryptocurrency ban a step further last year by outlawing all mining activity. This had a significant and instantaneous effect on the world’s largest blockchain network, as it was the country with the largest part of the hash rate of Bitcoin (BTC) at the time.
The measure dropped by over 60% in a matter of weeks, causing certain temporary difficulties such as block building delays. However, miners rapidly sought other residences, and the mining difficulty mechanism performed its task by making the necessary adjustments and allowing the network to resume normal function.
Furthermore, the hash rate rebounded in the months that followed, reaching a new all-time high in some weeks prior.
After the China crackdown, the countries that stepped up to host mining operations were the United States and Kazakhstan that are the foremost countries holding the percentage of the global hash rate of Bitcoin (BTC), with the US accounting for 35% and Kazakhstan accounting for 18% of the hash rate.