The crypto market from 2021 to 2024 has made great strides, thanks to changes in many factors such as market sentiment, legal regulations, institutional acceptance, and blockchain technology advancements. From a strong boom in 2021 to a more mature and stable market in 2024, investors, technology, and legal regulations have all played a role in changing the face of the crypto industry.
1. Market Psychology and Maturity
2021: The crypto market recorded explosive growth and many notable price increases, especially Bitcoin and Ethereum reaching historical highs. In addition, retail and institutional investors flocked to the market, causing an explosion of assets such as meme coins (e.g. Dogecoin, Shiba Inu) and NFTs. This fueled an unprecedented wave of speculation, with tokens rapidly increasing in price due to excitement and expectations.
2024: Market sentiment has become more cautious and stable, with less excessive speculation. Investors are mainly interested in proven projects with clear foundations and utilities, instead of chasing short-term trends. The market has reached maturity, with few peaks and lows, reflecting a psychology leaning towards stability and sustainability.
2. Legal Regulations
2021: Regulatory uncertainty remains high, as countries take different approaches to crypto. Some countries are crypto-friendly, while others impose strict bans, like China. Regulatory policies are still in the testing and exploration phase, leading to inconsistency globally.
2024: Most countries have established clearer regulatory frameworks. Major economies such as the US and EU have implemented regulations on exchanges, stablecoins and digital assets. This increases transparency and reduces the risk of fraud, but also increases compliance costs for exchanges and crypto-related service providers.
3. Acceptance by Organizations
2021: Institutions begin investing in Bitcoin as a hedge against inflation, and several major companies announce holdings of Bitcoin or accepting crypto payments. This is the first step in crypto's penetration into traditional finance.
2024: Institutional adoption has expanded and deepened. Many traditional financial institutions now offer crypto-based financial products, including ETFs (exchange-traded funds) and asset custody services. Several central banks have included crypto in their national asset portfolios, demonstrating the growing position of crypto in the financial system.
4. Blockchain Technology and Innovation
2021: Ethereum is the main platform for DeFi, and Layer-2 solutions like Polygon start to gain traction due to their scalability. Competing blockchains like Binance Smart Chain, Solana, and Polkadot also emerge as alternatives.
2024: Layer-2 technology has made great strides, solving problems with transaction speed and costs. Prominent Layer-1 blockchains such as Ethereum, Solana, and Cardano are now not only improving in scalability but also developing interoperability with each other. Blockchain applications have also been deployed in real-world areas such as supply chains and finance, improving business processes and reducing operating costs.
5. Central Bank Digital Currencies (CBDCs)
2021: CBDCs are mostly in the experimental or research stage, with very few countries actively testing.
2024: Several countries have implemented CBDCs or are in advanced stages of implementation, which will impact how stablecoins are used in domestic and international transactions. The popularity of CBDCs will help reduce the dependence on private stablecoins in traditional transactions.
6. Stablecoins and Decentralized Finance (DeFi)
2021: Stablecoins like USDT and USDC are the main tools in DeFi transactions, focusing on lending and yield farming. However, the transparency and security of stablecoins remain controversial.
2024: With increased regulation, stablecoins have become more transparent and have clear collateral. The DeFi ecosystem has evolved into a more mature sector, with institutional participation and strict supervision, helping to reduce risks and ensure user safety.
7. Environmental Impact and Sustainability
2021: PoW (Proof-of-Work) mining raises major concerns about its environmental impact, especially for Bitcoin.
2024: The crypto industry has shifted towards sustainable practices, with Ethereum switching to PoS (Proof-of-Stake) marking a turning point in its consensus mechanism. Many new blockchains also prioritize environmentally friendly solutions, and green crypto initiatives become popular.
8. Crypto in Finance and Mainstream Payments
2021: Some companies have accepted crypto payments, but application is still limited in mainstream finance.
2024: Crypto integration in payments and finance has become more widespread, with major banks and payment processors offering crypto services. Crypto lending and borrowing options are now more deeply integrated with traditional finance, increasing convenience and reducing the separation between crypto and other financial services.
Conclude
2024 marks a major turning point for the crypto market. The market is no longer the risky and speculative place it was in 2021, but has evolved into a more stable and mature ecosystem, supported by financial institutions and regulators around the world. These changes bring sustainability and create a solid foundation for the crypto market to develop long-term and sustainably in the future.