Market Wrap Year-End Review: Bitcoin Starts Off in a Frenzy

In this first episode of Market Wrap’s review of crypto markets in 2021, we recall the powerful rally that ushered in the new year. Retail traders piled in, even as some institutional investors sounded warnings about rampant speculation.

AccessTimeIconDec 20, 2021 at 9:09 p.m. UTC
Updated May 11, 2023 at 4:35 p.m. UTC

Hello, Market Wrap readers! During the final two weeks of 2021, we’re using this space to recap this year’s most dramatic moments in cryptocurrency markets – and highlight the key lessons from this fast-evolving corner of global finance. Over a series of eight posts starting on Dec. 20 and running through Dec. 30, we’ll recap what shook crypto markets this year. (For the latest crypto prices and news headlines, please scroll down.)

In our first episode today, we show how, even as bitcoin’s price soared in the early days of the year, some savvy institutional investors were already growing cautious on cryptocurrencies after a wave of buying during the fourth quarter of 2020.

Bitcoin (BTC) started 2021 on a strong note, gaining nearly 40% during the first week of January and surging to a new all-time high around $40,000.

But not everyone was convinced the rally could be sustained.

Retail traders piled in, while some institutional investors started to raise concerns about rampant speculation.

As early as December, Jeff Dorman, chief investment officer at crypto asset management firm Arca, had told CoinDesk that “there is a good chance that actively managed hedge funds and passive indexes built around high allocations to bitcoin have a very short shelf life.”

Indeed, a few funds established bitcoin positions but did not ”hold on for dear life” – a commonly misconstrued back-formation of the crypto-jargon term “HODL,” which originally appeared as a fast-typing (or maybe drunk?) person’s attempt to type the world “hold.”

Bitcoin quickly advanced from $30,000 to $40,000 within the first five trading days of January – an impressive gain that fueled even more market excitement. The sharp price rise in BTC contributed to a $1.1 billion profit for Ruffer Investments, a U.K. based investment management firm, in just five months. By June, Ruffer stated that a “speculative frenzy” in cryptocurrencies forced the firm to exit its bets on further gains.

And Ruffer was not alone in its concern about market exuberance. Volatile price swings caused other institutional investors to doubt a prolonged crypto rally.

Sure enough, by the end of January, bitcoin had declined about 30% from a January high of near $40,000. Shortly after the price drop, Scott Minerd, chief investment officer at the Guggenheim global investment firm, said he didn’t believe bitcoin’s investor base was “big enough” or “deep enough” to keep prices at current levels.

“Right now, the reality of the institutional demand that would support a $35,000 price or even a $30,000 price is just not there,” he said.

Scott Minerd, chief investment officer of Guggenheim Partners. (Getty Images)
Scott Minerd, chief investment officer of Guggenheim Partners. (Getty Images)

At the same time, a JPMorgan analyst said a bearish outlook could be triggered if bitcoin failed to claw its way back over $40,000, leading to steeper losses over the ensuing weeks.

Demand from institutional investors was said to have been the cause for the astronomical rise of the top cryptocurrency by market capitalization in the fourth quarter of 2020, when Paul Tudor Jones, Stanley Druckenmiller and MicroStrategy said they had jumped into the market.

As coming installments of this series will show, the rest of 2021 would be defined by market-moving tweets from electric-vehicle billionaire Elon Musk, rapid price rallies in barely-heard-of alternative cryptocurrencies, a fresh wave of corporate buy-in to the legitimacy and potential of digital assets, plenty more moments of extreme volatility – and, eventually, a new all-time high of around $69,000.

Latest prices

(As of 21:00 coordinated universal time, or 4 p.m. ET)

  • Bitcoin (BTC): $47,080, +0.5%
  • Ether (ETH): $3,936, +0.3%
  • S&P 500: -1.1%
  • Gold: $1,790, -0.8%
  • 10-year Treasury yield closed at 1.424%, up 0.017 percentage point

Relevant news

CoinDesk 20

Here are the biggest gainers and losers among the CoinDesk 20 digital assets, over the past 24 hours:

Biggest gainers:

Asset Ticker Returns Sector
XRP XRP +4.3% Currency
Stellar XLM +0.5% Smart Contract Platform

Biggest losers:

Asset Ticker Returns Sector
Algorand ALGO −4.7% Smart Contract Platform
Internet Computer ICP −4.2% Computing
Cosmos ATOM −3.5% Smart Contract Platform

Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.


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CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Damanick Dantes

Damanick was a crypto market analyst at CoinDesk where he wrote the daily Market Wrap and provided technical analysis. He is a Chartered Market Technician designation holder and member of the CMT Association. Damanick is also a portfolio strategist and does not invest in digital assets.

Bradley Keoun

Bradley Keoun is the managing editor of CoinDesk's Tech & Protocols team. He owns less than $1,000 each of several cryptocurrencies.