The 2021 crypto bubble: what pushed prices up and what ended the run

How far did crypto prices climb in 2021?

Bitcoin hit a fresh record near $42,000 on 8 January 2021 and surged above $44,000 on 8 February. On 16 February it traded above $50,000 for the first time, and by 12 April it was back above $60,000. On 17 October it neared a record of $63,000, so the year held 2 peaks, one in spring and one in autumn. Both peaks came after the price had already passed $50,000, which shows how a market can keep climbing after a first round of records.

The steps came quickly. From the January record to the April level the price gained more than 40% in about 3 months. The pace of the early months is the acceleration marker of the crypto warning signs, and the double peak is a reminder that a bubble can leave a first top and still climb.

Which institutional steps lifted crypto prices in 2021?

The record lists steps that widened the audience. On 8 February 2021 Tesla bought $1.5 billion in bitcoin and said it planned to accept it as payment. In April, Coinbase prepared for its public debut while Bitcoin traded above $60,000. On 9 June 2021 El Salvador became the first country to adopt bitcoin as legal tender. Each of these dates is documented in the public record of the period.

Each step carried a message that crypto was entering the mainstream, and the message drew attention. Yet a step is not proof of lasting demand. Ask what each step added in real use: payments completed, savings held, companies serving customers. Where the answer is attention alone, score the story-over-number marker as present.

How did attention and celebrity move the crypto price in 2021?

On 29 January 2021 Bitcoin spiked 20% after Elon Musk added the #bitcoin tag to his Twitter bio. That single event shows how a short signal from a famous account can move a large market within hours, and it shows how thin the link between price and use can become when attention leads.

The same channel works in reverse. On 13 May 2021 Tesla said it would no longer accept bitcoin over climate concerns, and Bitcoin dropped about 12%. On 22 July Musk said Tesla would likely accept it again. A price that follows posts and announcements is a price that depends on the audience, which is marker 6 of the warning signs, paid and borrowed enthusiasm.

What did the May 2021 plunge reveal about crypto leverage?

On 19 May 2021 Bitcoin plunged 30% to $30,000 at one point, then recovered to $38,000. A move of that size inside a day, followed by a partial recovery, is the signature of forced selling: positions closed automatically when prices fell below their margin, and buyers returned once the selling ended.

The plunge was an early warning that the market carried borrowed money. It did not end the run, since prices went on to new records in the autumn. Warning signs work like this: they shift the odds and leave the date open. A reader who logged the May plunge as evidence of leverage had a stronger reading a year later.

How did the 2021 crypto bubble fall through 2022?

On 21 January 2022 Bitcoin fell below $35,000. On 12 May more than $200 billion was erased from the crypto market in a day, and Bitcoin fell below $27,000. On 13 June it dropped to its lowest level since December 2020, and on 18 June it slumped below $20,000. By 28 November 2022 it traded at about $16,216.

The fall came in steps and each step had a cause in the record. Rising stress at one firm reached others within days. The total decline from the highs above $60,000 to the 2022 low exceeded 70%, a drawdown that tests every treasury plan. Compare that depth with the volatility your own plan can absorb.

Which lender failures ended the 2021 crypto bubble run?

The record shows lenders failing in sequence. In May and June 2022 the TerraUSD stablecoin and the lender Celsius Network collapsed. On 13 June Celsius paused withdrawals. On 27 June Three Arrows Capital defaulted on a $665 million loan, and it entered liquidation on 29 June. Each failure raised doubts about the next.

This chain explains what ended the run: a break in confidence among lenders who had financed each other. A lender that pauses withdrawals tells every depositor to check their own exposure. Read the chain as a case of the leverage and lender mechanisms, and ask of any platform you use who it lends to and who lends to it. The pattern echoes the lender chains of earlier crises, where doubt about one firm spread to every firm with a similar structure.

How can you use the 2021 crypto bubble in your own review?

Take 5 checks from the case. Did institutional steps add real use? Did attention lead the price? Did a sharp plunge show leverage? Did lenders depend on each other? How deep a drawdown can your plan absorb? Answer each for today’s market and date the answers. This page is general information, not investment advice.

The EQOS Asia method page explains how several dimensions combine into one score, and the EQOS Asia contact page books a 30-minute call to apply that method to your exposure. The 2021 record supplies the pattern, and your own figures supply the reading for today.

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About the author

Stéphane Jambu

President, EQOS Forecast Asia

Stéphane Jambu leads EQOS Forecast Asia and works as a consultant in e-commerce, search visibility, and AI. LinkedIn profile