2021: A Crypto Odyssey

Opinions

Written by
B2C2

Published

December 22, 2021

Another year has gone by. And quite a year it has been, filled with uncertainty and volatility. While there is much yet to be seen as we venture into a new year, one thing is for sure: B2C2 has your back.

Through thick and thin, through all market conditions, B2C2 continues to price, trade, and settle with you. Let's explore what that looked like in 2021.


Market Review

The crypto world changed in 2021. Bitcoin began the year under $30,000 and at the time of writing is up over 60% to $47,000. And even those incredible numbers obscure the high of $63,000 in April and the ATH of $67,500 in November. Bitcoin's meteoric rise in 2021 brought the whole industry with it. Yes, we have had bull markets before, but this time is different. The reason is down to two phrases you have likely learned to either love or hate this year - institutional adoption and transitory inflation.

Let's start with institutional adoption. Banks, asset managers, and traditional corporations have embraced cryptocurrency in 2021 like never before. Yes, MicroStrategy started buying bitcoin in 2020 and yes, Tesla likely made its first purchases at the end of the same year. But MicroStrategy accelerated accumulating bitcoin in 2021 and now holds "approximately 122,478 bitcoins" - a whopping $6 billion. Similarly, Tesla's "digital assets totaled $1.26 billion." 2021 even saw banks dip their toe into crypto with Morgan Stanley offering crypto ETF products to its wealthy clients. Goldman Sachs offered crypto derivatives to its investor clients and JPMorgan signalled that they may no longer be hardline bitcoin sceptics, just to name a few.

And now let's consider "transitory inflation". This theme is not so clear cut; it requires quotation marks as Fed Chairman Jerome Powell's now-famous turn of phrase has been questioned by both bitcoin believers and non-believers. There is inflation, sure. But is it really transitory? The international COVID health crisis stormed into 2021 showing no sign of slowing, with governments and central banks around the world using monetary and fiscal stimulus respectively to keep their economies afloat. Such stimulus was arguably necessary to ward off economic depression and further hardship for citizens but came at a cost. As vaccines were rolled out and the virus showed signs of abating, inflation has risen at a dramatic pace: 12-month US CPI stands at 6.8% and is "the largest 12-month increase since the period ending June 1982" according to the US Bureau of Labor Statistics. Bitcoin, with its cryptographically limited supply, has been boosted by this unbelievable (yet also very believable) rate of inflation. Consumer price increases have been the tide that has lifted all crypto boats this year.


By Chris Dick, Quant Trader at B2C2


Spot and CFDs


Our core spot product continues to go from strength to strength as we onboarded close to 100 new clients. During the summer, we rolled out wholesale changes to our pricing engines and risk systems, allowing us to significantly tighten our pricing on large clips, resulting in a  doubling of average trade size.



We added support for five new coins including DOT, LINK and DOGE during 2021. Unsurprisingly, we have seen BTC dominance in our market volume drop from 68% in January this year to 46% today. In the new year, we plan to support KSM and SOL to begin with and, as always, will seek client direction on further additions to our core range.

Since the beginning of 2020, our systems have generated and stored over 2 trillion unique price points which have been streamed to our clients to execute against. Over 75% of these were in 2021.

Our system uptime increased to over 99.998% and this stability ensures our ability to provide liquidity through all market conditions - such as the May 19th ‘flash crash’ when it was needed most. Our reputation has been built on our client focus and we’ll continue to focus on our white-glove service we provide.


Funding - For All Key Pairs


To our European and APAC Clients,

Our funding desk has grown significantly over 2021, as we’ve onboarded over 60 new funding clients in the APAC/EMEA regions. We also added two new screens to our GUI: 'Axes' showing our currencies with the best rates, and 'Rates' to allow clients to view two-way loan quotes for all currencies on a single page. Our connectivity was also enhanced as we launched our API solution alongside the GUI screen.


Options

In Q4 we also launched our options product, enabling counterparts to more precisely meet their hedging and investment needs. We kicked off by offering BTC/USD and ETH/USD OTC vanilla options, with bespoke expiry dates (out to three months) and strikes. As we round out the year, we continue to build upon our product offering, and are working on implementing first NOP margin treatment in addition to options on DOT/USD & BTC/JPY.


NDFs

Our NDF launch on November 10th was a big hit! By offering NDFs as a bank-backed company, we believe we have a first-mover advantage, paving the way for traditional financial institutions to enter the $3 trillion cryptocurrency market.


Tech

Not only was 2021 a big year for new product launches but it was also a year in which we optimised our tech stack and tripled the team.

This year we continued our search for the best and brightest technologists, more than tripling our Technology team headcount. Though growing in size, we pride ourselves on maintaining our quality, agility and innovation allowing us to quickly solve problems and provide solutions that address our clients’ needs.

These core attributes have enabled us to deliver new product launches in a fraction of the time it would take in TradFi, giving us an edge in a constantly evolving environment.

We have also re-doubled our focus on improving the stability of our platform which underpins our technology stack, ensuring we remain best in class. This was evident on May 19th when we saw unprecedented volumes with 723 net settlements filled, and over one million trades executed while maintaining continuous price streaming throughout the volatile day with no downtime.

Huge amounts of work have been devoted to building a v2 tech stack which will effectively eliminate rate limiting, massively reduce and stabilise execution latencies, enable regional execution hubs, and allow us to offer near zero reject rates. Watch this space for our roll out plans in Q1 / Q2 2022.

New Hires 

2021 has seen the  B2C2 team double to 115 people globally and we have continued to attract talented individuals across all core functions.  Notable hires include: Nicola White, President of B2C2 USA; Dean Sovolos, General Counsel - Americas and Head of Regulatory Affairs; Brad Nagela, Global Head of Options; and Anne-Maria Rothenstein, Chief Compliance Officer.


Events

We’ve been here, there, and everywhere in 2021, and we’ve very much enjoyed finally shaking hands/bumping elbows with so many of our colleagues and clients, both old and new! Check out some of our featured events: 



Thank You!

All in all, the crypto market has ended the year in a significantly stronger place than where it started. The new year is set to bring further investment into crypto derivatives (both options and forward products) as well as yield enhancement and debt tokens. Our industry even has a new name, Web3, as a sign of its maturity and ubiquity. We are hugely excited for what 2022 has in store!

Our ability to match our services to your needs relies on your feedback and suggestions for improvements. We are grateful for it. You can contact your account manager or email us at feedback@b2c2.com.


The B2C2 Team



About B2C2

B2C2 is the counterparty of choice in the institutional crypto markets. Founded in 2015 and headquartered in the UK, with offices in the Americas, Europe and Asia Pacific, B2C2 is trusted by banks, brokerages, exchanges and fund managers globally to provide 24/7 liquidity. In 2020, B2C2 was acquired by Japanese financial group SBI Financial Services. B2C2 OTC Ltd. is authorised and regulated by the UK’s Financial Conduct Authority (FRN 810834). For more information, please visit https://www.b2c2.com

Next article

Receive our news & commentary

Follow our social channels