Wondering whether a cryptocurrency will tease, plunge, or escalate investors along an uncertain path for the predictable future? Which kind of crypto will be the chalk horse in 2022? Will guidelines play a more important role? Will Bitcoin continue to be unstable?
Well, there are numerous predictions from analysts concerning the status of crypto.
With acceptance from Goldman Sachs, cryptocurrency continued to be popular in 2021. In October 2021, the first United States exchange-traded fund related to Bitcoin came into existence. In April 2021, Coinbase (the first leading crypto firm to go public) made a debut.
Bitcoin, the much-acclaimed crypto, had a favorable year. Since the beginning of 2021, the digital currency has risen by around 70%. This has driven the overall crypto business to a combined valuation of $2 trillion.
Looking at the status of crypto, if the past year is an indicator, investors will experience an exciting ride. Read on to know more!
Key highlights of crypto for 2022
The cryptocurrency space has turned too vast to ignore. Following are the reasons why finance professionals should understand crypto better:
- India has experienced a growth rate of nearly 641% in the crypto space over the previous one year.
- The increasing popularity of some crypto exchanges, such as CoinSwitch Kuber, prompted the south and central Asian region to emerge as one of the booming crypto markets.
- The crypto market stood at around $600 billion, growing by 706%.
- In recent times, almost 220 million individuals have traded in these assets actively.
- The DeFi ecosystem marked a huge Indianised hike, nearly 59% more than Vietnam and Pakistan.
- Globally, DeFi platforms raised around 17 billion dollars from institutional investors.
Things to consider while investing in crypto
As several individuals have shown interest in cryptocurrencies, demand for these assets is skyrocketing. However, investors must consider the following factors before parking their money into crypto:
1. Recognizing the appropriate crypto
Firstly, investors need to know that the assets with market valuation touching the ceiling may not grow any further or at a similar pace. Hence, they need to recognize the potential coins that can go up anytime.
2. Checking validity
Individuals should avoid investing in projects that got introduced to teams without any backing. Rather, they must choose projects that have been in business for at least 1 to 2 years.
The projects that were there during the tough phase for the crypto sector in 2018-19 promise more credibility. Basically, those projects that have passed through the difficult phases and are still in the game are likely to be less risky. Scammers usually arrive during peak times.
3. Understanding the value of projects
Knowing a project’s value proposition is equally significant. Investors must check the purpose and history that a project promises. They should understand what gap a project is trying to identify and fill. Besides the purpose, investors must find out the project’s uniqueness.
4. Conducting proper research
Investors must do proper research and analysis and then select the coins to invest in. One who only invests based on hearsay may not figure out the market scenario and eventually lose.
5. Assessing the risks
It is always better to evaluate the risk factor before opting for a project. For instance, DeFi (decentralized finance) might witness outstanding growth now. However, that does not denote that all the decentralized finance projects are worthy. Investors should know the technology related to it and how sturdy it is.
6. Planning for long-term
Investors should think for the long-term and buy in the dip. For instance, investors who parked their money in Bitcoin at 19,000 USD at the peak of the bull run of 2017 witnessed their investments falling 75-80%. Moreover, the believers relied on the investments, gaining over 300% on these investments post three years.
Top 8 crypto predictions in 2022
Here are the crucial cryptocurrency predictions for investors and crypto enthusiasts:
Crypto will be essential for law enforcement investigations
There exists an infamous belief that crypto is a facilitator of money laundering and illicit activities. However, as per reports, only 0.15% of crypto deals are linked to illicit activities in 2021.
The anonymous and untraceable transactions in crypto are an issue, but they can fix many types of cybercrime. Law enforcement professionals can use it for investing in criminal activities where crypto has been in use with the help of blockchain technology. Further, cryptocurrency-based illicit activities will continue.
However, the rise in business cybersecurity investment, law enforcement education, and global adoption, will make crypto a vital tool to combat those crimes.
NFTs will remain in the cryptocurrency market
NFTs (non-fungible tokens) find presence in ticketing, events, community platforms, and digital art. Related assets transform the interaction between the real and digital world.
NFTs have successfully captured the target market, including Ethereum smart contracts linked to the technology fetching over 43 billion dollars in 2021. The NFT boom had been a global aspect because no one zone had made up for above 40% of web visits (monthly) since March 2021.
This market will flourish in 2022 since many more video game makers, celebrities, creators, and artists will introduce collections for their fans. Further, several use cases have not been invented yet.
Governments will be more supportive of crypto
In 2021, the crypto industry entered the mainstream with commendable growth. This caught the attention of many countries which initiated the management of the cryptocurrency framework to regulate it better.
Three of the US Congress members, namely Cynthia Lummis, Tom Emmer, and Jim Himes, are in favor of cryptocurrency and trust its potential and promise. This blockchain has eliminated medieval ways of handling things around ownership, contracts, and titles.
The growing support from US legislators for these assets will firmly mean encouragement. In 2022, more countries will promote cryptocurrency as they consider it as an option to generate jobs and other sorts of value.
The 1st spot Bitcoin ETF can get approval
According to some crypto investors, the 1st spot Bitcoin ETF (exchange-traded fund) in the U.S. can get approval in 2022. With this, investors can have direct exposure to cryptocurrency. The SEC permitted the launch of the ProShares’ Bitcoin ETF in 2021. It only checks Bitcoin's future contracts.
At present, the market is mature and large enough to promote it. Thus, analysts predict that a spot Bitcoin ETF will get approval.
Whoever designs the first well-built app will win
The crypto space comprises the DeFi world, cryptocurrencies, and NFTs, each having its own considerable and unique market. However, the purpose is to introduce a super app or a centralized platform wherein users can connect with all these three worlds together.
Many of the greatest companies in this sector are working on it. As such, the company which will be the first one to create a super app will get an edge over its peers. Users will highly prefer its well-built space.
Flourishing crypto developments, namely DAOs (decentralized autonomous organizations) and DeFi (decentralized finance) are expected to be the greatest growing segments of crypto. DAOs can emerge as the latest internet community, while DeFi wishes to recreate regular financial products without intermediaries.
In 2021, deposits into decentralized finance services exceeded $200 billion and demand is likely to surge in 2022. Investors seeking profits in smaller segments of crypto will wish to see Cardano coins, Polkadot, Solana, and Ethereum in 2022.
DeFi is a part of a wider trend, namely Web3. According to supporters of Web3, a few entities such as Meta, Alphabet, Apple, and Amazon control online platforms. Web3 boasts of a decentralized, new version of the internet incorporating non-fungible tokens and blockchain. However, eminent entrepreneurs such as Jack Dorsey and Elon Musk remain skeptical.
Bitcoin will either underperform or outperform the S&P 500
Even with the onset of COVID-19, both the benchmark index and Bitcoin showed splendid gains in 2021. The S&P 500 rose nearly 27%, while Bitcoin jumped 66%. Bitcoins have performed as risk-on assets and they will intensify the stock market behavior.
If the volatile stock market shrinks in 2022, Bitcoin will likely underperform. However, if the market rises, you will again witness a bullish run of the cryptocurrency.
Regulators may pay close attention to cryptocurrency
In 2022, cryptocurrency regulation is likely to be a vital issue. It is expected that there will be some justification for the ethical gray zone of these assets, except for Ethereum and Bitcoin.
Stablecoins may be another segment of regulators’ interest. These coins' value is associated with the assets’ price (say, the US dollar). The largest stablecoin in the world, namely Tether, appears controversial.
In recent years, crypto assets and associated services and products have grown drastically. Such financial instruments have become highly interconnected with the regulated monetary system.
As of 2022, cryptocurrency prices are likely to drop. However, past records suggest that cryptocurrencies have emerged stronger after every bearish trend market. Thus, aggressive investors must seek opportunities and take insightful decisions to buy when the market is low.
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