Top 2022 Crypto Predictions That Will Give Investors Sleepless Nights
2021 has been a year marked by the emergence of the first major crypto company, Coinbase, in April, growing participation from Wall Street banks like Goldman Sachs, and the approval of the first bitcoin exchange-traded fund in the United States. However, recent price volatility and increased regulatory scrutiny have dimmed bitcoin's prospects. Experts warn that the market may be headed for a correction. With next year already shaping up to be another roller-coaster ride for digital currencies, this article examines some of the most prominent analysts' predictions.
Today's market is more than just Bitcoin. Investing in cryptocurrencies is the new stock market. Stablecoins are another significant area regulators are expected to focus on in 2022, according to experts. These are digital tokens whose value is determined by the price of existent assets such as the US dollar. And not just this, from yet another worldwide crypto market crash to the launch of the first spot Bitcoin ETF, experts have flooded the year with forecasts or predictions.
So, we have compiled a list of the most prominent 2022 crypto predictions that are expected to drive the crypto market this year. Read this article if you want to put your money in the right place.
Ethereum Will Outperform Bitcoin...Again
Long considered the second-best crypto, Ether surpassed Bitcoin by 418% in 2021, compared to 66% for Bitcoin. The spike in NFT sales volumes is one of the reasons Ether will continue to thrive in 2022. The majority of these tokens are still based on the Ethereum network. In addition, big enhancements this year, like the Berlin update and the London hard fork, helped the network process more transactions.
Because Ethereum's blockchain supports smart contracts, whereas Bitcoin's does not, it has become the de-facto medium for purchasing and trading NFTs. Ethereum was created to facilitate smart contracts, which automate transaction execution without the use of a middleman. This has uses beyond non-fungible tokens, such as in real estate transactions, concert tickets, and other purchases where the thing in issue must be validated. The future of cryptocurrency, as Ethereum demonstrates, isn't about displacing the dollar, but about meeting demands that fiat currency can't meet on its own.
Decentralized Finance (DeFi)’s Mass Adoption
The DeFi industry outperformed itself and made decentralization mainstream in 2021. The total value locked in the DeFi applications skyrocketed to $220 billion by the end of the year. WazirX’s CEO Nischal Shetty said that DeFi was a major hit in 2021, and by March 2022, the total value of DeFi contracts will be $41 billion. The DeFi and DAO communities have reaped significant benefits from yield farming, which has become increasingly popular on DeFi platforms. DeFi and decentralized platforms, such as DEXs and dApps, will arguably be crucial in 2022, as they will be the underlying infrastructure of Web3.
"More scaling solutions will become essential to the mass adoption of DeFi products and services," Biconomy's Ahmed Al-Balaghi said in an interview.
While most DeFi applications go live on many chains, which makes them cheaper to use, it adds extra complications for people learning and understanding how they function, according to Al-Balaghi.
"We need solutions that ease onboarding and employ DApps that are scattered across different chains and scaling solutions to start the second phase of DeFi broad adoption," he said.
Another expert, Alex Tapscott of Ninepoint Digital Assets Group, stated that the DeFi industry's market capitalization had increased by 30 times to $150 billion in just one year. According to him, during the next decade, a billion people, many of whom are unbanked, will have access to financial markets for the first time through DeFi applications.
Bitcoin at 100k
The largest cryptocurrency by market capitalization has lost about $80 billion since the beginning of the year, bringing it to its lowest levels since the early-December flash crash. However, there have been expectations that it will hit the fabled $100,000 level this year. Despite the volatility, many analysts believe Bitcoin is on its way to breaking the $100,000 barrier, though there are differing viewpoints on when this will happen. The volatility is nothing new, and it's one of the reasons why experts advise new crypto investors to be cautious when committing a portion of their portfolio to cryptocurrency.
Bitcoin has risen in value as steadily as any other cryptocurrency on the market over the years. It's only natural for Bitcoin investors to wonder how high the currency can rise. Because cash's purchasing value is eroding due to inflation, many investors have come to recognize Bitcoin as a legitimate asset class because of its ability to keep up with (or even outperform) rising prices in the economy. This is due to a limit on the number of coins that may ever be mined, as opposed to fiat currencies like the US dollar, which has no such limit. If inflation fears linger in 2022, more investors may turn to Bitcoin as a haven for their money, propelling it closer to the $100,000 mark.
A Big Year for Crypto Regulations
With the growing popularity and acceptance of crypto, governments all around the world are planning to bring some crypto regulations to their respective countries. Last year, regulators exercised their muscles on cryptocurrencies, with China outrightly prohibiting all crypto-related operations and the US government tightening down on specific areas of the business. Analysts predict that regulation will be a major issue for the industry in 2022.
Ripple, a blockchain business, is at odds with the US Securities and Exchange Commission over XRP, a cryptocurrency with which it is intimately tied. The SEC claims that XRP is unregistered security and that Ripple and two of its executives illegally sold $1.3 billion worth of tokens. Ripple, for one, claims that XRP should not be considered a security.
Stablecoins are another significant area authorities are expected to focus on next year, according to experts. These are digital tokens whose value is determined by the price of existent assets such as the US dollar. Tether, the world's largest stablecoin, is especially divisive, with questions regarding whether it has enough assets in its reserves to support its dollar peg. Meanwhile, regulators have begun to examine the DeFi market. The Bank for International Settlements, a central bank umbrella group, advocated for DeFi regulation earlier this month, citing concerns about services claiming to be "decentralized" when they aren't.
The Onset of the Web 3.0
According to observers, the Web3 movement will take center stage in 2022. Web3 refers to a new, decentralized version of the internet that incorporates blockchain and cryptocurrency technology such as nonfungible tokens (NFTs). Elon Musk and Jack Dorsey, for example, have already spoken out against it. However, according to many analysts, the importance of Web3 will continue to rise until 2022, with an emphasis on increasing user usefulness in a decentralized capacity, and naturally, placing people at the center of the emerging technology.
Wolfram Alpha, a Wolfram Research product, is one of the top Web 3.0 applications in 2022. It's a computational knowledge engine that gathers enough material from online databases to display it in an attractive user interface. Any form of query can be readily typed, and this Web 3.0 application will quickly respond with an exact answer. Web developers can work on a variety of themes, including math, science, and technology, as well as society, culture, and everyday challenges.
Conclusion
While no one knows what the future holds for crypto assets, industry experts predict another prosperous year for this genuinely global phenomenon of the twenty-first century. Many of them claim that the crypto sector is just getting started and that even the oldest of all cryptocurrencies, Bitcoin, is still in its infancy. More maturity could lead to greater steadiness.