The closer the end of 2021 approaches, the more the community wants to know what will happen in the crypto space in the new year. How will the market develop? What surprises are waiting for us? Will Bitcoin continue to rise or fall? The article will highlight the top 6 predictions for digital assets in 2022.
These predictions are largely based on the events of 2021 and some common sense.
DeFi will continue to thrive
In 2020 and 2021, the world of decentralized finance will grow significantly. From a total value of just over $ 10 billion at the beginning of 2020, the sector now has an additional market cap of $ 100 billion. Furthermore, given all that is going on in the ever-expanding crypto and DeFi space, there is really no reason to believe that money will not continue to pour into that space.
Total value locked in DeFi | Source: DeFi Pulse
To be honest, there are a lot of projects like Polygon, Solana, Internet Computer … that are just getting started with DeFi and have a lot to offer. Even if Ethereum’s fees have made DeFi more expensive on the blockchain, these fees will be much easier to control when Ethereum 2.0 actually rolls out. It should be noted, however, that while the overall future of Ethereum is very promising, there is no guarantee that ETH 2.0 will be rolled out in 2022.
As more people realize the potential of DeFi, and more services are integrated into the growing metaverse, it is expected that the sector will continue to grow for at least another year and perhaps longer.
Other cryptocurrency companies are listed publicly
One of the highlights of 2021 was Coinbase’s first public listing in April, which resulted in mixed valuations, according to Bitcoin Magazine. At the same time, Coinbase’s share price hasn’t really skyrocketed since May.
Source: TradingView
Bakkt also went public in October. So maybe this will continue until 2022. This is not just baseless speculation, as some companies have outright announced or hinted that they will begin issuing shares in the coming months.
These include big names like Kraken, BlockFi and Gemini. At this point it is not yet clear which companies will actually go public in 2022, but after all the ongoing discussions, it can be assumed that there will be a few more.
More companies will accept cryptocurrencies
Just as many crypto-related companies are likely to go public, the number of companies accepting various forms of crypto business will increase in the New Year. 2021 brought a lot of good news in this regard. For example, Regal Cinemas recently announced a partnership with the Gemini-Linked Flexa platform to accept multiple cryptocurrencies as payment for movie tickets and snacks.
Later, e-retailer Newegg announced that it would accept payments in SHIB through a partnership with BitPay. Although somewhat unexpected, it opens up yet another way of buying goods with cryptocurrency.
Perhaps the most popular and interesting approach is, above all, the partnership between Mastercard and Bakkt to offer crypto wallets, credit cards and debit cards to all of their customers. This means that every merchant who accepts MasterCard will soon be able to accept and offer crypto rewards as well. Indeed, there have been many stories like this one over the course of the year, but MasterCard’s announcement is arguably the biggest step toward the “crypto-as-fiat” future that many supporters have been waiting for.
Other countries will make progress in recognizing cryptocurrencies and / or creating their own coins
One of the biggest stories of 2021 in this space is the fact that El Salvador started accepting crypto as legal money earlier this year. Of course, there is a good chance that a number of other countries and territories will soon do the same. On the other hand, some countries like China and India have made it clear that they will not recognize Bitcoin.
In addition, the US-controlled International Monetary Fund (IMF) even advises countries against using cryptocurrencies as a currency. Instead, the IMF and many world powers are moving towards the digital currency of the central bank (CBDC). CBDCs are essentially cryptocurrencies run by a bank and that’s what the entire crypto space is trying to get out of.
However, many other countries are adopting a more crypto-friendly stance, such as Panama. In September, Congressman Gabriel Silva tabled a new bill accepting Bitcoin as an alternative means of payment with nationwide effects. While this is certainly encouraging, it must be admitted that the law has not yet been passed.
In general, the scene is evolving in the direction that large countries with strong economies prefer the CBDC route. However, small countries that are more focused on imports and remittances appear to be interested in free digital assets. Of course, it’s too early to confirm anything, but it looks like many countries will continue to consider at least one of these options as the New Year begins.
Other NFT use cases will heat up
The arrival of the NFT marks an important part of the year 2021. Even the Collins dictionary rates “NFT” as the word of the year. Although it has been around for many years, NFT won’t really see a transformation until 2021. Basically, the whole scene exploded when the world started the NFT craze and everyone from businesswoman Martha Stewart to rapper Snoop Dogg joined in.
In 2022, the market for NFT collectibles is expected to gradually fade or even shrink, instead many people are starting to look back at the exaggerated past of NFT paintings and explore more uses for the NFT.
It’s important to note that NFT is aiming to revolutionize online games, businesses, and more. For example, items your avatar uses or wears in the virtual world actually belong to you. You can easily transfer them across platforms and sell them on the secondary market. This alone is enough to attract players.
In fact, there are many other uses. Even everyday things like decentralized supply chain management and biometric self-identifying digital IDs could form a large part of the infrastructure of our world in the coming years. NFT is the underlying technology that makes this possible. Accordingly, the hype train will continue to shift to other NFT use cases, although artwork in NFT will probably not go much further.
The market is getting bearish
At the moment almost every forecast is bullish, so why say the market is going to fall? Simply because of the market cycles. Bitcoin’s market cycle is said to be more frequent as the halving event occurs every 4 years.
Above is a well-known Wall Street cheat sheet that illustrates the general trend in emerging markets. It looks like we are somewhere between optimism and tension at the time of writing, but not rising forever. At some point in the coming months we will likely see a period of euphoria followed by a crash.
Trader Byzantine general formerly tweet in October that:
“The 2017 bull market lasted about 35% longer than the 2013 bull market. If we assume that this will also last about 35% longer than the previous one, then the bull market will end at the end of the first quarter of 2021.”
Source: Byzantine General
To be fair, some people find that the time to climax is also a little longer with each cycle. Hence, it looks like the market will peak sometime in 2022.
Overall, this is healthy and to be expected. A new cycle is about to begin and in about 4 years time, Bitcoin is likely to see even more highs. However, numerous variables such as global regulation or industry acceptance rates play a role that can cause price actions to deviate for better or for worse from the normal market cycle.
Conclude
The article made some of the top predictions for 2022. These are essentially based on general market acceptance and will be expanded further over the next 12 months. There is simply a lot of interest, development, and actual business pouring into the crypto space. However, it’s also important to note that overall growth doesn’t always mean consistently increasing values, and there are many factors that increase the likelihood that certain predictions will be in error.
So the best advice is not to worry about all-time highs and focus on new projects, partnerships, and assets that are sure to be launched in 2022.
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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
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