Despite its high volatility, 2021 was a successful year for cryptocurrencies. And institutional and retail investors deserve all the praise.
Since January 1, the market’s capitalization has increased from $800 billion to $2.2 trillion, with some coins performing astronomically well in terms of price and utility. The entire bitcoin ecosystem has benefited from this increase.
Furthermore, Defi applications and non-fungible tokens are thriving consistently due to the alt season, which suggests greater earnings in the next year.
Trends to Watch Out For in 2022
Increased regulation: Due to (or perhaps because of) its decentralized organization and lack of regulation, bitcoin trading has prospered. However, many in the industry will tell you that they are receptive to law as long as they are enforced fairly.
Governments have been attempting to regulate bitcoins to reduce access to cyber criminals and improve retail investors’ safety.
Investors and business owners in the crypto world are hoping for a moderate approach in the US, where the SEC, CFTC, and Treasury Department have all been pushing for new rules. Regulations may result in more transparent tax laws and possibly the potential to include bitcoin assets in retirement plans for investors. Additionally, if well-known bitcoin trading systems adapt to rules, there might be an increase in its adoption as it would give investors an additional degree of security.
A rise in Bitcoin ATMs: Since people can’t see or touch cryptocurrencies, they have difficulty understanding its concept as it is distinct from fiat money. It has been a constant problem for cryptocurrencies for a long time now. However, once Bitcoin ATMs start to spread out in more locations around the globe, consumers will begin to see digital assets as tangible investing tools.
Since 2015, the number of Bitcoin ATMs has gradually risen, reaching new highs in 2021.
In essence, bitcoin ATMs let users buy BTC using their credit or debit cards. It makes cryptocurrencies very approachable for both experts and beginners. Due to their ease of use, Bitcoin ATMs can replace the need for cryptocurrency brokers. However, their costs may cause some users to hunt for better deals elsewhere.
Protection of the environment: Blockchain networks’ environmental impact has been a point of contention for crypto doubters, and some crypto enthusiasts are even troubled by the problem.
Mining bitcoins indeed needs a lot of processing power, which is energy-intensive. However, any significant change in energy costs for 2022 is unlikely because coins that use proof of work for their mining process generate the majority of the cryptocurrency market cap. In addition to requiring a lot of energy, mining for bitcoin also produces a lot of electronic garbage from its abandoned mining equipment.
On the other hand, newer cryptos like Cardano and Solana have received praise for switching to a proof-of-stake algorithm that uses less energy. Ethereum, the second-largest cryptocurrency by market capitalization, is about to change to proof-of-stake, inspiring other cryptos to follow suit and significantly go greener with their operations. Even if Bitcoin’s energy usage doesn’t decrease, the market will benefit if the adoption of green crypto increases in 2022.
The ongoing volatility in Bitcoins’ price: The most popular benchmark for the cryptocurrency market continues to be the price of Bitcoin, which is by far the most popular cryptocurrency in the world.
Given that bitcoin trading is still in its infancy, this volatility— downplaying the importance of the asset—is likely to remain long until 2022.
Due to this volatility, many savvy investors favor Bitcoin because its fluctuations present arbitrage opportunities. However, many asset managers urge caution and advise clients only to invest 5% of their portfolio in cryptocurrencies. Investors need to be entirely ready for Bitcoin to fluctuate wildly.
Positive trend: In 2022, these dynamics will make cryptocurrency even more valuable. Investors are eager to trade digital assets this year due to new legislation, various investment options, better technologies, and top organizations developing accurate solutions.
They will benefit greatly from a wealth of investment options, thanks to these trends.
Approvals of Crypto ETFs: When BITO, the first exchange-traded fund (ETF) for Bitcoin futures, launched on the New York Stock Exchange this year, it saw close to $1 billion worth of trades on its first day, moving it closer to a record start. It served as an instant validation of the long-growing investors’ desire for a cryptocurrency product they can purchase and trade on conventional exchanges.
However, BITO is a mechanism for individual investors to gain exposure to Bitcoin futures, not actual BTC, and does not own any Bitcoin itself. It’s not a “spot” ETF. Although there have been numerous requests for ETFs based on the market value of cryptocurrencies, the SEC has never approved one. But given BITO’s performance and the confidence investors have in it, a Bitcoin spot ETF—along with prospective ETFs linked to other cryptocurrencies—looks likely to be approved in 2022 or very soon after that, which might attract a wave of new retail investors.
Global Trends Moving Toward Defi: Since Defi is still in the development stage, there are dangers involved in fully implementing decentralized finance. For example, scalability, financial credibility, credit score, and other issues may present difficulties for you.
However, some significant changes may occur in 2022. Because international fintech companies have joined the market with some solutions, investors can handle this issue.
It will result in enormous Defi adoption by banks, governments, Fintech firms, and many other organizations. As a result, its token will see a spike in demand, marking the cryptocurrency sector with the highest growth rate in 2022.
In continued macroeconomic uncertainty brought on by rising inflation, a weak stock market, increasing interest rates, and worries about a recession, Bitcoin and the larger crypto market has been declining this year. However, the future trends for it talk overwise. You should consider your options and make an investment in the Bitcoin market right away.