This year has been more volatile than ever for crypto investors, and heading into 2022, the ups and downs are still cloning thick and fast.

At the end of the year, Bitcoin fell from a record high of $ 69,000 per coin, but is leveling off around the $ 50,000 mark.

It’s been an eventful year in crypto, but here are some predictions for the year ahead – because, if anything is certain, it’s that the journey is far from over.

Main crypto changes in 2021

All in all, Bitcoin may have collapsed quite severely, but it has had a decent year. The $ 69,000 rise in November fell back to around $ 50,000, but it is also about 70% higher at the start of 2021, contributing to a $ 2,000 billion crypto market value.

The first major crypto firm went public, Wall Street banks began to get involved, and the United States approved the first Bitcoin-linked ETFs, so the future looks bright.

However, there has also been no end to the explosive events in crypto, with Bitmart losing a catastrophic $ 150 million in a hacker attack this month, as reported. Crypto News.

This security breach arose through an Ethereum hot wallet and resulted in withdrawals being suspended as the exchange tightened its security.

In the same week, Bitcoin collapsed, losing 16.5% in one day and losing about a fifth of its trillion dollar value.

An undisclosed trader, who owns the largest Bitcoin assets in the world, lost $ 2.48 billion in 24 hours, seeing their Bitcoin wallet drop from $ 16.29 billion to $ 13.8 billion.

These sudden and high value declines reflect the instability of the crypto. Although it is often seen as a safe haven from fiscal policies and inflation, it remains a decentralized asset very sensitive to changes in market demand.

Factors behind the crypto market crash

It is important to note that Bitcoin has started to recover in value, but several contributing factors led to the price spike and subsequent crashes.

  • Financial markets have been under great pressure since the start of the pandemic, with inflation rates climbing across the board and tightening restrictions from central banks.
  • China has severely cracked down on Bitcoin mining, one of the main reasons Bitcoin crashed earlier in the year.
  • The recent emergence of the new Omicron COVID-19 variant has also kicked in, creating a climate of risk aversion as we wait to see the economic fallout.

In the good news, El Salvador approved Bitcoin as legal tender in September 2021, adding to the potential for growth, although this benchmark has seen a few hurdles along the way.

The financial services industry is playing a role as blockchain and crypto payments become more widely accepted, and crypto begins to establish itself as a secure payment solution.

Digital asset businesses have grown significantly, with Coinbase going public at double the valuation of the Nasdaq, followed by other crypto facilitators and miners including Stronghold Digital Mining, Bakkt and CoinShares.

Therefore, while the major crashes make the most noise, there is a growing boom in acceptance which means that it is becoming more accessible for all companies in the crypto space to reach out to the general public.

The main cryptographic events 2021

Cryptocurrencies have evolved this year, with discussions of a regulated framework in most major trading countries, the adoption of crypto as a legitimate currency, and investments by ordinary people, not just traders and fund managers. seasoned.

Influenced by figures such as Elon Musk and Jack Dorsey, what was once a misunderstood asset and deemed “shady” by the general public is now a conventional investment option.

There are perhaps three key events that have factored into crypto’s annual performance:

  • Coinbase IPO: While stock prices are falling, this crypto firm’s listing has wider impacts on the market. A successful listing acts as a marker for market approval and strengthens the regulatory appetite to examine the legal framework behind crypto assets.
  • Binance ban: Binance, the world’s largest crypto exchange, has been banned in the UK and Europe. This unregulated exchange is outside of the normal rules, but the withdrawal has shown that even the largest exchanges are not immune to the restrictions.
  • Bitcoin ETF: The Chicago Mercantile Exchange (CME Group) introduced the world’s first exchange-traded fund, leveraged against Bitcoin futures. This new ETF raised a record capital investment when it was listed on the New York Stock Exchange in October 2021.

These events are contributing to the rapidly changing market appetite and paving the way for future changes to make crypto a widely accepted asset.

Five predictions for crypto in 2022

So what can we expect in the coming year for this most unpredictable market?

Let’s take a look at five predictions of how the crypto will perform in 2022.

1. Big news to come on the regulatory front

Regulation is an important deal for crypto, and regulators in China, the United States, the United Kingdom and Europe have flexed their digital muscles to ban certain activities or attempt to control parts of the market.

In 2022, regulation will be the hot topic, with governments tightening cryptocurrency rules and clarifying many of the vague gray areas surrounding crypto.

Critical areas include stable coins and whether Tether (the world’s largest stable coin) is of sufficient value to warrant the link to the dollar.

2. Introduction of the first Bitcoin Spot ETF

We talked about the Bitcoin Strategy ETF previously, but it follows futures contracts without investors having the option of making cash investments.

While this SEC approval is remarkable, the cost of renewing ETF contracts is very high, so there is a willingness to approve a spot Bitcoin ETF in 2022 as the market is now mature enough to support this type of trading. product.

3. Another possible crypto crash

Crashes are comparable to the course of crypto, but some experts expect a massive drop in 2022, with some economic analysts suggesting a drop as low as $ 10,000 for Bitcoin, wiping out any gains made in the past 18 months.

Let’s not forget that Bitcoin slumped to around $ 3,000 in 2018, from $ 20,000, but this opinion is subjective and other analysts are not convinced the party is over.

4. Massive adoption of crypto in large institutions

Crypto and blockchain adoption exploded in 2021, with fintech providers like PayPal and Square allowing crypto payments through their platforms.

Global businesses can have a major impact on crypto, adoption by big banks or retailers adding major credibility to trigger a chain reaction of a much more comprehensive deployment of digital currency payments.

5. Expansion of small cryptographic pockets

Defi, or decentralized finance, is experiencing considerable growth. Bitcoin has always been the market share leader, but competitors like Ethereum have started to gain momentum.

Analysts expect this pivot to continue as smaller coins like Polkadot, Solana and Cardano start to move, and retail investors turn to coins in other less notorious blockchains.

One prediction is that Bitcoin market cap will fall to half that of smart contract coins this time around 2022

2021: the year of cryptography

Frequently Asked Questions About Crypto

What will happen to cryptocurrencies in 2022?

All speculation is just guesswork, and no one knows how crypto investing will turn out. There is little history on which to base estimates and a much higher risk than conventional investment structures.
However, economic analysts predict a year of stricter regulation, wider adoption of crypto in consumer markets, and the growth of small crypto coins to compete with the major players.

Is it worth investing in crypto now?

Crypto isn’t for everyone, and while it’s tempting to join the herd, it’s just as important to take your time with investment decisions.

It is advisable to do your research, set long and short term investment goals, and ideally seek advice from an experienced advisor.

While Bitcoin may (or may not) fall seriously in 2022, many competing crypto coins are expected to rise in value significantly.

Is there a minimum or maximum crypto investment?

The investment thresholds depend on the exchange you use.

Coinbase has a minimum spend of $ 2, but the minimum deposit depends on the method you use to transfer money to your account.

What are the risks of investing in crypto?

Every investment has a risk vs reward scenario, and crypto is more exposed than many other investment assets.

One of the notable risks for 2022 will be with legal regulatory frameworks, and understanding tax obligations is crucial – in some countries crypto is classified as a currency, but in the United States it is property and taxed accordingly. .

The potential of crypto licenses allowing businesses to accept cryptocurrency payments may also restrict the rights of some businesses to operate in specific countries.

Where can I use cryptocurrency to pay for goods?

More and more retailers are starting to accept cryptocurrencies, either directly or through a third-party app.
Shopify, Whole Foods, Microsoft, Etsy, Amazon all have options, the latter of which provides the ability to purchase vouchers through Bitrefill to convert them to cash on the site.