The popularity of cryptocurrency has increased in the last few years and has reached the point where the investment alternative has become mainstream. Even though Bitcoin was the initial and remains the most well-known cryptocurrency, thousands of different cryptos have sprung up on the market.
A major reason behind the hype around this asset class is the huge returns achieved by a few investors. Bitcoin is an example. It was the most profitable asset from March through March 2021. It earned an astounding 230% annualized gain.
During that period, the second-best performing asset class was the Nasdaq 100 ETF (QQQQ), which had “just” a 20% annualized return. So what’s in store for the fast-growing cryptocurrency market? Here’s a look into some of the most well-known cryptocurrency predictions for 2022.
Crypto will be more accepted as a Payment Method.
One of the biggest negatives of cryptocurrency is that it’s not recognized as a suitable alternative to traditional currencies. If this scenario occurs, then a lot of cryptocurrencies could be worthless.
In reality, the reverse is happening in 2021, and the trend appears to continue through 2022. Moreover, since more companies begin to accept crypto like Bitcoin for legal currency, the viability and value of cryptos are likely to increase.
· Ethereum Could Overtake Bitcoin
Ethereum isn’t as well popular as Bitcoin. However, it ought to be. Presently, Ethereum is the second-largest cryptocurrency, and its growth has been higher than Bitcoin’s.
If current trends remain, Ethereum may very well surpass Bitcoin for the title of the most popular cryptocurrency in 2022. This could make Ethereum an appealing option for investors seeking to diversify their crypto portfolios and away from just owning Bitcoin.
More Countries will adopt Crypto as a legal currency.
On September 20, 2021, El Salvador became the first nation to accept Bitcoin as a legal tender. Alexander Hopper, the giant crypto exchange BitMEX believes that at least five nations could follow suit by 2022 and begin using Crypto as a legal currency. If these initiatives succeed and are successful, other nations will be looking to adopt Crypto, too.
Investors and Companies Together may increase their Crypto Allocations
As cryptocurrency becomes more popular is being adopted more frequently in the portfolios of private investors and companies.
Certain financial advisors are now recommending that cryptocurrency be allocated at a minimum of percentage points. In addition, more businesses are allocating funds to digital and crypto-assets. These shifts in allocation tend to gain momentum of their own, which implies that increasing amounts of money are likely to flow into cryptocurrency by 2022.
Certain, and possibly many Cryptocurrencies, Will Be Valueless
Although general trends towards increasing acceptance for cryptocurrency appear to be increasing, and with hundreds of cryptocurrency options all fighting for a place within the market, It’s likely that some or even a majority will eventually lose all their value.
The market leader Bitcoin remains a favorite with plenty of big investors who are lining against it, which suggests that in the end, the price that comes from Bitcoin will be zero. If the most popular cryptocurrency falls the other ones, there’s likely to have much backing for hundreds of smaller digital currencies that aren’t as popular or reputable.
Traditional finance is set to play a greater role in cryptocurrency:
2021 has seen an abundance of institutions that are traditional investors taking part in the crypto market significantly. For example, on March 1, Morgan Stanley became the first major US bank to give its clients in wealth management the option of Bitcoin funds.
Even the world’s most powerful asset manager BlackRock, its largest asset manager BlackRock made its first steps towards cryptocurrency exposure with two funds at the beginning of the year.
This is only an initial step for traditional banks investing in the crypto market in the future as they study and gain more knowledge about the field.
In 2022, the world will witness even more financial institutions joining, including WisdomTree, already planning to launch additional crypto-related offerings in 2022.
There will be more uses cases from Crypto:
2021 was an exceptional one for the NFTs, or non-fusible tokens (NFTs). In September 2021, the value of all sales of NFTs on the art market was $774 million.
Suppose you’ve made use of blockchain technology to create art that will never be duplicated since many computers manage their ledger across the globe. In that case, you realize that there are different applications for cryptocurrency to help build an environmentally sustainable society.
In 2022, you may observe blockchain technologies making our digital identities safer, secure, and simpler to manage, improving healthcare processes, public policy, and the financial sector.
The crypto savings account will be the nor.
By using Bitcoin, Ethereum and stablecoins, You can transfer (staking) them in crypto savings accounts and earn high-yielding passive income.
Two senior analysts from JPMorgan have stated that this year staking is expected to become a major source of revenue for retail and institutional investors. According to experts, investing in staking produces approximately $9 billion of income every year.
However, once Ethereum 2.0 is launched, it will increase stakes in the DeFi space. The payouts for staking to increase to $20 billion within the first quarter after the launch. By 2025, it could be 40 billion.
This is a completely new asset class, which is an excellent method for people to use their digital assets in idleness to earn money. This trend is expected to continue in 2022.
Although cryptocurrency has seen an explosion in visibility and market value, they’re a long way from being a common currency or a source for payment.
Although digital currencies may eventually replace or even exist alongside traditional paper currency, it’s hard for investors to determine which cryptocurrency will be able to survive and which will be the leading long-term contender in the market.
Cryptocurrency will likely continue to gain usage, public awareness, and even value by 2022. All these predictions will not be true, it’s highly likely that, at the very least, a few are likely to be true.