- The cryptocurrency space has seen unprecedented growth and adoption this year
- The valuation of the crypto space topped $3 trillion this year
- What can we expect to be the biggest trends or events in 2022?
2021 has been another explosive year for the cryptocurrency space, with DeFi continuing to expand, NFTs coming out of nowhere to grab headlines worldwide, Bitcoin getting the Tesla treatment, and El Salvador choosing to adopt it as a currency. The way things are looking however, 2022 could end up being even more volatile than 2021. We list five things for cryptocurrency holders to watch out for next year.
The metaverse emerged at the end of 2021 as the latest hype cycle to grab the cryptocurrency industry. If 2020 was the year of DeFi and 2021 was the year of NFTs, 2022 looks like it will be the year of the metaverse, with some of the world’s biggest brands already on board. Expect existing metaverse coins to excel in a bull run and a rash of new metaverse projects (and scams) to crop up as the space explodes.
More Countries Adopting Bitcoin
Several countries including Panama, Brazil, and Argentina have been linked with adopting bitcoin as a currency in the wake of El Salvador taking the bold step earlier this year. These reports may have been quashed, but it is unlikely that El Salvador will remain the only country using bitcoin for long.
2022 could well be the year that the next domino or two begin to fall.
Interest Rate Cuts
The explosion in the crypto space in 2020 was in line with equities after the Federal Reserve and other central banks began aggressively cutting interest rates and pumping trillions worth of liquidity into the capital markets. These twin moves made risk assets far more attractive to investors compared with safer but less profitable bonds, but the Fed announced this December that it was planning to quicken the pullback of its easy-money policies and raise interest rates sooner than expected. Higher interest rates make risky assets such as bitcoin less attractive.
When combined with Bitcoin’s incredible growth since 2020, we could see de-risking impact the crypto space and see people deserting the Bitcoin they bought in 2020.
A Bear Market
Regardless of the wider financial space, the crypto space experienced two market tops in 2021, leading to claims that the bull market is over. Of course this could well be the case, but assuming the four-year cycle is now consigned to history due to the size of the space, we can expect another cycle in 2022.
However, this certainly will be followed by a bear market, and there’s a good chance this will hit sometime in 2022 as the world de-risks as world economies return to normal.
If Bitcoin does enjoy a resurgence in 2021, the chances of hitting the magical $100,000 figure is eminently feasible. This only requires a 30% increase from the prior high in November, and knowing how Bitcoin can run when it gets in the mood, this is easily achievable. The headlines if (when) this occurs in the anti-Bitcoin media will be something to behold.