2021 was a volatile but highly profitable year for cryptocurrencies. Market capitalization tripled from less than $800 billion on the first day of the year to around $2.2 trillion in late December. Keep reading to check five upcoming trends to keep an eye on throughout 2022.
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More Demand for Regulation:
So far, the crypto industry has been successful thanks to – or despite – its decentralized structure and unregulated nature. Nonetheless, many financial experts believe that cryptocurrencies could be open to regulations – as long as the rules are applied transparently.
Crypto investors and entrepreneurs expect a more moderate approach in the United States, where the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and Treasury Department offices are calling for new regulations.
For larger investors, regulations could introduce clearer tax guidance and even the ability to incorporate cryptocurrency investments into retirement accounts. We are sure that these regulations will affect derivatives as well, and hence, companies like Bitlevex are working hard to meet them.
An Increased Number of BTMs Available:
Bitcoin ATMs, also called “BTMs,” are automated teller machines that permit cryptocurrency users to conduct transactions in Bitcoin. This modern and convenient solution allows people to buy Bitcoins by using cash or a debit card, also using the BTM to sell Bitcoins for cash.
In this sense, BTMs solve an age-old problem that prevents the mass use of cryptocurrencies – the fact that the intangible nature of cryptocurrencies works against them. Many people have trouble considering Bitcoin as real money, as they cannot see or touch them.
But now that the installation of BTMs is slowly becoming a reality in many parts of the world, people will be able to understand digital assets as tangible investment instruments.
The number of BTMs has been steadily growing since 2015 and reached new highs in 2021. Currently, there are nearly 35,000 BTMs around the world, according to Coin ATM Radar. BTMs can eliminate the need for crypto exchanges as people can easily transact crypto using BTMs – although the fees still scare some people away.
Environment-Focused Solutions for Cryptocurrency:
Several critics of cryptocurrencies are targeting the environmental impact of blockchain networks – a problem that plagues even some crypto enthusiasts. Bitcoin mining requires a lot of computing power, uses a lot of energy, and is a problem widely reported in the mainstream media.
Since much of the market capitalization of cryptocurrencies is generated by coins that use proof of work (or PoW) for their mining process, it is unlikely that there will be any big changes in energy costs in 2022.
In addition to the high energy costs of mining bitcoin, the process also generates a lot of e-waste from discarded machines. On the other hand, newer cryptocurrencies such as Cardano (ADA) and Solana (SOL) are praised for adopting a proof of stake (or PoS) method, which does not require high energy usage.
Ethereum, the world’s second-largest cryptocurrency, is about to switch to PoS, which could make other cryptocurrencies do the same and make their processes much more sustainable.
Bitcoin’s Growing Price Volatility:
In 2021, Bitcoin has consistently suffered ups and downs as the world’s most valuable cryptocurrency hit a record high above $60k in April, dropped below $30k in June, hit a new high of nearly $70k in November, and dropped to its current level.
Volatility – the characteristic that critics of Bitcoin highlight when they disregard the seriousness of the asset – will likely continue into 2020, considering that the crypto market is not yet fully mature.
Volatility is one reason why sophisticated traders like Bitcoin (considering price swings allow for arbitrage opportunities), but also why many asset managers urge caution and ask clients to only allocate 5% of their portfolio to cryptocurrencies.
Furthermore, investors need to be patient and not worry about temporary ups and downs and commit to a long-term outlook.
Crypto ETFs:
When BITO, the first Bitcoin futures index (or ETF) fund hit the New York Stock Exchange (or NYSE) in 2021, it hit nearly $1 billion in trades on its first day, breaking a record debut.
Despite the US SEC receiving numerous requests for ETFs based on the current price of cryptocurrencies, the entity is still reluctant on approving the growing number of crypto-based ETFs.
However, based on BITO’s performance, a “spot” Bitcoin ETF looks very likely to be approved in 2022 or soon – along with potential ETFs linked to other cryptocurrencies, which could attract a new wave of retail investors.
5 Upcoming cryptocurrencies Trends in 2022 – Final Thoughts:
Ultimately, 2022 might be Bitcoin’s year, as the “king” of cryptocurrencies asset is expected to lead the market.
After a struggling period of oscillation and corrections, market agents are quite optimistic about the appreciation of Bitcoin (BTC), as some still believe the cryptocurrency could reach $100,000 by the second quarter of this year.
Nonetheless, portfolio diversification is crucial, as Ethereum’s 2.0 Merge to PoS (Proof of Stake) and the constant appreciation of several altcoins bring unmissable opportunities.
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