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A Glimpse into the Future of Cryptocurrency: Exploring Perplexing Predictions
The question on everyone’s mind: Will cryptocurrency soar, plummet, or lead investors along an unpredictable path in the foreseeable future? Is Bitcoin destined to maintain its volatile nature? The role of regulation looms large. Identifying the most promising cryptocurrency becomes a matter of intrigue for the forthcoming year.
Predictions abound, as countless analysts chart the course of cryptocurrency’s future.
The year 2021 witnessed a surge in cryptocurrency’s popularity, with Goldman Sachs accepting its presence. The advent of Coinbase in April 2021, the first major public crypto company, and the launch of the first U.S. exchange-traded fund linked to Bitcoin in October marked significant milestones.
According to CNBC, Bitcoin, the most renowned cryptocurrency, experienced substantial growth, soaring nearly 70 percent since the beginning of 2021 and propelling the entire crypto market to a combined value of $2 trillion.
Gazing into the crystal ball, the future of cryptocurrency appears to hold an exhilarating ride for investors. Let us explore some intriguing crypto predictions to keep an eye on in 2022:
Crypto Prediction #1: Towards a Crypto Crash or an Exhilarating Ascent?
Cryptocurrency prices might witness a decline in 2022. After surging to an all-time high of nearly $69,000 in November, they have since dipped below $50,000, marking a staggering 30 percent decline from their peak. Carol Alexander, a finance professor at Sussex University, anticipates Bitcoin’s plunge to as low as $10,000 in 2022, erasing most of its gains from the past year and a half.
Contrary to this view, Yuya Hasegawa, a crypto market analyst at Bitbank, believes the most significant risk factor, quantitative tapering by the Fed, has been priced in and already decided.
Sayantani Sanyal, in a report, asserts several factors favor
higher Bitcoin prices, including increased acceptance by businesses and higher
demand from Bitcoin ETFs. Market analysts predict Bitcoin could reach USD
$100,000 by the end of 2023, while others speculate it may achieve this
milestone in the first quarter of 2022. However, contrasting opinions state
that Bitcoin might not surpass USD $70,000 by the end of 2022.
In sum, crypto predictions encompass a wide spectrum of
possibilities.
Crypto Prediction #2: Embracing Bitcoin – A Growing
Investor Trend
According to The Ascent, Ric Edelman, founder of the Digital
Assets Council of Financial Professionals, foresees more than 500 million people
worldwide owning Bitcoin by the end of 2022. Flori Marquez, co-founder of
BlockFi, echoes this sentiment, attributing increased adoption to regulatory
clarity and enhanced industry understanding.
Crypto Prediction #3: The Emergence of the First Spot Bitcoin
ETF
Some crypto investors anticipate the approval of the first
spot Bitcoin exchange-traded fund (ETF) in the United States this year,
granting direct exposure to the cryptocurrency itself. While ProShares’ Bitcoin
Strategy ETF based on Bitcoin futures contracts was allowed for launch by the
Securities and Exchange Commission, analysts believe a Bitcoin Spot ETF could
gain approval due to the market’s maturity and size.
Crypto Prediction #4: The Rise of Decentralized Finance
(DeFi)
Intriguing developments in the crypto space, such as
decentralized finance (DeFi) and decentralized autonomous organizations (DAOs),
are expected to be the high-growth areas. Bryan Gross, network steward at ICHI,
believes DeFi aims to recreate traditional financial products without
intermediaries, while DAOs usher in a new era of internet communities. DeFi
services have already seen deposits surpassing $200 billion in 2021, and
further growth is anticipated in 2022.
Evaluating smaller crypto areas, Carol Alexander points to Ethereum,
Solana, Polkadot, and Cardano coins as potential candidates for investors
seeking gains.
Crypto Prediction #5: Regulatory Focus on Cryptocurrency
Regulating cryptocurrencies will be a significant concern in
2022. Vijay Ayyar, VP of corporate development and global expansion at Luno,
predicts substantial regulatory developments. He anticipates clarification on
the legal status of cryptocurrencies other than Bitcoin and Ethereum, as well
as scrutiny on stablecoins tied to asset prices such as the U.S. dollar.
Controversy surrounds Tether, the world’s largest stablecoin, concerning
whether its reserves adequately back its value.
Crypto Prediction #6: Bitcoin’s Performance in Comparison
to S&P 500
Despite the threat of the coronavirus to the global economy,
both Bitcoin and the S&P 500 exhibited impressive gains in 2021, with
Bitcoin surging 66 percent and the S&P 500 climbing around 27 percent.
Arcane Research suggests that Bitcoin behaves like a risk-on asset, and its
performance could amplify that of the stock market. If the stock market surges
in 2022, Bitcoin is likely to outperform, while a bearish year for the stock
market could lead to Bitcoin underperforming.
Crypto Prediction #7: Ether’s Potential to Outperform
Bitcoin
Ether outperformed Bitcoin in 2021, achieving a remarkable
418 percent gain compared to Bitcoin’s 66 percent. The surge in NFT sales
volumes is believed to contribute to the continued success of both
cryptocurrencies, especially since most NFT tokens run on the Ethereum
blockchain.
Crypto Prediction #8: The Vanishing of Most Meme Coins
In the previous year, meme coins such as Shiba Inu and Squid
experienced astronomical gains, only to fade away quickly.
Crypto Prediction #9: USD Coin Competing with Tether
Tether’s dominance as the largest stablecoin by valuation
might be challenged by USD Coin as it joins the lending wave.
Crypto Prediction #10: VIX Spikes and Their Impact on
Bitcoin
Market difficulties in 2022 could influence Bitcoin’s
short-term price trajectory, with spikes in the Cboe Volatility Index (VIX)
affecting Bitcoin sell-offs.
A Look Ahead: Bright Prospects for the Crypto Market
The crypto market’s trajectory over the past years has been
nothing short of a roller coaster ride, characterized by rapid price
fluctuations. Yet, amidst the volatility, the industry has witnessed remarkable
growth. Experts remain optimistic that this trend will continue in 2023, as
historical market performance suggests a positive outlook for virtual
currencies. This optimistic outlook bodes well for both seasoned and novice
investors.
The market’s evolution has been closely monitored by