2021 has been the crypto industry’s largest year ever. It’s not just because the prices of tokens increased in some cases by hundreds of percentage points. This proves that the potential for massive gains in cryptocurrency is still on the table. The most important thing is that the growth in crypto this year was in the form of significant acceptance, integration, and innovations like El Salvador’s bitcoin policies in addition to the acceptance of NFTs by big companies as well as famous celebrities.
What happens following the biggest year in history? It could be a smaller year for Bitcoin bank and others.
This year was different in that the momentum of day trading that erupted during the COVID lockdowns in 2020 was carried into actual adoption and innovation through the such as Twitter. Crypto is typically dynamic, with new users who become overwhelmed and burned and then go back to lick their wounds and begin research before diving into it. 2021 broke the crypto’s previously regular boom and bust pattern, but it’s still possible to do anything.
Although it may be more modest than 2021, 2022 will witness major changes, including the introduction of Ethereum 2.0 (finally!) and the reversal from”NFT-mania” (probably!). With the maturation of the sector, it will have plenty of capital available to finance the ongoing development of exciting projects, as well as plenty of opportunities to participate when you’re watching. There are also a lot of global factors that can influence crypto, ranging from U.S. interest rates to COVID variants to inflation, certain variables are more reliable than others.
This article is a mixture of my own thoughts about the future, as well as the (usually much more insightful) perspectives of other cryptocurrency analysts. This is not financial advice and the majority of it could be wrong However, I hope it helps you build your own vision of what’s to come.
The market for tokens is flat.
We should expect at the very least a time of fluctuating and basically flat market for tokens. I’m becoming more convinced that there won’t be a similar to 2018’s huge drawdown, however, 2021 was a massive year that the possibility of a return to the average is possible in purely mathematical terms. There’s the possibility that bitcoin could set the record for highest ever recorded at $69,000 at the end of 2022 however I wouldn’t put my money on it being sustainable beyond 2023.
In all honesty, I was way too cautious last time around. I believed we’d see an upward trend of around $30,000 in 2020, but it proved to be nothing other than a cycle. The momentum could be regaining momentum and this is as a forecast that’s not too optimistic.
Elon Musk will continue misleading and confusing those who are new to crypto.
By the end of 2022, once he’s caught up to the fact that it’s not Nick Szabo, Elon will claim to be Satoshi despite not “getting” proof-of-work (PoW). Craig Wright will sue him for defamation, and lots of laughter will ensue.
NFTs keep tanking.
This is kind of a misnomer since a lot of once expensive Non-fungible coins are bleeding already and many of these prices were created through was trading initially and they’re likely to drop. I can see that the markets for “profile photos” and NFTs with celebrity names specifically coming back to the basics as a large portion of their price movements in the last 18 months was founded on the false notion that NFTs are “art” and can be traded as a Basquiat as well as Van Gogh.
They’re not and will not. To gain more understanding of what makes art valuable, either as an NFT or in other types, read my essays on the market for art and the generative arts.
It’s been planned for many years and now, the transition of Ethereum into Proof-of-Stake (PoS) will move forward in 2019 when its new PoS Beacon Chain joins the existing PoW chain. This implies some uncertainty, but the benefits for the change may not be available until 2023 at which point Ethereum’s new Ethereum will begin to introduce the concept of sharding.
The most crucial thing to keep in mind is that, at the very least, until sharding implementation is complete in the near future, the PoS change is not likely to impact the transaction fee on Ethereum. The high fees in the last year or so have been the primary reason for the growth in other blockchains that are layer one, such as Avalanche as well, consequently, the Ethereum upgrade isn’t likely to disrupt this trend (see the following). (Note that the ETHDenver Conference in February will provide the perfect occasion to refresh on the specifics of this.)
The Layer One diversity can be real.
A single of the more positive things I’ve observed in the last year has been fracturing the interest of users in real useful applications across several blockchains. For instance, in the NFT sector, example we’ve seen a significant increase not only on Solana however, but also Tezos as well as other blockchains.
However, as the Bankless team discussed in its “5 Things We Got Right” episode, there are good reasons to think that over the longer term, it’s more likely that there will be two or three dominant smart contract chains than say, five or 6. This year is likely to see an increase in the variety of the platforms that people actually use however, the next year will see real competition and eventually, consolidation.
The Great Token Decoupling continues.
“Decoupling” in this case means that the various crypto assets won’t be just observing the price of bitcoin. Instead, each will earn results based on their own value concept. Decoupling has been occurring gradually for a while however, the process increased in 2021.
The gap between the top cryptocurrency returns as well as the smallest was quite significant: the Layer 1 tokens like Solana (SOL) and Terra (LUNA) yielded at least 8,000% and aging or faulty projects such as EOS and the internet computer dropped over 20%. The message is clear that it’s no longer sufficient to simply have the status of “in cryptocurrency.” Just like any investment, the place you invest your money is important.
To learn more about decoupling, check out the latest edition of Messari’s Cryptotheses which is a must-read every year and an excellent opportunity to catch up with the year’s transformational moments.
Bitcoin mining is a big thing.
Arcane Research predicts that bitcoin mining will see more bans in the coming year in countries that have weak grids or inadequate supply of energy, “while other energy-rich jurisdictions will be embracing the industry.” It’s unfortunate that citizens and the governments of these countries are likely to see restrictions on their participation in Bitcoin as well, for the sake of their own interests and as a result of more shared mining being beneficial for the Bitcoin network as a whole.
In the longer term, there are benefits here. The ban on mining in countries that do not have sufficiently strong and sustainable electrical grids could increase the amount of hash power that is devoted to more sustainable energy sources, possibly reducing certain aspects of narrow environmental social and governance (ESG) critique that made its way into the public sphere this year, in large part due to the Tesla’s Elon Musk.
Stocks are rising but they’re growing slower.
Goldman Sachs predicts a 9percent increase of the S&P 500 index. This isn’t as high as the previous year when the index increased by 27 percent however it could remain very healthy. Based on the current economic conditions this is a sound wager – the latest unemployment report, for example, is lower than forecasts and consumer demand is high for a number of months after the pandemic stimulus ended.
The question remains how far stocks are able to grow given how stretched price-to-earnings ratios are currently. Growth and tech stocks such as Tesla have seen a downturn over the last few months with the most notable example being Cathie Wood’s Ark Innovation Fund down to a shocking 20 percent. Additionally, CNBC’s most recent Millionaire Survey finds that wealthy investors are losing the desire to take risks and could allow more air to escape from the tires.
The Fed is getting tighter.
It is expected that the U.S. Federal Reserve will be reducing its bond-buying program beginning in January, and it is also anticipated to increase prices by 2022. It will have complicated and, frankly, uncertain implications on crypto. Theoretically, it could aid in reducing inflation, however, it can also put pressure on the speculative investments that have attracted some loose funds in recent times.
Remember, however, that at the very least, in terms of conventional economics this is great news. The near-zero rate of interest only benefits those who sell low-quality, high-risk investment options. A slight increase of one cent (or perhaps two) will mean that there is room for us to decrease in the event of a recession, which is the greatest benefit to U.S. long-term stability.
The inflation story of Bitcoin is being tested.
As I’ve previously written, bitcoin didn’t respond to the rise in inflation as it should, as per the “inflation hedge” concept outlined by a lot of advocates. According to my, this is because adoption hasn’t reached the level where the price is steady enough. However, if inflation persists or increases, even in the first quarter this year, the bitcoin needs to demonstrate a market reaction to ensure that the narrative remains valid in the longer term.
Tungsten cubes collapse.
Look out for used cubes for sale on eBay Be sure to keep in mind those costs for shipping.
Meme coins are wiped out.
Meme coins are essentially an online casino, however, they have positive feedback loops due to the fact that winners generate a huge amount of interest which helps keep the winnings flowing. On the other hand, a downward, or sideways-like cycle could be quite painful. 2022 will be a time of an aversion to ape-like behavior in cryptocurrency newcomers and consolidation around well-informed investing. This means that doge-like coins will continue to lose steam (it was at their peak in May) and the new pump will only have a limited gain.
(Shiba Inu is a fascinating alternative here and an example of how to transform an idea into a viable project. ShibaSwap DEX’s the ShibaSwap DeX is, at a minimum, in its own way intriguing, but I’m unable to be sure if it could raise the project above meme coin status, even in the event that it does succeed.)
The builders continue building.
It’s true, markets that are flat or down are often very exciting times to be involved in the world of crypto. The annoying shills go away while the designers and others who are actually making things can concentrate on what they are doing. The projects I’m most excited about during the coming BUIDL stage are Arweave which is an innovative system for distributed storage; Sign-in With Ethereum that’s basically exactly what it’s called as well as whatever Jack Dorsey has planned at Block (formerly Square).
Old hands need rough waters.
The rise of Avalanche, Terra, Solana, and Polkadot this year marks the end of the real momentum for several initiatives that’ve been in existence for quite a while. They had big promises over the years, but they have not performed technologically and in markets during the year that has been the most successful for crypto to date. A brief list of projects I’d consider putting in this category is Litecoin, IOTA, Cardano, EOS, and Hedera, due to the lack of interest from developers or technological issues that don’t align with the direction that the ecosystem is heading.
USD inflation will reach its peak.
It may even fall towards the end of next year. The impact of sentiment is huge in the process of inflation since it influences the future-looking setting of salary and price. It is expected that inflation will persist into 2022’s early years – for example, food producers have already made public announcements of price increases that will take the market in January.
There’s no reason not to expect to see a cooling trend in the second portion of this year. The demise of Biden’s Build Back Better bill is significant in terms of business sentiment and the planning for inflation – regardless of what you think about the bill and its potential benefits for Americans or the impact, it could have on the supply of money.
Additionally, early indications of South Africa are that the Omicron wave of COVID-19 is likely to be relatively short (mostly due to the fact that it is infective). This could mean that a lot of the factors that have driven U.S. inflation over the recent six months could begin decreasing by the end of June or July. This includes supply bottlenecks caused by the shortage of farmworkers and the shutdown of factories in China as well as the record-breaking growth in durable goods demand that should ease off as people return to a more “normal” living.
Remember that no matter what the bigger COVID picture may look like, summer is likely to be a low-inflation time and will result in at least a temporary downward pressure on goods consumption, which has accounted for the majority of inflation.
DAOs will draw considerable regulators’ attention.
However, in a more abstract conceptual way, we might not have any actual rules or enforcement until an individual uses a decentralized, autonomous group to carry out something completely insane. There’s plenty of discussion about the fact that DAOs can be described as ” the new corporation” and that governments are prone to regulate them. This is also where the rubber will hit the road of decentralization. There will be decentralized entities that will be able to in one way or the other, ignore regulations. False claims will be slapped down.
Stablecoins are restricted.
This could mean more enforcement actions by regulators like U.S. Securities and Exchange Commission & Co., and, at the very least, the beginnings of a serious rulemaking effort. There’s good news that U.S. regulators appear to be willing to let stablecoins come into existence. According to the investor, Lyn Alden has stated, a controlled stablecoin market could essentially mean an enormous new infusion of Treasury-backed liquidity around the world. To me, this could be a way to put increasing pressure on the prices of crypto assets whether for good or bad.
Many countries are adopting bitcoin.
In the immediate aftermath of El Salvador’s announced its new bitcoin policy, reports came in that other countries most of them from South America, were considering similar actions. They’ve just received a strong nod from the Bank of England, which in December. 21 gave permission to take approximately $2 billion worth of its gold assets. Instead, it might transfer the gold in the hands of Juan Guaido, the Venezuelan “opposition head” who is adored and adored by Western security agencies.
It sends a clear message to any country that dares challenge neoliberal dominance It’s not your bank, not even your gold. Bitcoin offers a compelling alternative to this threat.
Turkey descends into chaos.
President Tayyip Turkey’s long campaign to take over the country concludes as they typically end in the form of an unchecked autocrat making a poor decision because nobody has the money to speak up for him. The absurd prisoner’s dilemma regarding monetary policy runs for only a few weeks instead of months. Bitcoin transactions within Turkey are continuing to increase. It’s the kind of hyperinflation that your parents warned you about.
In his blog post at the end of the year, Bill Gates projected that we’ll witness an effective closure for the COVID-19 virus in the coming year. Although Gates’s focus is on vaccinations, it’s to be more likely that the super-infectious Omicron variant will stop the epidemic by infecting almost every person who hasn’t been vaccination-free (and the deaths of a large portion of people).
Facebook’s “metaverse” is a smack of absolute rubbish.
Virtual reality’s early quarterly reports on sales and use are poor or heavily manipulated. The company then redefines what it is referring to with the term “metaverse” exactly the manner as it has been moving away from Libra. Many millions of dollars are lost. In retrospect, everyone is of the opinion that the idea to use an online social network that requires you to wear glasses to access was a complete blunder throughout.