Top predictions for crypto in 2022, from bitcoin crash to regulation
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Crypto crash
According to some experts, bitcoin could see a rapid decline in the coming months.
Bitcoin reached an all-time high of $69,000 in November. Now, it’s below $50,000. This is almost 30% down from the peak. Bear markets can be defined as any decline greater than 20% from their recent highs. But, Wall Street knows that bitcoin’s volatility is a major problem.
Professor of Finance at Sussex University Carol Alexander said that bitcoin could plummet to $10,000 by 2022. This would wipe out any gains made in the last year and a quarter.
Alexander declared, “If I was an investor right now, I’d think about getting out of bitcoin quickly because its price is likely to crash next year.” She believes that bitcoin is more of an investment than a tool and has no intrinsic value.
Alexander says bitcoin may fall, just as it did in the past after an increase in its price. After climbing to nearly $20,000 just a few months prior, bitcoin plummeted to close to $3,000 in 2018. Many of the cryptocurrency’s supporters claim that this is a different time because more institutional investors have jumped in to the market.
Todd Lowenstein is chief equity strategist for Union Bank’s private branch. “Without doubt, Bitcoin’s prices chart seems to track many historic asset booms and busts. It also has a narrative that ‘this times it’s different,'” he said.
One common use for bitcoin as an investment is to hedge against inflation due to government stimulus. Lowenstein stated that there is a possibility of bitcoin becoming a “financial hedge” against rising inflation caused by government stimulus. more hawkish Federal ReserveBitcoin may lose its wind.
He stated that “Goldilocks” conditions were ending, and the liquidity tide was receding. This will adversely affect overvalued assets and speculative markets including cryptocurrency.
However, there are still doubts that the crypto party will be over by 2022. This is the biggest risk, however. [quantitative tapering]By the Fed, is already decided and most likely priced in,” Yuya Hasegawa (crypto market analyst, Japanese exchange Bitbank) said.
ETF Bitcoin First Place
The approval of the United States’ first spot-btc exchange-traded fund is a major development that crypto investors want to see in 2022.
ProShares launched even though the Securities and Exchange Commission had not approved it. Bitcoin Strategy ETFThis year the product will track bitcoin futures contracts and not give investors direct exposure to cryptocurrency.
Futures are financial derivatives which require an investor to sell or buy an asset later and at an agreed price. Experts say ProShares ETF tracks futures prices rather than bitcoin. This could pose a risk to novice traders who are often invested in crypto.
Vijay Ayyar is vice president for corporate development at Luno. He stated, “The Bitcoin Futures ETF was launched this year and has been widely considered not to be retail-friendly due to the high cost of rolling over contracts that amounts around 5-10%.”
“Increasing pressure/evidence… points to a Bitcoin Spot ETF being approved in 2022 mainly because the market is now large and mature enough to support one.”
Grayscale Investments filed for conversion bitcoin trustThe world’s largest bitcoin fund is. into a spot ETF. You can also find plenty of other bitcoin ETF applicationsYou are waiting for your turn.
Rotation into ‘DeFi’
The market share for bitcoin has been declining as the cryptocurrency industry evolves. ethereumThis is a larger part of the equation. As investors seek smaller amounts of cryptocurrency in the hope for big gains, analysts anticipate this trend will continue.
Alexander, a student at Sussex University flagged ethereum. solana, polkadot cardanoAs coins to look out for in 2022.
“As retail investors begin to realize the dangers of trading bitcoin, especially on unregulated venues, they will switch to…other coins belonging to blockchains which actually serve an essential and fundamental role in decentralized finance,” she said.
Alexander said that “this time next year, I predict bitcoin’s market capital will be half of the combined cap smart contract coins,” like ethereum or solana.
Bryan Gross, crypto platform ICHI network steward and network steward said that emerging crypto technologies such as decentralized financial services and decentralized autonomous organisations are likely to “likely be the most lucrative areas in crypto.” The DeFi initiative to recreate traditional financial productsDAOs do not require middlemen. new type of internet community.
The total amount of money that was deposited in DeFi accounts surpassed $200 Billion for the first year. Experts anticipate that demand will grow even more in 2022.
Web3The movement for a decentralized version of the internet is expected to grow in popularity next year. Web3 also includes DeFi, and other blockchain technology such as non-fungible tokens. It is. already found skepticsIn the same vein as Elon Musk Jack Dorsey.
“A huge year for the regulatory front”
China was the latest country to show its regulators that it is willing to take on cryptocurrency. completely banning all crypto-related activitiesU.S. Authorities cracking downCertain aspects of market. Most analysts believe regulation will become a major issue for this sector by 2022.
Luno’s Ayyar declared that 2022 would be “a major year on the regulation front, no question.” The interest of various countries, especially those in the U.S. to regulate the crypto-space has never been greater.”
Ayyar stated that he hopes to receive clarifications on the legal gray zone of cryptocurrency other than bitcoin or ethereum. The SEC said they are not. not securities.
Ripple Blockchain Company is locking horns with the U.S. watchdogover XRP. This cryptocurrency is close to its heart. Ripple, two of its executives and XRP are accused of illegally selling $1.3 million worth of tokens. Ripple, for its part, says XRP shouldn’t be considered a security.
Experts predict that regulators will also be focusing on another important area next year. stablecoins. These tokens have a value that is linked to existing assets, such as U.S. dollars. The world’s largest stablecoin is Tether. particularly controversialAs concerns are raised about the amount of assets it has in reserve to pay its dollar peg.
Lowenstein said that “undoubtedly, more scrutiny will come around stable coins as regulators check under the hood on how soundness of theunderlying collateral and leverage deployed”
People remember well the time when mortgage and housing crises were triggered by suspect collateral and aggressive risk-taking.
Regulators have, however, also begun scrutinizing the DeFi space. The Bank for International Settlements, a central bank umbrella organization was established earlier this month. called for the regulation of DeFiAccording to the company, it was concerned that services might be marketed as being “decentralized”, even though this is not necessarily true.
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