Experts Predictions for Crypto in 2022

By Aleksandra Wilson
5 min read December 23, 2021

Considering the big picture, Bitcoin has had a great year. The cryptocurrency went up by 70% since the beginning of 2021, bringing the crypto market to around $2 trillion in value. This year, the first crypto company that went public, Coinbase, debuted back in April. Also, during 2021 we’ve seen more active participation from Wall Street banks such as Goldman Sachs. Also, how can we forget the approval of the first exchange-traded fund in the US linked to Bitcoin? 

Although, the intense fluctuations of price and the strict regulatory scrutiny have slowed down BTC’s prospects lately. Regarding this, experts have been warning crypto users that the situation could be leading downhill. 

With the new year looking like another fluctuating period for crypto, a group of experts has already made predictions for crypto in 2022. Cryptodigest brings you a look at the most relevant predictions of analysts.

Experts Predictions for Crypto: The Crypto Crash

Some analysts assure that BTC is due for a steep decline in the months to come. Bitcoin rose to a record price of almost $69,000 back in November; currently, it’s sitting right below $50,000. That’s nearly 30% down from its highest point in just a matter of weeks. 

According to the wisdom that rules Wall Street, a decline of 20% or more is what defines bear markets. Although, it’s worth mentioning that this means nothing because of Bitcoin famous volatility.

Finance professor, Carol Alexander, said it’s expected for Bitcoin to go as low as $10,000 in the next year. If that happens, the profits earned in the last year and a half would be virtually whipped out. She strongly advises investors to consider coming out of Bitcoin soon because its price will probably plummet in 2022.

Alexander’s predictions for crypto are not based on mere speculation; we should keep in mind that if well it’s famous for its volatility, it also has specific patterns that we shouldn’t overlook. For example, after a significant price rise, Bitcoin tended to nosedive in the past. In 2018, the coin went down to $3,000 after getting close to $20,000 only a few months before.

On the other hand, cryptocurrency backers differ from Alexander’s opinion. As more institutional investors join the volatile market, crypto supporters insist that things are more stable now. A usual investment case for BTC, in particular, is that it serves as a hedge versus the inflation rising as a consequence of the government stimulus. Todd Lowenstein, a strategist from the Union Bank, says that the Federal Reserve has a big chance to pull the plug on Bitcoin.

The Exchange-Traded Fund

The most significant development that investors are eagerly anticipating in 2022 is the approval of the first ETF (Exchange-Traded Fund) in the US. Earlier this year, the SEC gave the green light to launch the Bitcoin Strategy ETF of ProShares. The product keeps track of futures contracts of Bitcoin instead of providing investors direct contact to the crypto.

In finance, futures are derivatives that require the investor to sell or buy certain assets for a price already agreed and at a later date. Experts agree that ProShares’ ETF might be risky for inexperienced traders that track futures and not Bitcoin. The futures of Bitcoin that launched has been categorized as not retail-friendly because of the high costs of rolling over contracts that end up being around 5-10%.

Grayscale Investments, which holds the most prominent Bitcoin fund, has requested to convert it into a spot ETF. Like Grayscale, there are many other Bitcoin ETF applications on the waiting list.

Hope in the Predictions for Crypto in 2022?

2021 was rough on crypto regulations, starting with China banning all crypto-related activities. Then, the authorities in the US cracked down on some aspects of the market. Experts suspect that new regulations will be one of the main issues in 2022 for the industry.

Vijay Ayyar, head of Luno exchange, stated that next year would influence the regulatory side of the crypto market. Since there’s a lot of interest from many governments (the US as one of the main), expectations have never been higher to bring regulation into the crypto industry. Ayyar also said he expects to clarify the legal gray zone for other cryptos besides Bitcoin.

Ripple is in a battle with the US authorities over XRP. The SEC says that it is a non-registered security and that the company sold the tokens illegally. On the other side, Ripple alleges that XRP is not a security.

Experts also mentioned stablecoins as one of the main focuses for regulation authorities next year. Stablecoins are cryptocurrencies that back up their price with assets like the USD. For example, Tether is the primary concern since there’s a lot of speculation about if it has enough assets backing it up or not.

Conclusion

Without a doubt, more scrutiny is to come around the crypto space. People still remember the housing and mortgage bubble too well, so it’s natural to be cautious about assets that people still don’t understand completely. 

While this is happening, regulations have also started scrutinizing the decentralized finance sector. It seems that the wheel has been set in motion, but the real question here is, whose interests are governments protecting? That’s a question worth asking. For sure, 2022 will bring more on crypto news and we at Cryptodigest are excited about keeping you informed about it.

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