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How will the 2022 crypto market play out?

The entire crypto market has taken huge strides towards mass adoption in 2021. Now, as the year draws to a close, analysts are setting their price targets for 2022. Analysts have backed a $100,000 price point for Bitcoin before the end of 2021, and while this seems unlikely, most investors expect to hit this critical level before Q2 2022. Here are some Bitcoin price predictions that analysts are expecting in 2022.

Bitcoin continues to plunge, decentralized finance takes over, and increasingly tight regulations could become a reality next year. 

Looking back at 2021, Bitcoin had a pretty good year. The digital currency is up nearly 70% since the start of the year, pulling the entire market cap to $2 trillion. This year saw Coinbase – the first major cryptocurrency company IPO. Wall Street banks like Goldman Sachs became more involved in the crypto market and the first Bitcoin ETF was born.

However, increasingly strict regulatory regulations and intense price volatility have dampened the outlook for Bitcoin recently. Experts warn the market may be heading for a recession. According to experts compiled by CNBC, the cryptocurrency market in 2022 can continue like a “roller coaster”. The following are prominent predictions for the crypto market in 2022.

Bitcoin is still on track to surpass $100,000

Analysts have become more careful in making Bitcoin predictions since PlanB’s stock-to-flow model incorrectly predicted a $98,000 price at the end of November, even though the model worked quite well from August to October.

While some traders are now questioning the validity of the stock-to-flow model, analyst DecodeJar still insists BTC surpasses the $100,000 mark within the next few months and could even go as high as $250,000 by the end of 2022.

In fact, if we look at the weekly chart, we also see that BTC is still in a long-term uptrend, only when the price breaks the strong support area of $40000-43000, then the downtrend will really appear. Currently, the market is still correcting its trend.

First spot bitcoin ETF

One big step crypto investors will be watching in 2022 is the approval of the first spot Bitcoin exchange-traded fund (ETF) in the US. Although the US Securities and Exchange Commission (SEC) gave the green light to the launch of ProShares Bitcoin ETF this year, they only have Bitcoin futures contracts.

Experts say Bitcoin futures may be too risky for novice investors. Vijay Ayyar, Vice President of Corporate Development and Global Expansion at Luno Cryptocurrency Exchange, said that the Bitcoin ETF launched this year is considered by many to be not very retail-friendly, due to the high cost associated with rotating contracts which amounts to around 5-10%.

Decentralized Finance (DeFi) is on the throne

As the cryptocurrency industry grows, Bitcoin’s market share gradually decreases, while other currencies like Ethereum gradually play a larger role. This is something that analysts predict will continue to happen next year. Investors are increasingly looking to smaller cryptocurrencies, hoping for big gains.

Alexander lists Ethereum, Solana, Polkadot, and Cardano as coins to watch 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.

She predicts that by this time next year, Bitcoin’s market capitalization will be half or even less than the total value of smart contract coins, such as Ethereum and Solana, combined.

Bryan Gross, network steward at crypto platform ICHI said that decentralized finance (DeFi) and decentralized autonomous organizations (DAOs) are likely to be the highest growth areas of crypto next year. DeFi recreates traditional financial products without intermediaries, while DAO can be seen as a new Internet community.

Total money deposited into DeFi services surpassed $200 billion for the first time this year. Experts forecast demand to increase further in 2022.

A big year on the regulatory front

Authorities in many countries have stepped up regulation of cryptocurrencies this year. In particular, China has completely banned all activities related to this field. The US has also tightened its grip on the sector of the market. Analysts predict more regulation will be an important issue for the crypto market next year.

“2022 will be a big year on the regulatory front” Ayyar said. Ayyar expects to see some clarification on the legal “gray zone” of cryptocurrencies other than Bitcoin and Ethereum

The Ripple company is getting into trouble with the US watchdog over XRP. The SEC alleges that XRP is an unregistered security and that $1.3 billion worth of tokens were illegally sold by Ripple and two executives. For its part, Ripple says that XRP should not be considered a security.

Another key area that regulators will likely focus on next year is stablecoins. These are cryptocurrencies whose value is tied to the price of existing assets such as USD. Tether, the world’s largest stablecoin, is particularly controversial as there are concerns about whether it holds enough assets in its reserves for a peg to the dollar.

“Undoubtedly more scrutiny is forthcoming around stable coins as regulators look under the hood on the soundness of the underlying collateral and amount of leverage deployed,” said Lowenstein.

In addition, authorities have also begun to scrutinize the decentralized finance (DeFi) space. Earlier this month, the Bank for International Settlements called for regulatory research for DeFi. The organization is worried about some services that advertise themselves as decentralized finance, which they are not.

Mass adoption continues

Despite the short-term signs of weakness, Loukas Lagoudis, operator of crypto and digital asset hedge fund ARK36, is convinced that the overall uptrend of the crypto market will continue in 2022.

Lagoudis suggested that “the sustained adoption of digital assets by institutional investors and their further integration into the legacy financial systems will be the main drivers of growth of the crypto space in the next year” as institutions were seen as starting to favor “digital assets over gold as a reserve asset” over the course of 2021.

“In addition, since digital assets have consistently outperformed traditional asset classes, we predict that investors will see allocation to digital assets as a part of their risk management strategy — especially given the increasingly inflationary economic environment and the declining bond yields”.

According to Jean-Marc Bonnefous, head of asset management at Tellurian ExoAlpha, suggested that “the trend seems to be favoring blockchains that focus on performance, DApp development and that are somewhat more centralized.”

Bonnefous said this represents a significant change from the trends of the past, which were more “focused on security, store of value and that are more decentralized like BTC and even ETH.”

“Basically, the market seems to go for business agility and cost-efficiency rather than blockchain purity, a big change from the past years. This winning relative value trade is likely to continue into next year.”


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Disclaimer: This article is for informational purposes only, not investment advice. Investor should research carefully before making decision. We are not responsible for your investment decision

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