The past year has been regarded as a huge success for cryptocurrencies. What will 2022 bring to Bitcoin and the broader crypto industry?
2021 is a turbulent but fruitful year for cryptocurrencies. The market value of cryptocurrencies has increased from less than 800 billion U.S. dollars to about 2.2 trillion U.S. dollars today, and some of these assets have achieved huge returns in terms of price and users. In addition, the continued prosperity of DeFi (decentralized finance) applications and NFTs indicates that there may be more gains in the coming year.
Below are the five major encryption trends we will focus on starting in 2022.
1. Strengthen supervision
So far, the crypto industry has been booming, thanks to its decentralized structure and unregulated nature. But many people in the industry will tell you that as long as the rules are transparent, they will be open to regulation.
Governments have been trying to find a way to regulate cryptocurrencies to deter cybercriminals and protect the safety of retail investors. China has shown a way to do this by making it illegal for encryption activities within its borders, unless it is an activity approved by the government.
Crypto investors and entrepreneurs want to adopt a more moderate approach in the United States, and the US Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC) and offices under the Treasury Department are all advocating for the development of new regulations. For investors, regulations may mean clearer tax guidelines and even the ability to include crypto investments in retirement accounts.
2. Bitcoin ATM has doubled
The intangible nature of cryptocurrency has long been a disadvantage; many people cannot see Bitcoin as a real currency because they cannot see or touch Bitcoin. But now that the installation of Bitcoin ATMs is slowly becoming a reality around the world, people will be able to treat digital assets as investment tools within reach.
Since 2015, the number of Bitcoin ATMs has been steadily increasing, and set a new high in 2021. According to data from Coin ATM Radar, there are now more than 33,000 Bitcoin ATMs worldwide.
Bitcoin ATM basically allows people to buy BTC using a credit or debit card. This makes cryptocurrency very accessible to both enthusiasts and novices. Bitcoin ATMs can actually eliminate the need for crypto brokers because people can easily use them for crypto transactions.
3. Environmental improvement
Encryption skeptics have pointed the finger at the impact of blockchain networks on the environment. This problem even plagues some encryption enthusiasts.
Bitcoin mining does require a lot of computing power, which consumes a lot of energy. Since most cryptocurrency market capitalization is generated by the use of proof-of-work tokens in the mining process, it is unlikely that there will be any major changes in energy costs in 2022.
On the other hand, newer cryptocurrencies such as Cardano and Solana are praised for adopting proof-of-stake methods that do not require a large amount of energy. Ethereum is the second-ranked cryptocurrency by market capitalization and is about to move to proof of equity, which should cause other cryptocurrencies to follow suit and make it more environmentally friendly. If environmentally friendly encryption technology is adopted in 2022, even if Bitcoin’s energy use does not improve, it will be beneficial to the field.
4. Bitcoin prices continue to fluctuate
Bitcoin is by far the largest cryptocurrency in the world. In 2021, Bitcoin’s performance has been unstable. In April, it hit a record high of more than 60,000 U.S. dollars, plummeted below 30,000 U.S. dollars in July, and hit nearly 70,000 U.S. dollars in November. And then fell to a current level well below $50,000.
Considering that the crypto market is not yet fully mature, this volatility may continue into 2022 and beyond.
Bitcoin’s volatility is one of the reasons why many experienced traders like Bitcoin, and its volatility provides opportunities for arbitrage. But this is why many asset managers advise to proceed with caution and tell clients to allocate only 5% of their portfolio to cryptocurrencies.
Investors should be prepared for Bitcoin’s skyrocketing and plummeting.
What cryptocurrency bulls expect is that Bitcoin and other cryptocurrencies will continue to fluctuate in the short term, but in the long term, despite periodic sharp corrections, their value will continue to grow steadily. Therefore, investors need to be patient and don’t worry about temporary ups and downs.
5. Approval of Crypto ETF
When the first Bitcoin futures ETF (Exchange Traded Fund) BITO was listed on the New York Stock Exchange this year, the trading volume on the first day reached nearly $1 billion. This confirms investors’ interest in crypto products that can be purchased and traded on regular exchanges.
But BITO does not hold any bitcoins-this is a way for retail investors to access bitcoin futures instead of actual BTC. It is not a “spot” ETF. The SEC received a large number of ETF applications based on the current prices of cryptocurrencies, but never approved them. However, based on BITO’s performance and investor confidence in it, the Bitcoin spot ETF looks likely to be passed soon in 2022, which may bring in a large number of new retail investors.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/whats-next-for-bitcoin-and-cryptocurrencies-5-trends-to-watch-in-2022/
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