The state of the cryptocurrency market – 2022 predictions

2 years ago 178

Events in the crypto world are moving at lightning speed, with hundreds of new tokens being launched every month and volatile movements of the more established assets. This solid pace will not decrease next year, experts predict.

In 2022, both retail and establishments will continue to adopt crypto, blockchain networks will further refine their technology, and it will be easier for newcomers to get involved.

We’ve seen some major global events that have moved the market in 2021: El Salvador adopted bitcoin as legal tender and many private investors got into cryptocurrencies. On the other hand, China has been tough on mining digital currencies. And finally, Facebook went all in on the metaverse, leaving Wall Street with even more dollar signs in its eyes.

Invezz surveyed Americans about their knowledge and usage of crypto and how they see this changing in 2022. After an eventful 2021, a variety of experts share their predictions for this new year.

17 percent of the American public holds cryptocurrencies

Invezz conducted a survey of 2,500 members of the US public, commissioned via Google Surveys using a nationally representative sample, to explore how consumers will be using cryptocurrencies in 2022.

When asked if they hold any cryptocurrencies at the moment, 83 percent answered that they don’t. It is noteworthy however that out of the 17% which are said to hold digital tokens, the vast majority (71%) of these respondents are male.

Whilst our survey concluded that the majority of these Americans didn’t hold any crypto assets in 2021, many also don’t intend on making their first investments this new year. 81 percent said they wouldn’t consider buying cryptocurrencies in 2022, whilst 19 percent would. 70 percent of respondents that indicated they are considering investing in crypto this year are males between the ages of 25 and 34.

27% of consumers invest in crypto for quick profits

More than one in four (27%) of the respondents considering crypto investments do so with the same motivation – they see it as a way to make a quick profit. Other motives include them seeing it as a viable long term investment (20%), the intention to use digital tokens to purchase goods and services (17%), being encouraged by people around them (12%), and feeling encouraged by advertisements (4%). 0.35 percent of respondents consider investing purely out of interest.

Before making any kind of decision or investment, it is wise to conduct research beforehand. However, the overwhelming majority of respondents (54%) indicated they didn’t look into the matter at all. 13 percent stated that they researched between six and 12 months, whilst 9 percent of those surveyed invested between one and four weeks of their time to get familiar with the topic before investing and 6 percent said to have spent less than a week researching.

Most of our respondents (51%) state they have no knowledge about cryptocurrencies at all. 27 percent of those surveyed class their understanding to be of a basic level, whilst 11 percent classify themselves as intermediate and 5 percent claim to have advanced knowledge. A further 5 percent say they have expert understanding.

Out of all currencies, most of those surveyed who were interested in investing would be most inclined to invest in Bitcoin. 38 percent said they would invest in BTC, whilst 15 percent said to prefer investing in Ethereum. 13 percent however said to be interested most in investing in Dogecoin and 7 percent said to be most prone to SHIBA INU. 5% said they are most interested in Solana.

On the possibility of using crypto as a payment method for various goods and services, 77 percent of those surveyed said they would not be comfortable using digital tokens to make such purchases.

Over half of respondents (52%) do not envision cryptocurrencies ever overtaking fiat, or to function as a valid alternative for money as we have known it previously. 14 percent however sees this adaptation taking place in the next one to five years, whilst 13 percent anticipates this happening in the next five to ten years. Notably, 7 percent expects this to happen as soon as within the next year.

Market movements and price predictions for June

Paul Arssov, President of ARS Technologies / Decentralized Web project:

“Currently, cryptocurrencies are viewed as a safe haven from turmoil instead of a bubble development. In the absence of cataclysmic events, most cryptocurrencies will keep increasing in price.”

Alexey Kirienko, CEO of EXANTE expects big movements amongst meme coins, as well as a rise in Ethereum’s and Bitcoin’s value:

“Dogecoin and Shiba are meme coins, which are prone to elevated levels of pump and dump and other similar schemes. As such, we don’t normally provide any views on them.”

Kirienko reckons Bitcoin will move up to $80,000, Ethereum to $6,000 and Solana to $600 with a positive yet speculative mindset.

Grigory Rybalchenko, Founder of Emiswap believes BTC could move to 100k. It is a possibility with a high probability. According to them, the Ethereum price is forecasted to reach $3,711.622 by the beginning of June 2022. The expected maximum price is $4,639.528, and the minimum price is $3,154.879. The Ethereum price prediction for the end of the month is $3,711.622.

Rybalchenko says the price of Binance Coin is forecasted to reach $482.505 by the beginning of June 2022. The expected maximum price is $603.131, and the minimum price is $410.129. The Binance Coin price prediction for the end of the month is $482.505. Forecasted Solana price may become less volatile by the beginning of next year. According to Solana (SOL) price prediction, the cryptocurrency will stay in the $300 range in 2022 and may go up to as far as $400. If it stays above the $200 mark, we may see considerable growth in SOL price in 2022.

In terms of movements from consumers in crypto investing, most of those surveyed who were interested in investing would be most inclined to invest in Bitcoin. 38 percent said they would invest in BTC, whilst 15 percent said to prefer investing in Ethereum. 5% said they are most interested in Solana.

The Dogecoin price is forecasted to reach $0.2445885 by the beginning of June 2022. The expected maximum price is $0.3057356; the minimum price is $0.2079002. The Dogecoin price prediction for the end of the month is $0.2445885. SHIBA INU price target for June 2022 is $0.0000339. A bullish trend with 15.5% volatility is expected. Out of the consumers surveyed, 13 percent said to be interested most in investing in Dogecoin and 7 percent said to be most prone to SHIBA INU.

47 of experts believe policy and regulation will have the biggest impact on crypto in 2022

Paul Arssov suggests geopolitical events will have the biggest impact – escalation of tensions, direct or a proxy war between US on one side and China and Russia on the other side.

Alexey Kirienko thinks that the Fed’s monetary policy will influence cryptos in 2022. Investors are likely to be discouraged from excessive risk taking as the US central bank reduces stimulus and starts tightening monetary policy. Other major central banks are likely to tighten their belts as well amid strong inflationary pressure.

The early parts of the year might see cryptos struggle amid concerns about the overall macroeconomic backdrop, with Covid-related uncertainty and inflation both remaining high, and central banks not sure whether to be aggressive in tacking inflation or remain patient. Inflation in the US has risen to 6.8%, its highest level since 1982 and could remain elevated for a while yet. This is going to eat into consumers’ disposable incomes and could weigh on risk appetite, including expensive technology stocks and cryptocurrencies.

According to Kirienko the early parts of the year will be a bumpy ride, but by June, things should have improved, leading to a wave of new investor interest in cryptos, resulting in limited downside risks in 2022 for cryptos as an asset class. But within the sector, there will without a doubt be certain cryptos that will sharply outperform the rest, while some will undoubtedly fall out of favour as investor interest gets concentrated on a selected few.

Anndy Lian, Chairman, BigONE Exchange and Founding Member of INFLUXO, expects a move towards big time adoption of crypto in 2022. He hopes to see everyone, including the older generation, using crypto in their daily lives. Many significant areas and spaces are developing within the crypto space, including DeFi, GameFi, NFTs, Metaverses, and more.

Seth Zhuo, Research Analyst at Nansen further asserts the regulations that are anticipated to be put in place. The industry has thrived in the gray areas of regulatory oversight for a while now; it looks like there will be more formal regulatory clarity in the coming years.

Some important topics the industry has to confront with those setting out these regulations include aspects such as tax evasion, investment fraud, exchange oversight and security rules and privacy issues.

Michael Kong, CEO of Fantom Foundation, believes technological improvements to the underlying blockchain technology will continue to have a massive impact on cryptocurrencies. For Fantom, that would be the implementation of a new middleware layer that is faster and more efficient than what is currently available through the Ethereum Virtual Machine, along with improvements to core consensus performance and well and layer-2 solutions.

“As we’ve seen in the past, no matter the market conditions, the technology continues to improve, and this is a big reason that always makes me bullish on cryptocurrencies long-term.

We will also continue to see big impacts from DeFi and NFTs, and in particular the growth of the Metaverses. There are more and more developers building very interesting new applications that we haven’t seen before, and I believe some of them will take off in 2022.”

Kerim Derhalli, CEO of Invstr, summarizes:

“The movement to mass adoption will be the biggest impact on crypto for this new year; the massive amount of money that is waiting to get involved is what is going to be the biggest drive in terms of helping the asset class. Regulation, taxation, these are inevitable things, and hopefully they’ll create opportunities for people to get involved in crypto. It’s the spread of crypto investing is going to be the main feature of 2022 both on a retail and institutional level.”

Influence of world-leading governments

Arssov:

“As countries start rolling out their central bank digital currencies (CBDCs), they will have direct control over financial transactions. This will in turn allow control over the fiat-crypto gateways — banks which did collect the fiat currency which was exchanged into cryptocurrency. Cryptocurrencies are viewed as an unhealthy and destabilizing force by China, resulting in the ban that came into effect last year. There are a number of countries following suit, which influences today’s trends and will impact crypto growth.”

Zhuo expects the US to play a leading role. We see some push backs on regulations happening already with the infrastructure bill. Given the tougher stance of current regulators, stablecoins, along with crypto tokens, will be under increased scrutiny in the coming years. This is not a bad thing – regulation has an important role to play as an industry matures, and the crypto industry is invested in building out smarter crypto policies with the authorities, with the likes of Coin Center, Blockchain Association, and others stepping up to collaborate with regulatory authorities.

However, according to Michael Kong, growth will continue no matter what governments do. The long term trend is for the technology to keep improving and use cases expand. Government policy can only have a short term impact on that. In terms of China’s impact, we’ve already seen this year how the change in mining policy affected global hash power distribution of bitcoin. It will be interesting to see, as proof-of-stake networks grow and staked values increase, how this will shift globally on the market as a whole and to what extent China will be a major player going forward.

Kerim Derhalli notes that the other positive trends that we’re seeing are the central banks are clearly getting involved as they don’t want to lose control over currency systems, so they’ll be publishing their own CBCD’s, which he thinks we’ll see evolve. Additionally, DeFi is growing at a ridiculous rate, building an entire parallel financial system and I think that’s going to continue growing. It really is the Federal Reserve in the US that’s behind.

Buy, sell or hold Bitcoin in 2022

Alexey Kirienko says hold. Bitcoin has become very expensive for most retail investors, even after its big correction in recent weeks. It is, however, likely to find its feet again, simply because it is the benchmark and there’s institutional sponsorship to take into account. Bitcoin bulls’ mentality has been to buy and hold. Given that its supply is limited and demand still hot, it will likely bottom out in the coming weeks.

However, if we are to see big percentage gains in 2022, it is more likely to be for some altcoins than Bitcoin. This is simply because altcoins will be rising from a much lower base. This should reduce the appeal of Bitcoin on a relative basis, which is why it is a “hold” for us.

According to Grigory Rybalchenko, Bitcoin is predicted to hit $100,000 by 2023. Others are more optimistic. Experts in the field forecast $100,000 Bitcoin by Q1 2022, So, buy and hold.

The rise of crypto niches

Whilst Kirienko expects DeFi to grow further in popularity, MetaVerse is the new big thing. It has the potential to radically change how people interact online and has huge potential for companies to advertise their products in a new virtual environment. The possibilities are endless.

Michael Kong expects to see the MetaVerse and NFTs continue to grow the most. There is now a lot of hype around both, in particular after Facebook rebranded themselves to Meta. Since then, there have been a lot of articles suggesting the MetaVerse will become the next big opportunity. NFTs and gaming are experiencing similar growth. However, we will still see a lot of growth in other areas such as DeFi and DEXes, and Central Banks will continue to explore CBDCs.

Kerim Derhalli thinks MetaVerse is not going away, however he thinks we’re in the early pioneering phase of this. Companies like Meta and Unity are investing massively in building this community, I think it’s still very early days. And the other thing we’re waiting for the MetaVerse to unfold, is the miniaturizing of VR technology.

NFTs are gaining in popularity, they aren’t going away either. Just in the same way we’ve seen that rush with the ICA explosion in 2018, I think similarly to that we’re going to have to find where the quality lies within the NFT space. Naturally, there will be assets that are worthless and others that are valuable, yet it’s not yet obvious where we differentiate between the two.

The cryptocurrencies that help support the build out of DeFi are the ones that I would favour in terms of positive movement in 2022. Litecoin, Cardano and Serrano are all great. Ethereum is fantastic and is being used as the basic standard. The only problem with this however is the gas prices. This, again, is also almost becoming a victim of its own success as it becomes more expensive to use which could limit it, and we may need alternatives which creates opportunities for other chains to become established, says Derhalli.

MetaVerse and NFTs vs traditional markets

The NFT and MetaVerse are not related to traditional markets, says Paul Arssov. As an area of technology, metaverse is much bigger than crypto and blockchain technology. Currently, it uses crypto/blockchain tech as a value exchange mechanism. But as crypto/blockchain tech is pretty cumbersome, the metaverse may move to some other ways of value exchange.

Timo Lehes, co-founder of Swarm Markets, sees NFTs as a streamlined and efficient way of bringing real-world assets on-chain, like traditional financial products. By adding more assets, we can expand the DeFi ecosystem 10-100X and will start to see interesting and novel trading pairs and products.

Anndy Lian says MetaVerse, NFT and the technologies revolving around are not detached from the traditional markets. It appears as if there is, but it is purely the mindset of not being able to accept changes.

Kong commented:

“NFTs are experiencing significant growth on their own since they represent a form of ownership of data, which may be something purely digital or a physical item in the real world. This is a very powerful concept, as it means NFTs have a lot of use-cases. For example, they can be applied across multiple games or metaverses.”

Until we see the financialization of NFTs in 2022, the narrative of NFTs and Metaverse will remain detached in the short term – especially those in the gaming, music and art spaces.

Cryptocurrencies as a payment source in 2022

When asked about cryptocurrencies being introduced as a more standardized form of payment this new year, our experts are divided.

Paul Arssov reckons there may be some acceptance of ordinary cryptocurrencies as a payment source, however this will be temporary and overtaken by CBDCs once they are introduced. Alexey Kirienko agrees and says this has been the trend, and thinks this will continue to be the case in 2022 as more institutions get involved. “The big retailers are already accepting cryptocurrencies. I am expecting SMEs to do the same in 2022”, adds Anndy Lian.

Josh Neuroth, Head of Product at Ankr, agrees, but notes this development won’t happen in the way people anticipate it will. Consumers don’t want to pay for regular living expenses with a potentially appreciating asset such as crypto.

“Bitcoin is unlikely to ever see mass adoption as a payment medium, as the network cannot scale globally for this purpose. Stablecoins are much more likely to be used for payments due to their stability. But Bitcoin is gaining more adoption as a speculative asset and store of value among retail and institutional investors, including in the forms of pension plans and ETFs,” adds Alan Konevsky, CLO at PrimeBlock.

According to Derhalli, it’ll mainly be the stable coins such as Tether or USDC that could become more widely accepted as a payment method. If you look at our banking system, it is so backwards that it needs to be replaced. Payments through crypto, stable coins, in particular, are going to happen. However, tokens such as Bitcoin and Ethereum aren’t suitable for such a mechanism, as one won’t use an investment to buy goods. I think most crypto will fall into this investment space and the role of stable coins and eventually the digital currencies central banks will inevitably roll out, they will be used as payment mechanisms. Crypto as a payment method will help us move to a 24/7 efficient payment mechanism, particularly in the US, for more efficient and free movement of money.

Cryptocurrencies most likely to lose their value in 2022

In the ordinary times we will see patterns of a slow growth, followed by a sharp decline in value, and then repeat of the same. In a geopolitical crisis, we can see a permanent loss of value of most cryptocurrencies, says Paul Arssov.

Without naming any particular coins, some meme coins are the ones most likely to get crushed as “investors” realize some of them have near zero use in real life applications, according to Alexey Kirienk. Some like Doge might be able to bark louder given Elon Musk’s involvement. He thinks we will see many meme coins lose their value this year.

On a broader scale, any crypto asset which fails to attract developers stands to lose the most in 2022 as real market traction becomes more important than speculation and roadmap, says Josh Neuroth. Projects and developers are looking for chains which offer what ETH cannot. For example, he sees many projects and developers who started on Ethereum exploring the Solana ecosystem due to the enthusiasm around transactions per second and low gas fees. He doesn’t see the same level of excitement among developers for chains like Cardano, who have promised a lot but are still figuring out delivery.

Ethereum overtaking Bitcoin as the top crypto in 2022

In terms of the hypothesis of Ethereum overtaking Bitcoin, the analogy Kerim Derhalli uses is like commodities. Gold is the one that is quoted the most and is followed more than any others. To Derhalli, Bitcoin is equivalent to gold. It’d be difficult to displace its status, especially given the increased scarcity which gives it a natural support, and he thinks it is always going to retain its status as the benchmark for the crypto world. Whilst many are working on making Ethereum more efficient and there certainly are still issues to be ironed out such as the cost of using it, these aspects will limit its natural growth.

Paul Arssov on the other hand states that Ethereum does deserve the spot as a top coin as it evolves, it is an ecosystem and a template for projects. On the other hand, Bitcoin is ‘ossified’, with no way to evolve.

Alexey Kirienko disagrees, and emphasizes Bitcoin is likely to remain number one for a while in terms of market capitalization and also price. As we see further upside potential for ETH, it has mountains to climb before it can pose a serious threat to BTC in terms of becoming the top crypto. The market capitalization difference is simply too large, with Bitcoin’s being around double that of ETH. ” “Nope. There is a long way to catch up with big brother bitcoin.

Josh Neuroth thinks it’s possible for ETH to flip BTC but unlikely in 2022. However, several things would need to occur before this could happen: ETH2 must first launch and then demonstrate its ability to scale to higher transactions per second, as well as decrease gas fees. Institutional investors will have to feel fully comfortable with ETH, and that won’t even begin to happen until 2.0 launches and the market responds. I do believe ETH2 will continue to climb in value leading up to the ETH2 merger and as people realize it’s now a deflationary asset. “

Timo Lehes believes it’s too early to see a challenge to Bitcoin’s market cap dominance. ETH and BTC are also different things with distinctively different roles in the market, so, if and by the time it happens, the dominance conversation might be less of a topic.

Adaptation of established crypto’s by traditional institutions

Arssov expects professional traders will go into areas which promise gains – including in cryptocurrencies. Most, if not all, institutions which did enter the crypto market did not cash out back – from fiat to crypto. Few people understand that the growth in crypto is measured in ‘stable coin’ dollars’, and there is a lot less collected fiat/paper dollars to cash out on.

Kirienko thinks we are likely to see more investment funds get involved in cryptos, given their rising popularity and adoption. While the volatile nature of cryptos means it is not for everyone, anecdotally we have seen the perception of people towards cryptos change over the years. So, it is reasonable to expect more traditional institutions will warm to the idea of having some exposure to cryptos in 2022.

We’re going to see more countries adopting Crypto as a legal currency, according to Konevsky. We’re also going to see central governments coming out and taking their own currencies and putting them on the blockchain. China has already said they are going to do this, which is going to speed up the real competition to private cryptocurrencies from a payment perspective. CBDCs do not present competition from a store of value or inflation protection perspective because it’s still the same fiat currency, subject to the same monetary policy manipulation by the central banks. It’s certainly something that is fully digital, transparent, and has both good things and some very scary things that come with it. The hope is that, at least in the US, the dialogues around CBDCs will happen with keeping the values of our society in mind, including our own privacy and control.

“Whilst we will see sell-off’s as we always do, we’ll certainly see more traditional institutions add crypto such as Bitcoin to their portfolios and take advantage of these market movements”, summarizes Derhalli.

Methodology

Invezz interviewed a panel of 11 fintech specialists from December 10, 2021 to December 24, 2021. Panellists may own some cryptocurrencies, including Bitcoin.

Additionally, a survey of 2,500 members of the US public was commissioned via Google Surveys, using a nationally representative sample, to explore how consumers will be using cryptocurrencies in 2022.