What to Expect from the Crypto Market in 2022? Watch Out!
The crypto world is changing rapidly. Every day, we can see new advancements in the crypto space. While some advancements on one hand are likely to benefit the investors, some, on the other hand, may make people feel reluctant to invest in crypto assets. For example, the recent breaking news of the Indian Government putting 30% tax regulations on the crypto earnings is one of the expected changes in the crypto market. Similarly, there are various other trends that are likely to show in the crypto world that the investors must look out for. Here is what to expect from the crypto market in 2022.
Crypto-based Investments will Become More Sustainable
Investors have been feeling reluctant in buying crypto-based assets and products because of the significant carbon footprint that backs up the mining of crypto coins. So, the European Emissions Trading System has put forward a provision of buying emissions allowances for around $100 US Dollars to offset the carbon footprint of mining crypto coins. This year, these CO2 emissions allowances are likely to increase in prices as more people will be buying crypto assets.
Approval of Crypto ETFs: What to Expect from the Crypto Market
As you may be knowing, the first Bitcoin ETF appeared on the New York Stock Exchange in October. Following that, the developments have introduced a more convenient way of investing in cryptocurrencies. For example, the BITO Bitcoin ETF will be allowing investors to buy cryptocurrencies through their traditional investment accounts like Fidelity and Vanguard.
However, we must note here that the BITO fund doesn’t hold Bitcoin directly. Rather it tracks the general trends of the real crypto market. If we look at the trading activity related to BITO, we will be able to see that it was pretty high during the initial few weeks of listing. This clearly indicates that people are more likely to buy ETF assets because they can buy them easily from their existing brokerage accounts.
But if we consider the risks attached to investing in direct cryptocurrencies or crypto funds like an ETF, there is no difference at all. So you must invest in the crypto funds, only if you are willing to take the risks, else keep your foot out of it.
Adoption of Cryptocurrencies by a Wider Institutional Audience: What to Expect from the Crypto Market
Currently, there is a lot of doubt and lack of credibility that lurks around the discussion about crypto. Even after investors boast about the huge profits that they have gained over the last few years by investing in cryptocurrencies, more and more people are still feeling skeptical about investing in the crypto market.
At the same time, there are talks about big companies like Walmart, Amazon, and Tesla having large chunks of their investments in cryptocurrencies. To top it all, fintech companies such as PayPal and Square are taking great interest in this industry, letting investors buy these digital assets on their platforms. As a result of the increasing fame of cryptocurrencies in some of the biggest companies across the world, the crypto market is likely to gain a bigger pool of investors in the next decade.
Here are some of the most striking changes that can happen in the coming decade for cryptocurrencies.
- More retailers may start accepting cryptocurrencies as payment methods.
- A more elaborate institutional adoption of crypto funds.
- The demand and value are likely to increase.
- Greater expenditure of Bitcoins on goods and services.
WEB3 Infrastructure will Enable the Decentralization of Crypto: What to Expect from the Crypto Market
The Web3 infrastructure proposes a way of delivering internet architecture to a DeFi protocol by using blockchains. It gives the users full control of the data and infrastructure. This Web3 infrastructure may open several avenues for the use cases, that is, to store decentralized data via blockchains, decentralized wireless networking, community-based decision making, and so on. How do cryptocurrencies fit in this technology? By providing sustainable incentives to the network users for providing the required infrastructure.
NFTs and NFT-based Games will be More Popular
Several big companies are all set to enter the GameFi world by setting up their own metaverse platforms. Metaverse is a digital platform where people can interact and trade with each other. In this case, NFTs which are further governed by cryptocurrencies and smart contracts, will have a significant role to play. As these virtual platforms gain more popularity, the NFTs and NFT-based gaming world are sure to witness a further boost.
Legal Clarity Around Crypto: What to Expect from the Crypto Market
In the year 2022, countries will create a more defined legal framework around how they are going to handle and regulate crypto assets. Some countries like China have already issued a statement by banning the cryptocurrencies nationwide while others like El Salvador have accepted cryptocurrencies as official currencies besides US Dollar. Similar regulations can be seen in other countries of the world regarding crypto-assets while exploring the legal viability of such decentralized finance protocols and are likely to adopt a crypto-friendly way of managing assets.
Better Social and Economic Coordination: What to Expect from the Crypto Market
Cryptocurrencies are finding utility in clubbing the various use cases of blockchains with the organizations involved in the working of blockchains. Such organizations are known as Decentralized Autonomous Organizations (DAOs). Some of the existing examples are Syndicate, MakerDAO, ConstitutionDAO, and so on. So, it is possible that many such DAOs will emerge this year. At present, the top 20 DAOs are known to hold a sum of $14 Billion in their treasuries.
Market Rules to Follow in 2022: What to Expect from the Crypto Market
While there are so many new trends for the crypto market in 2022 that investors must look out for, there is one trend that has been there since the introduction of the crypto space. That trend is its volatility and a less public acceptance. So here are some market rules to follow for crypto that will help you to be successful in this market.
Put in Small Amounts
Investors may feel lured into the high percentages of profits earned by other investors in the crypto market. But the cryptocurrencies do not always witness such highs. This is the beauty of the volatility that exists in the crypto market. Therefore, crypto investors must not put more than 5-10% of their investments in crypto.
Build Some Appetite for Volatility
The Crypto market is well-known around the world for its extremely volatile nature. If you are an investor and have entered the crypto market to earn profits overnight, you must have some appetite for risks that are born out of its volatility. High risks correspond to high returns. But the investors must be sure of how much loss of money they can endure.
Choose a Trustworthy Platform
With the rising popularity of cryptocurrencies in the world, there are new crypto exchanges flourishing every day. Hence, investors must choose the crypto exchange platforms very wisely and go for platforms that are well-established.
Do not Follow the Tips
There are many people in the crypto industry who claim to be the masters of this market. Beginner investors often have to rely on these crypto-teachers for basic knowledge and pay them for their services. Always remember that there is the same set of information available for all kinds of crypto investors on the internet.
Invest in Blue Chip Funds
The Crypto world too has blue-chip coins just like the stock market and these blue-chip coins have the same significance as blue-chip funds in the stock market. Such coins are more stable and may help you protect your portfolio from the volatility of the crypto market. Bitcoin and Ethereum are the two most important blue-chip coins in the crypto market.
Cryptocurrencies are still new and are bound to undergo several changes in the near future. Therefore, investors are advised to dip their feet in the crypto waters very carefully while following the rules given above. These rules will not only help crypto investors to make profits but also help them in not lose their money in the crypto market.