Bitcoin hitting $ 100,000 is ‘ambitious but far from crazy’

[ad_1]

2021 has been a crazy year for cryptocurrency. Despite the recent plunge in bitcoin, for example, its price has still risen by over 70% in the past 52 weeks.

More importantly, bitcoin and other cryptocurrencies have made huge strides, not just in terms of valuation – today, the market cap of cryptocurrencies is estimated at $ 2.5 trillion, or more. double a year ago – but also in terms of growing acceptance.

A mid-year survey estimated there were 221 million cryptocurrency holders, more than double the number in January. And this year, El Salvador declared Bitcoin to be legal tender, and several countries, including the United States, have issued some form of Bitcoin-based ETF.

At the same time, we have also seen some serious backlash against cryptocurrencies. China has been one of the countries most explicit in the crackdown, both expelling crypto miners and banning most cryptocurrency transactions for its citizens over $ 1 billion. India is considering similar measures.

And even where governments are unwilling to ban crypto, 2021 has been a year of skepticism about the energy drain, and therefore the climate impact, that crypto can potentially create.

Faced with these contradictory signals, what does the new year have in store? As the editor of the FIN fintech newsletter, here are what I see as the crucial crypto trends in 2022:

1. Lots of El Salvador

We will see further advances in the adoption of cryptocurrency by the general public. They might not always take the form of legal tender, but financial institutions will increasingly embrace cryptocurrency because customers demand it to be part of their wallets. Many banks and financial services companies will make working with crypto a way to attract and retain customers.

2. Expansion into secondary or derivative markets

In February, Canada’s Purpose Investments launched what it claims to be the world’s first bitcoin-based ETFs. Less than a year later, it manages some $ 1.4 billion.

There is no reason that it cannot be duplicated 10 or 100 times in markets outside of the United States. And although it has been reluctant to do so, the Securities and Exchange Commission could approve a bitcoin or crypto ETF in 2022.

Individual investors are also increasingly likely to realize that they can generate profits in a crypto wallet, despite the risks, and borrow against it, thereby expanding the crypto ecosystem.

3. Ethereum’s war will continue

Fascinating competition has developed in recent months between the crypto-titan Ethereum and several crypto blockchains that present themselves as faster and cheaper.

The argument might not resolve in 2022, but savvy investors will likely balance their portfolios to play it safe.

4. The end of the Big Tech competition, for now

2021 has been a remarkable year of decline for tech behemoths who once dreamed of crypto dominance.

Meta, formerly known as Facebook, has been dragging its feet for years over its digital currency, now called Diem. The recent departure of Meta’s cryptocurrency chief David Marcus almost guarantees that even if Diem does manage to get out of the departure gate, it won’t matter.

The departure follows Google’s announcement in October that it will not continue with its ambitious plans for a full-fledged banking and payments service. The departure of humiliated tech companies is expected to represent a growth opportunity for existing cryptocurrencies and stablecoins.

5. The government’s reaction will continue

It’s confusing, but the more the world wants crypto, the more some governments want to crack down on it.

Technologically, banning crypto is next to impossible, but governments can make it very difficult for citizens to trade (by denying licenses to exchanges, for example). In the United States and Europe, expect a closer look at the climate impact of cryptocurrency mining.

6. Volatile growth for larger coins

Sometimes the crypto roller coaster can distract from the fact that, overall, the larger coin market was on the rise in 2021. There is no obvious reason to believe that this pattern will change in 2022.

Bill Barhydt, CEO of crypto exchange Abra and a renowned bitcoin bull, said bitcoin could hit $ 100,000 in 2022. It’s ambitious but far from crazy. What investors and potential investors must accept is that it could also drop an additional 20% on its long journey to that height.

James Ledbetter is editor and publisher of the FIN fintech newsletter, and former editor of Inc. Follow him on Twitter @jledbetter.

Don’t miss:

[ad_2]