6 crypto trend predictions for 2022

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Prepare for another amazing year in crypto.

2021 has been an extraordinary year for cryptocurrencies. According to a study by Grayscale Investments, almost half of Bitcoin (BTC) owners in the United States have only bought this year. The non-fungible token (NFT) and decentralized finance sectors are both booming, and a number of leading cryptocurrencies have recorded gains of over 5,000%.

So what does 2022 have in store? Let’s take a look at six crypto trends to watch out for.

Blockchain games took off in 2021. Axie Infinity (AXS) led the way in pioneering the concept of games to win. This, combined with improved graphics and gameplay, has created an increase in demand for crypto games. Games to win mean people can earn in-game tokens which they can exchange on a cryptocurrency exchange for hard cash.

Facebook’s decision to rebrand itself as Meta has put virtual worlds in the spotlight, although metavers have been gaining momentum for some time. It is not yet clear what form these virtual worlds will take, particularly if they will be decentralized or if businesses will dominate the space. But since cryptocurrencies are the most likely form of payment in the metaverse, we can expect crypto to be a part of this development.

2. Web 3 will start to take shape

Web 3 is the next generation of the Internet – a decentralized space where people are rewarded for sharing their time, building communities, or posting. It’s connected to the game and the metaverse above, but has broader implications.

And, like the Metaverse, it’s not yet clear how Web 3 will play out. Some think it’s a chance for people to break free from big business sitting in the middle of our web surfing and social media. Instead, we would control our own data and earn tokens for participating.

Existing businesses are already looking for ways to stay relevant, so the big players are unlikely to be completely left out. But as an investor everything related to Web 3 should be on your radar because it is a key area to watch out for.

3. There will be more regulation and government involvement

The specter of increased crypto regulation around the world has loomed over the crypto market for much of this year. From the steps China has taken to ban crypto altogether to El Salvador’s acceptance of Bitcoin as legal tender, it is clear that governments can no longer ignore cryptocurrency. Here are some ways in which governments are likely to act:

Stablecoin regulation. Stablecoins are cryptos whose value is tied to another commodity, such as gold or the US dollar. However, regulators are concerned about how some of these parts are guaranteed and whether they have enough reserves to sustain a run on a specific part. Expect new rules early next year Increased cryptoregulation. In addition to the stable coin rules, governments are working to increase investor protection without stifling the entire industry. There has been a lot of talk this year, which will likely turn into action in 2022. Central Bank Digital Currencies (CBDCs). Various governments are weighing the benefits of introducing their own CBDCs or govcoins, such as a digital dollar. Unlike other cryptocurrencies, these are said to be backed by central banks and governments. All eyes are on China, which has almost completed its digital yuan pilot project. We will see even more adoption

According to a Chainalysis report, by the end of the second quarter of 2021, global crypto adoption had increased by more than 880% from the previous year. We saw more people buying crypto for the first time, more traders accepting crypto, and more ways to buy and earn interest on their crypto assets. More recently, WhatsApp announced a pilot program that allows users to send encrypted payments just as they would with a photo or text message.

This trend is expected to continue in 2022, especially as platforms strive to make cryptocurrencies and decentralized finance more accessible.

5. We will also see more institutional interest

Venture capital firms have invested nearly $ 30 billion in crypto this year, according to PitchBook Data, more than all previous years combined. And a September survey of global institutional investors by Nickel Digital Asset Management found that 62% of those with no crypto exposure planned to take the plunge in the coming year.

There is growing confidence in cryptocurrency as an asset class, which will only be bolstered by certain regulatory measures. The price of Bitcoin surged in November after the launch of the first Bitcoin futures ETF, and many are hoping the SEC could give the green light to a spot ETF that would be able to buy and sell Bitcoin rather than derivatives. of Bitcoin.

6. Some cryptos will fail

As is often the case with crypto, opinions are divided on whether we will see global prices soar or collapse. In truth, we’ll likely see both as it doesn’t look like the cryptocurrency will stop being volatile anytime soon.

However, it should be remembered that cryptocurrency is a high risk investment. Many pieces have already failed and many existing projects lack the foundations to support them in difficult times. Only invest money that you can afford to lose, and don’t assume that every cryptocurrency is going to make huge gains.

Blockchain technology has huge potential and we are just starting to see how it can transform various industries. But there are still a lot of unknowns, so it’s important to move forward with caution. One thing is certain. It will be another crazy year in the land of crypto.

Emma Newbery owns Bitcoin. The Motley Fool owns shares and recommends Bitcoin.

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