Cryptocurrency and the associated technologies are becoming more and more integrated into our lives, whether we like it or not. And as their impact on the economy becomes inevitable, it is important to stay informed and know what to expect tomorrow. The least it will allow you to be in the loop, and the most it will help you to find a growth area for your finances.
In this article, we will look back at what events of the previous year have affected the world of cryptocurrencies and, based on global trends, try to predict what the market has to offer this year.
The 2021 events substantiating cryptocurrency future predictions
First of all, it is important to understand that Bitcoin and Ethereum retain their position as leaders, despite active attempts by various projects to knock them off the bench.
But the world is changing and there are some interesting and promising areas to consider to understand the future of cryptocurrency.
The brightest flash of 2021 is NFT. At one point, it seemed as if the crypto-community had simply gone nuts – giving away enormous amounts of money for “web pictures”! Digital art, like many more art forms before, is going through its own difficult growth path. Only times faster.
But it is important to understand that NFT as a unique title proving tool has a big future. With proper development of technology and regulatory policy, of course.
As of today, we see the development of infrastructure for NFT by many projects and attempts to introduce the technology into the legal field. Therefore, a cryptocurrency based on NFT-enabled blockchains (ETH, Matic, Solana, NEO, Tezos, TRON) will have a good future.
Decentralized finances are not a new thing in 2021. They started back in 2020, and last year they were adopted by a large number of platforms (Ethereum, Solana, Aave, Uniswap, Polkadot, Chainlink, Terra, Avalanche, Dai) as the promising trends of the future decentralized economy.However, savvy experts (chairman of SEC Gary Gensler, Senator Elizabeth Warren and others) insist that DeFi projects pose a major threat to the financial sector because of often perceived decentralization and scams.
Thus, in 2022, the US, and many countries around the world following them, will be on the path to regulate this sector as much as possible. Perhaps through regulation of stablecoins, most of which are backed by the US dollar.
Memecoins and “The Elon Effect”
These coins, which emerged as an ironic joke on serious projects, have suddenly been embraced by the community with particular enthusiasm. The values of the most popular Dogecoin and Shiba Inu have risen unprecedentedly during 2021. By the end of the year, however, interest in them had waned a bit.
Many people tend to think that these were short-term projects, as there are no serious solutions or technological developments behind them. Except for Elon Musk’s tweets, of course.
By the way, the impact of “the Elon Effect” on the cryptocurrency value is also an interesting recent phenomenon.
Technologies of substitution of real reality with virtual reality actively entered our lives from the world of games in 2021 and it looks like they will stay with us for a long time.
Many spheres of life (communication, entertainment, shopping, some kinds of work and services, sports, art, etc.) can go to virtual reality worlds, especially if the trend of social isolation continues.
The development of metaverses requires infrastructural components, including cryptocurrency for value exchange. Based on this “micro-trend”, we can conclude that projects offering coins for metaverses will be on the rise in 2022.
Bitcoin’s ups and downs
Interesting things have been happening with the oldest and most expensive cryptocurrency, Bitcoin. Its price broke its own high this year, hitting $67,000 per coin. Then, it went sharply downwards. Analysts link this to the news from China about the mining ban.
BTW, it is likely that other countries, which are under its influence in any way, will follow China’s example.
El Salvador is the first country in the world to adopt Bitcoin as an official legal tender in its jurisdiction.
Meanwhile, Elon Musk, a previous supporter of the coin, has called its mining environmentally unfriendly, reapplying “The Elon Effect”.
Nevertheless, Bitcoin remains the most marketable, highly capitalized, and trusted virtual asset of 2022.
Global trends affecting the future of cryptocurrency
Many events of the previous year reflected global trends that will also affect the future of cryptocurrencies.
Ecology and environmental protection
This is not a new trend; it has long occupied the minds of scientists, politicians, and populists around the world.
Claims made by Elon Musk and others about the environmental impact of mining were one of the reasons for the Bitcoin price correction in the summer of 2021.
China’s mining ban has also been linked to excessive energy consumption.Researchers have found that more electricity is spent per year on BTC mining than on powering Argentina’s needs.
As a consequence, on the one hand, there is a shift away from the PoW consensus algorithm in favor of PoS. And on the other hand the search for alternative sources of energy for mining (solar energy, volcanic energy). This could have a significant impact on miners’ income, and consequently on the “power balance” in the cryptocurrency ranking.
Digitalization and security
The digitalization of all walks of life has created new opportunities, but also new risks of focusing control over data in the same hands. Blockchain has the potential to become a mainstream technology that increases the security of the virtual exchange of information and value by decentralizing these operations.
Therefore, blockchain projects that provide practical utility to society (registries, logistics, insurance, education, finance, healthcare, entertainment, commerce) and solve the challenges of secure and efficient communication will succeed.
Venture capital inflows
To back up the previous statement – venture capital has rushed into blockchain projects. That’s a good indicator of a potentially promising area. Experts see this trend as a sign of the industry’s maturation.
All of this, along with the surge in the popularity of decentralized finance, is leading to increased regulatory attention.
In the near future, many countries are expected to develop laws and regulations for cryptocurrency circulation and the adoption of innovative technologies in various spheres of life. Obviously, keeping our safety in mind…
Internet of Blockchains
This is another predictable trend. The global and massive adoption of blockchain technology and cryptocurrencies requires an ecosystem of networks that is accessible and secure, interoperable, and user-friendly.
Today, many blockchain projects (Polygon, Polkadot, and others) are working to build cross-networking bridges and cross-chain infrastructures. Their cryptocurrency, by the way, also has a good chance of gaining a foothold in the market.
Most valuable cryptocurrency in future: expert opinion
Now, having laid out the basis for predictions about the future of cryptocurrencies, let’s look at what’s worth investing in 2022.
Just recently we wrote about 5 cryptocurrencies with good market prospects in 2022. We won’t repeat ourselves, but consider additional options for building an investment crypto portfolio.Bitcoin and Ether remain the most reliable “anchor” cryptocurrencies of any portfolio. In the long term, they have a high chance of generating income. Some experts suggest that Bitcoin could reach the $100k mark in 2022.
Stablecoins (USDT, USDC) will also remain in demand because they are basically digital dollars with a relatively stable price, conditionally secured, easily convertible into traditional currencies, and convenient as value fixers for volatile currencies. But you can’t make a profit with them, for the reasons mentioned above.
However, DOT crypto, according to experts, can generate profits, growing substantially in value, due to the development of the project Polkadot. The main goal of the project is to enable the cross-chain transfer of any data or assets, not just tokens, and thus make a wide range of blockchains compatible with each other. This is fully in line with global trends.
Analysts also rank Terra (LUNA) cryptocurrency among the top currencies to invest in 2022. It is expected to show excellent growth in the coming year. According to WalletInvestor’s 2022 forecast, LUNA will reach $150 by the end of 2022. It is also being bet on because the project’s goals are also trend-setting and aim to drive rapid adoption of cryptotechnology to the public and solve the problems of high volatility in crypto-assets by creating a unified ecosystem of stablecoins.
Trustee Wallet supports all of the above cryptocurrencies. Here you can get secure storage and profitable exchange of your virtual assets, safe access to the DeFi world, as well as the ability to store and trade NFTs.
Finally, we would like to point out that all forecasts and analyses of the future of virtual assets are the personal opinions of individuals, not outright recommendations or guarantees. It is impossible to consider and calculate everything. Don’t rely on forecasts completely, analyze and make your own conclusions. And never invest more than you are willing to lose in cryptocurrencies!
Please share your opinion on the future of cryptocurrencies in the comments below this article!
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