Three trends to watch as crypto goes mainstream
Updated
Where will crypto go in 2022?
On the surface, that question applies to the price of bitcoin and other crypto assets. Bitcoin’s price is indeed the primary focus area because the world’s largest digital coin sets the trend for other cryptocurrency values.
But investors and analysts have other matters on their minds as crypto goes increasingly mainstream this year.
Two other notable trends to watch are greater acceptance of digital assets among financial institutions and the future of non-fungible tokens (NFTs.)
Bitcoin crash fears
Some observers fear a bitcoin price crash this year following a rollercoaster ride in 2021.
Carol Alexander, a finance professor at England’s Sussex University, told NBC that she expects bitcoin to nosedive as low as $10,000 in 2022, virtually erasing its gains of the past year and a half.
“If I were an investor now, I would think about coming out of bitcoin soon because its price will probably crash (in 2022),” Alexander said. She contends that bitcoin “has no fundamental value” and is more of a “toy” than an investment.
But Jeremy Gardner, a California-based entrepreneur and crypto evangelist, said in an interview with Capital.com that he is confident that bitcoin can withstand any storms this year.
“The 20% to 30% drops we’ve seen (in 2021), and then the rebound, that’s nothing compared to previous upswings where the market has gone up tens of thousands of percent and collapsed,” he said. “What we’ve seen is a sustained support in the tens of thousands of dollars”.
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Not a bull market
Benjamin Cowen, a widely followed crypto analyst and investor, does not believe bitcoin will fall to $10,000. In fact, he expects bitcoin’s price to take a big jump eventually.
“It’s not really a bull market,” he said in a recent YouTube post. “It’s just sideways”.
But Cowen said he is bullish on bitcoin from a long-term perspective.
In a recent interview with Altcoin Daily, Cowen said he expects bitcoin to build up to an all-time high in 2022. But the record is six months out “at the very least,” he said, noting that it may not occur until the second quarter of 2023.
“I think 2022 is going to be a good year (for bitcoin),” added Cowen.
He and other analysts will also be looking to see how bitcoin performs in relation to ethereum, the world’s second-largest cryptocurrency, which is expected to make large gains in 2022.
Institutionalisation a major theme
According to Gardner, the “institutionalisation” of crypto will be a major theme as investment in bitcoin and other digital assets gains more credibility from banks and traditional financial institutions.
Cowen and other analysts share that view.
On a webpage offering Block analysts’ crypto predictions, Block Research analyst George Calle said that bitcoin will outperform equities this year “but be a laggard within crypto portfolios”.
“Traditional (private-equity and venture-capital) firms became far more active in crypto in 2021 as private investment increased to $25bn from just $3bn in 2020,” he wrote. “Most allocated via equity financing deals for infrastructure, exchange and services businesses – the strategy being to get directional exposure to the sector while minimising specific asset risk and operational complexity. In 2022, expect some of these firms to hire, partner or acquire capabilities to directly custody crypto, execute on-chain yield opportunities and participate in governance”.
For his part, Block senior research analyst Greg Lim expects to see “more institutional involvement” from traditional finance companies.
“In 2021, we saw blue-chip household names like Visa buying NFTs and getting into digital assets,” wrote Lim. “(Financial technology, or fintech) and payment services will also continue to shift towards digital asset adoption as on the retail side. Digital assets lower the hurdle for access to lending, staking, payments and traditional banking for the historically marginalised.
“While many institutions and (traditional finance company) participants remain skeptical, they can no longer ignore crypto as a legitimate asset class. In my opinion, many of them are neither bullish nor bearish, but simply want to adopt so as to not be left behind and for the inherent (foreign exchange) and inflation hedges”.
Consumers familiar with crypto
“Your average consumer now is familiar with crypto, even if they don’t realise they’re familiar with crypto, whether (they’re) holding something like bitcoin or (ethereum) or collecting an NFT,” said Gardner.
An NFT is a one-of-a-kind digital asset. A bitcoin, meanwhile, is considered a fungible token because it can be traded for a similar asset.
“Back in 2018, I was saying how NFTs would be the catalyst, or the backdrop of crypto assets,” said Gardner. “I believe that forecast was correct”.
Some NFTs consist of digital trading cards involving superstar athletes. For example, DraftKings has become involved in the sale of NFTs, featuring marquee sports stars like retired all-time National Hockey League leading scorer Wayne Gretzky, golf great Tiger Woods, tennis superstar Naomi Osaka, National Football League (NFL) quarterback Tom Brady, and retired Olympic track and field legend Usain Bolt.
“You will now have the (National Basketball Association), the NFL, you will have the major music artists all talking about NFTs, creating and issuing NFTs,” he said. “When that happens, especially as it starts to hydrate the world of gaming and esport, which is the fastest growing area of entertainment, what you end up having is a technology that is at the heart of the zeitgeist and which is really very much where I think blockchain technology is today”.
Blockchain refers to a decentralised ledger system that serves as the backbone of crypto assets.
NFTs expected to expand considerably
Other analysts also expect NFTs to expand considerably in 2022.
“NFTs will continue to integrate themselves with established institutions, and we may see large tech companies like Meta, Apple, Amazon or Google begin integrating the metaverse with their (augmented reality and virtual reality) hardware products,” wrote Block Research analyst Eric Tong. “If this doesn’t happen in 2022, it will only continue to develop into the future”.
Fellow Block Research analyst Jae Oh Song expects the NFT narrative to “extend strongly to the 2022 market with a mature business model coming out from both the music and sports entertainment industry”.
More gaming characters are also expected to be used as NFTs this year, but Block Research analysts are split on how long that trend will last.
Either way, it will be one to watch in 2022.
Read more: Ethereum price prediction for 2022 and beyond: Will ETH rebound?
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