Cryptocurrencies to watch in 2022
18:00, 11 January 2022
The past year has proven quite turbulent for cryptocurrencies, with a number of sharp rises and steep crashes, especially for meme coins such as shiba Inu and dogecoin. With volatility persisting in 2022, in the form of potential interest rate hikes by the US Federal Reserve (Fed) and other major central banks, investors have mixed expectations for cryptocurrencies this year.
A number of investors are still wary of investing in newer coins, following a number of scams in the past year. However, established coins, such as bitcoin, also pose risks, due to sudden crashes and unexplained volatility. So where should investors put their money?
Nexo, solana and sandbox
Betrand Bayuga, founder of Sultan Bridge Technology sees nexo poised to do well. “Nexo has emerged to be the best in what they do as they have successfully processed billions in loans to users worldwide using deposits such as bitcoin, ethereum and XRP as collateral while charging a small interest rate.”
Bayuga also supports solana. “Solana has had a good bull run recently from early 2021 before the general bear market came into play in late 2021. The future is still very bright for the coin as it has recently gained a lot of adoption by developers and traction from customers, with a circulating market cap of just over $42bn (£31bn) as of 7 January 2022. I believe Solana still has a potential upside of at least 2x if markets regain momentum in 2022.
“One of the major problems of many blockchains is speed and scalability. Scalability gives developers the freedom to be innovative and flexible with their development while speed gives users the convenience that they need in using the product and Solana helps solve this problem with their blockchain.”
Sandbox could be another one to watch. “With the rise in popularity of the metaverse and NFTs in the 2020s, Sandbox is an early player in this space with huge investor interest, there is still a huge significant upside for the project especially as its circulating market cap is still under $5bn. Given that good projects like this that gain massive adoption normally attract a market cap of around $50bn+, Sand could easily have a 10x potential if we see another bull market in 2022,” according to Bayuga.
What is your sentiment on BTC/USD?
Polkadot, KlimaDao and decentralized finance
Gareth Randle, managing director of Authentix Management, is of a similar opinion. He highlights Polkadot. “Polkadot is built as a layer 0 network allowing Layer 1 networks such as Ethereum and Solana to work together on the same network. As crypto expands and more networks/blockchains are created, polkadot was created to unify all these different blockchains to work together.
"As Polkadot grows and starts working with the likes of Ethereum, Solana and other top 100 blockchains, the potential of the Polkadot ecosystem is humongous. Polakdot is becoming the next step in crypto market to unify all blockchains, this is a very good long-term project and something you cannot afford to miss.
“Ethereum has scaled incredibly with the adoption of decentralized applications, or dapps, ability to lend, borrow, trade, NFTs, gaming and the use of DAO’s (Decentralized Autonomous Organisations). With ETH 2.0 in the pipeline to go from Proof of Work (PoW) to Proof of Stake (PoS), and with the now deflationary issuance (where coins are taken out of circulation due to a network software update known as the London Hard Fork since August). I would expect this to still be one of the most used networks and more adoption will create more burning of Ethereum tokens.”
He also points to KlimaDao. “KlimaDao is an Environmental Social Governance (ESG) project which has been labelled as a climate change activist group backed by carbon credits. It’s having a real-world impact on the price of carbon credits.”
When it comes to the crypto space, Petro Levchenko, managing partner at Ascension Capital, said, “I think the most unquestionable aspect of the crypto economy, which is already objectively adding value is Decentralized Finance (DeFi) and the way it functions via Layer 1 protocols, ie, Ethereum blockchain competitors, such as AVAX (Avalanche), SOL (Solana), FTM (Fantom) and partially LUNA (Terra) and DOT (Polkadot). These protocols tend to be valued off the Total Value Locked (TVL) metric, which measures the total amount of liquidity (funds), that can be valued in US dollars, staked in the protocol. As this grows (already at $200bn+ across the space), the value of Layer 1 protocols will increase tremendously.”
Bitcoin
About what’s next for market leaders such as bitcoin, Levchenko explains, “I have always tended to be a bitcoin maximalist, as it always had the most obvious use case for me – stock of value which is censorship resistance and trustless. However, since 2020 I have changed my position, I now think bitcoin dominance will subside overtime and there will be fierce competition from protocols/blockchains in the ecosystem which add tangible value in other ways besides just being a store of value. I think of bitcoin as digital gold, whilst ethereum is like an Amazon. So I think ethereum is one of the best lower risk long-term bets, if there is such a thing as lower risk in crypto.”
In this case, Randle points out, “Bitcoin has always been the main cryptocurrency since it was created. All crypto markets currently move in line with bitcoin's price actions. With institutional adoption and country adoption, we have established bitcoin is here to stay. It is the most decentralized and is the largest computer network in the world. Bitcoin uses secure cryptography, it’s public, it’s decentralized, doesn’t require permission.”
He further explains, “Fun facts: There’s almost eight billion people in this world, 4.88 billion people have internet access. There’s only ever going to be 21,000,000 bitcoins in the world. Population growth is just over 1% per year averaging 80 million people. That’s a potential demand of 4x the bitcoin supply every year.
“We are already seeing a huge decline of bitcoin on exchanges (Glassnode, 2021), I would expect with population growth alone, the supply continue to reduce in the next 5-10 years as demand continues to grow and more of the younger generations who were brought up with computers to continuously adopt crypto.”
Market factors
Regarding what factors may play out in the market, Levchenko highlights, “In 2020 and 2021 we learned that crypto is here to stay, and is not just some fad that’s going away. I think there’s tangible value behind Layer 1 protocols like Ethereum, Solana and Avalanche but I also think the market is too heavily positioned on the long side. Everyone and their dog is buying random crypto tokens at the moment, it is very reminiscent of 2017 style bubble to me right now. So I think we will have quite a bit of chop and potentially big washouts on the downside before we see everything moving significantly higher from current levels.”
To this, Randle mentions, “I believe the market is still young and very emotional, but the best comparison I have seen is the 1970’s gold rush comparison to the bitcoin chart. We have seen several market ‘crashes’ throughout the lifespan of bitcoin of over 50% at a time with the worst just over 80%.
“I know a lot of bitcoin and crypto investors from back in 2017/2018 (‘Peak of Inflated Expectations’) with the 80%+ crash who are still thinking what if it happens again this time round. I believe bitcoin is much further along the innovation curve, and we may follow the ‘slope of enlightenment’ path, where less than 5% of the potential audience has fully adopted crypto.
“The short-term outlook looks bad at first but we have been testing the very well-known 0.618 Fibonacci retracement support level on the weekly bitcoin chart and at the time of writing we are sitting above $46,500 with a potential double bottom forming. However, I wouldn’t be surprised to see a dip to $40-42k level, before continuing upwards. The long-term market outlook for cryptocurrency is very bright, so long as the governments allows the innovation to continue and doesn’t try to suppress the new era of Web 3.0.”
The Metaverse
Coming to the Metaverse and what it means for the cryptocurrency world, he elaborates, “Our children these days are growing up with computers, gaming and technology. There are a lot of different metaverses allowing people: to own their digital self, own their own look (skins, accessories), own land and many other digital items in the form of NFTs (non-fungible tokens). The most popular Metaverses are Decentraland (MANA), Sandbox (SAND) and Axie Infinity (AXS). These have seen the most growth and would be considered the highest market cap Metaverse coins.
“Two of my favourite upcoming metaverses would be Illuvium (ILV) and RMRK. With the AAA game play by Illuvium and the upcoming land purchase. Along with RMRK and their NFT Lego approach and upcoming land purchasing.”
When asked about the Metaverse, Levchenko says, “At the moment Metaverse is a mainly hype, as even Meta Platforms (ex-Facebook) doesn’t have a clear plan for implementation. However, I do think the crypto ecosystem benefits massively as it offers a decentralized solution to the ‘Metaverse’, which is theoretically the pure way it should exist.
"Where the players/participants own the space rather than some big corporation. At the moment the crypto space has managed to successfully monetise the decentralized virtual games via projects like Axie and Decentraland (MANA), by allowing players to earn while playing. I think we haven’t seen the final product of the Metaverse yet and tremendous innovation in this space awaits, much beyond the imagination of most people right now.”
Decentralized autonomous organisations
According to Michael Lorenzo Cecchini, co-founder of Digital Eyes Capital, “For this year we're going to be looking at Curve (CRV), Convex (CVX), and newly created decentralized autonomous organisations (DAOs), which are creating what we know as the ‘Curve Wars’ (competing to bribe for Curve rewards on different pools) – Dopex and BTRFLY are two really interesting projects as well. The ones mentioned above are more niche coins. On a more macro-level, we'll be looking at some heavy growth to really scalable L2s like Polygon and FTM, especially FTM. The whole FYM ecosystem (Tarot, Hundred Finance, Spiritswap) is already exploding.
“Also Olympus DAO is going to be a bomb. It’s already acting as a decentralized VC (but much more powerful and effective) and people still think it may be a scam. Many big funds are invested in it (Maven 11 as well), as well as Klima DAO and ROME DAO. They all use Olympus’ reserve currency model to back their tokens (and new token emissions) with a growing treasury value of risk-free value assets, protocol owned liquidity, and many more.”
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