2021 was an eventful year for the cryptocurrency market. From hitting the $3 trillion market cap to getting regulatory approval, there have been several positive developments encouraging the adoption of cryptocurrencies globally. There are more than 300 million crypto users worldwide, and the number is expected to reach 1 billion by 2022-end. While the adoption of the underlying technology, i.e., blockchain, is one of the reasons behind the increasing interest of investors in cryptocurrencies, users also look at it as an alternative to stocks, where they are in control of their money. The emergence of concepts like DeFi, NFTs, and Metaverse has opened up a whole new stream of investment opportunities for users. In this blog, we will look at some of the most promising crypto trends in 2022.
Extreme volatility is one of the key reasons behind traditional investors being in two minds about crypto investments. But with leading businesses adopting crypto, the general public’s interest in the crypto market is going to increase. Big companies like Microsoft, Paypal, Starbucks, and CheapAir.com have started accepting Bitcoin. Microsoft became one of the early adopters when it started BTC in 2014. Dallas Mavericks, the NBA team of billionaire Mark Cuban, has been accepting payments in crypto for over 2 years now. Users can use Bitcoin, Bitcoin Cash, Ethereum, Binance USD, and Dogecoin to buy tickets and merchandise.
Source: https://www.analyticsinsight.net/10-promising-cryptocurrencies-you-should-buy-in-september-2021/
Regulation and real-world adoption could be the key factors defining the rise of cryptocurrencies globally. “The exciting part of 2022 is that crypto is no longer at this point in time where it will have a single narrative,” says Mason Nystrom, a senior research analyst at crypto data company Messari. Despite the significant increase in the number of crypto users over the past year, crypto is still very much in the beginning stages when it comes to global adoption. As we move forwards, here are some top industry trends that could well define the future of this parallel decentralized economy.
Institutional Adoption: With governments around the world adopting a futuristic approach towards crypto, institutional investment in the industry is expected to rise significantly. Investors like Elon Musk, Mark Cuban, and Michael Saylor have paved the way for other big businesses to adopt crypto. We are living in a world of digital media, and investors like Cuban and Musk have the capability to influence others. With Facebook shifting its focus to Metaverse and Twitter allowing its users to receive tips in Bitcoin and Ethereum, it is a matter of time before other big players jump into the bandwagon. Fairlead Strategies Founder Katie Stockton says institutional adoption of crypto is still in the early stages. With more and more investors exploring alternate investment options, 2022 could witness an acceleration in the institutional adoption of cryptocurrencies. “I’ve talked to every large bank, every large investment bank, pension funds — they’re all eyeing the sector. Many of them have started breaking ground on their activities in it, but it’s just slow, and it takes time,” says FTX CEO Sam Bankman-Fried.
Crypto Regulation: The lack of clarity among governments and financial institutions over the regulation of crypto has acted as a hindrance to the mass adoption of cryptocurrencies. But with more and more industries realizing the potential of tokens and the underlying technologies, several governments have taken a positive stance on the issue. The Indian government has already become a part of the trend by announcing a 30% tax on income from crypto, paving the way for regulation in the country. The decision reflects the interest of over 10 crore crypto investors in the country, which is the highest in the world. Regulation has to be one of the most pathbreaking crypto trends in 2022. The latest reports suggest that the US is also inching toward crypto regulation. Earlier this year, Thailand regulated the use of cryptocurrencies as well. With major economies like US and India approaching cryptocurrencies positively, other countries are bound to follow the path sooner or later.
The emergence of Central Bank Digital Currencies (CDBC): We are living in the era of digitization. From communication to supply chains, everything is being digitized, and CDBC is an attempt for financial institutions to benefit from this digital wave. CDBC is essentially a digital form of a country’s FIAT currency. Experts argue that CDBCs can bring more efficiency into a country’s financial system. Nigeria and UAE have already launched their CDBCs. India’s Reserve Bank also announced its plan to introduce its CDBC soon. China, Russia, Kazakhstan, and Brazil are likely to introduce their respective CDBCs between 2022 and 2024.
Source: https://www.inventiva.co.in/business/money/central-bank-currency/
The Rise of DeFi: Decentralization is at the core of cryptocurrencies. It is among the most promising crypto trends in 2022. Investors look at crypto as a path to financial freedom. Cryptocurrencies like BTC aim to put investors in control of their money. Decentralized Finance (DeFi) is based on the concept of decentralization with a focus on transforming global finance by emerging as a better alternative to traditional financial institutions. The focus is on bringing more efficiency to global finance by eliminating intermediaries to get rid of bottlenecks and delays. It’s a logical step that this mainly digital finance evolves in a decentralized way, says Marc Zeller, Head of Developer Relations at Aave. Investors and innovators have already shifted their attention towards DeFi, with the total value locked in DeFi protocols reaching beyond $78 billion. DeFi applications have witnessed a growth of over 40x over the past two years in terms of the user base. As of November 2021, the market size of decentralized finance stood at $274 billion. London-based Fabric Ventures, Amsterdam-based Ascnsive Assets, and Singapore-based PetRock Capital are some of the top VC firms in DeFi. The increasing awareness about decentralized finance is bound to attract the attention of more and more investors toward DeFi.
Source: https://www.devteam.space/blog/what-is-defi/
Crypto ETF: The debut of Bitcoin ETF on the New York exchange in October 2021 has attracted the attention of investors toward a more conventional investment method in crypto. BTC ETF became the quickest ETF to grow to $1 billion in assets. BTC ETF could play a major role in bringing some clarity among those who are skeptical about the future of cryptocurrencies. BTC ETF allows investors to buy the largest cryptocurrency directly from traditional investment brokerages. This could well be the beginning of another trend. The debut of other cryptocurrencies like ETH on ETF would mean increased accessibility for investors. Asia is set to welcome its first crypto ETF in the first half of 2022. Torus Kling Blockchain IFSC is going to launch the ETF. It will go live in Gujarat International Finance Tech city.
The Rise of Digital Universe with Metaverse: Metaverse would have appeared like any other passing trend in the first few months, but we are already beyond that phase, with Gen Z showing great interest in space. Metaverse became the buzzword after social media giant Facebook renamed itself, Meta. Facebook, led by CEO Mark Zuckerberg, announced its plans to switch focus to Metaverse. The renaming of Facebook marked the beginning of a new trend with leading tech businesses exploring investment opportunities in the Metaverse space. “The metaverse is the next iteration of social media,” said Andrew Kiguel, CEO of Tokens.com, a Toronto-based company that has dropped $2.5million on a patch of virtual land in Decentraland. The global market size of Metaverse stood at $47.69 billion. It is expected to grow to $783.3 billion by 2024. Businesses are looking at Metaverse as the future of digitization. Metaverse is, in fact, on the road to becoming a $10 trillion to $30 trillion opportunity in the next 10 to 15 years.
NFTs Going Mainstream: NFTs emerged as a digital means of earning for artists and creators. But the sale of Everydays: the First 5000 Days for a whopping $69.3 million took the crypto world by storm, attracting millions of online creators towards this new way of representing their art digitally. Everydays: the First 5000 Days’ record of being the most expensive NFT has already been broken by Pak’s The Merge that amassed $91.8 million in December 2021. The trading volume in the NFT space is going to increase with the increasing use-cases. Total NFT trading volume surged to $19.6B in 2021 from $86M in 2020. With big exchanges like Binance, ByBit and Coinbase having already launched or planning to launch NFT marketplaces, the future is bullish. Investment bank Jefferies sees the market size of NFT climbing to $80 billion by 2025.
Source: https://horizonfintex.medium.com/what-will-it-take-for-nfts-to-go-fully-mainstream-2fe9a5ed7a4f
P2E Revolutionizing Gaming: Gamers across the world are embracing P2E (Play-to-Earn), a business model providing financial benefits to players contributing to the ecosystem. P2E has been at the core of the changing dynamics in the gaming industry, with more than 41.9 million gamers owning crypto as of 2020. Gaming is a huge industry, accounting for nearly half of all crypto transactions globally. The gaming industry’s total market value stood at around $336 billion in 2021. With play-2-earn putting the interest of the community at the center, the gaming industry is set for a huge boost. Several big players are planning to embrace P2E to keep up with the trend. Grand Theft Auto has already unveiled plans for its upcoming P2E game. Some P2E platforms allow contributors to create their own games or NFTs and earn from that. This community-friendly concept is fuelling the rise of the P2E ecosystem.
Source: https://www.nftdropscalendar.com/nft-news/oasys-gaming-chain-wants-to-take-p2e-gaming-mainstream
What lies ahead?
The crypto market has seen exponential growth over the past couple of years, both in terms of users as well as market capitalization. While minor corrections are part of the game, heavy investments by institutions indicate that investing in crypto could be a rewarding exercise in the long term. The increasing awareness among the general public is going to trigger huge investments in altcoins as well. In 2021, BTC accounted for 70% of the crypto market share. The number came down to 40% in January 2022. With concepts like Metaverse and Web3.0 gaining acceptance, investors will be keen to diversify their investments across multiple cryptocurrencies.
The global cryptocurrency market is projected to reach $4.94 billion by 2030, growing at a CAGR of 12.8% from 2021 to 2030. The previous decade was all about education and awareness. This decade could witness the mass adoption of cryptocurrencies by investors, governments, financial institutions, and businesses. Are you running with the trends?