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6 Crypto Predictions for 2022

October 20, 2021


6 Crypto Predictions for 2022
Although there’s still plenty of room for more action in the last months of 2021, we’re already speculating about what 2022 may bring.

2021 has been a stellar year in crypto (and there's still more to come). Bitcoin became a trillion-dollar asset, DeFi has become a $200 billion industry (that’s grown by 10x since January), while NFT art and gaming have made global headlines. Based on current trends and historical precedent, here are six forecasts for what could happen in crypto in 2022. 

A New Phase of the Bitcoin Halving Cycle

Bitcoin’s halving cycles are widely accepted as one of the biggest influences on price, and there are some startling similarities between the price movements in 2017 and those in 2021. A recent tweet from a prominent Twitter analyst highlights the trend. 

If history does repeat itself, we can expect that early 2022 will represent a turning point for BTC prices. Soon after Bitcoin reached its previous all-time high of almost $20,000 in December 2017, the markets entered bear territory. 

Early 2018 also saw a massive surge in altcoins. Therefore, it seems likely that early 2022 will still bring plenty of opportunities for traders and investors. 

More Institutional-Grade DeFi

While DeFi has grown by 10 times in 2021, institutions have remained cautious about this nascent and still highly risky sector. However, some developments indicate we can expect to see more institutions begin to dabble in DeFi in the coming year. 

Following the announcement of institutional lending pools, Aave teamed up with Fireblocks to woo more professional investors to the space. In a similar vein, popular DeFi wallet Metamask also recently added custodians BitGo, Qredo, and Cactus Custody to its institutional offering. 

Given that DeFi’s returns far outpace what’s available on the traditional markets, it seems inevitable that further institutional DeFi adoption will soon follow. 

Regulation of DeFi and NFTs

Whether DeFi will remain in the same unregulated state is a matter for lawmakers to decide, and the same applies to the growing NFT market. 

Prestigious private bank Coutts recently told its customers in no uncertain terms that it doesn’t currently view NFTs as investable assets due to their lack of regulation and associated risk. The insider trading scandal discovered at OpenSea, the largest NFT platform, will undoubtedly have regulators scrutinizing the space, as they already are with DeFi. 

[Read now: 5 real-world use cases for NFTs]

As a result of the ongoing scrutiny, it seems likely that we’ll see something emerge concerning the regulation of NFTs and DeFi in 2022. Ultimately, this could be positive news for these segments if it helps to promote more investment from institutions. After all, institutional growth is largely credited with the massive growth in the crypto markets in 2021. 

More News About CBDCs

Central bank digital currencies (CBDCs) have been another big news story in 2021. China has rolled out its digital yuan, and many other jurisdictions across the globe have advanced their research and development. Therefore, it seems inevitable that CBDCs will continue to make headway in 2022. 

However, there are significant challenges to overcome in the rollout of any digital currency that would replace physical cash. So while we expect CBDCs to continue to evolve, it’s a confident bet that a digital dollar or digital euro won’t emerge before the end of 2022. 

Further Adoption of BTC as Legal Tender

El Salvador made history in early September when it officially adopted Bitcoin as legal tender. Despite the move drawing criticism from economists and many others, it seems plausible that others could follow suit based on recent news. 

For instance, an MP in Brazil submitted a bill for the regulation of the cryptocurrency sector with a view to taking advantage of the opportunities, which would also include making it a legal form of payment. An MP in Tonga has called for a similar move.

The ESG Agenda Becoming More Prominent in Crypto

Bitcoin and Ethereum’s Proof-of-Work algorithm became the target of green campaigners earlier this year as the NFT markets began to swell. The crypto community fired back with arguments about Bitcoin’s dependence on renewables and overall value in the financial system. 

However, based on the way macro events are unfolding, it seems inevitable that the environmental, social, and governance (ESG) agenda will become more prominent in crypto over the coming year. It’s a significant focus for financial institutions who are coming under increasing pressure to demonstrate sustainable investments and prove they aren’t merely “greenwashing.” As such, we can expect more developments on the ESG front in 2022. 

Rational predictions notwithstanding, we live in uncertain times, and events such as the U.S. revisiting its debt ceiling in December could wreak havoc in the markets. And nowhere is volatility more present than in crypto. So buckle up because 2022 is set to be as exciting as 2021 has turned out to be so far. 

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