Bitcoin prices have been on a wild ride this year, and they are set to finish 2021 sharply higher than where they began it.One bitcoin currently trades for just under $49,000, a stunning surge of 66% from January levels. But the top crypto is also down nearly 30% from its record high of almost $69,000 hit in November.So what’s next for bitcoin and other cryptocurrencies?
There is no denying that crypto has gone mainstream. The total value of all cryptocurrencies in circulation stands at more than $2.2 trillion, with bitcoin accounting for about $920 billion of that total.
Ethereum, or ether, is starting to close the gap, too. Ethereum, which is a popular crypto for the smart contracts and non-fungible tokens (NFTs) that have taken the art and collectibles world by storm, has a market value of $475 billion.Ether prices have more than quintupled this year, from around $730 per coin to nearly $4,000.
There now are also several bitcoin exchange-traded funds (ETFs) for individual investors to choose from. ETFs investing in other top cryptos could be in the cards, too.
“The next possible step is for additional ETFs for other coins to launch. There probably will be an ether ETF in early 2022,” said Nick Elward, senior vice president and head of institutional product and ETFs at Natixis Investment Managers. “There probably will be an ether ETF in early 2022.”Major professional and institutional investors, including top fund managers George Soros and Stanley Druckenmiller, have been investing in crypto. Still, the latest pullback is a stark reminder of how notoriously volatile bitcoin and other crypto prices can be.
Less severe crypto winters ahead?
Many investors rushed into bitcoin in 2017 and watched prices surge from about $1,000 per coin to a little below $20,000 by December of that year.Then came the crash, with bitcoin plunging as low as around $3,500 by the end of 2018. Those prices obviously have recovered — and then some — but it took until December 2020 before the coin got back to the $20,000 mark.Such breakneck swings in crypto prices are probably here to stay. The key, experts said, is for investors to learn to stomach them and ride out the inevitable ups and downs.
“More than once we have observed a correction in the market,” Anton Chashchin, managing Partner of Bitfrost, a digital assets service provider, said in an email to CNN Business. “If institutional investors begin to take profits, then it can cause a ripple effect.”But he added that these large firms will likely keep flocking to bitcoin as a potential hedge against inflation and rising interest rates, which could hurt traditional government-backed currencies.”Even if the source of institutional investor interest is the Fear of Missing Out (FOMO), all of the institutional decisions have been made after careful consideration. These firms have come around to the potential benefits of cryptos,” Chashchin said.The increased adoption and legitimacy of cryptocurrencies also will likely help mitigate some of the volatility. Prices may still move sharply, but the shifts may not be as violent as in the past few years.”Having larger institutions with deeper pockets and steadier hands buying cryptos will help,” said John Wu, president of Ava Labs, an ethereum-compatible blockchain firm. “They can withstand the volatility.”
Moving beyond bitcoin
Natixis Investment’s Elward also believes that more fund managers will look closely at cryptocurrencies, and may be likely to move beyond passively run bitcoin ETFs that simply mirror the direction of bitcoin futures.”Active is a logical fit for crypto investors. I expect more managers in there analyzing which are the most appropriate ones to buy,” Elward said.
He added that crypto is a natural extension of the so-called alternative investment world, a group of assets beyond stocks and bonds that typically includes gold and other precious metals.Along those lines, some experts think that ether and the world’s third most valuable cryptocurrency, binance coin, could continue to gain market share versus bitcoin.”You have to look at the utility of cryptos. Ether could eventually be bigger than bitcoin. It’s the rails for NFT transactions,” said Alex Lemberg, CEO of the Nimbus Platform, a decentralized finance lending firm.
Wu, of Ava Labs, also thinks that investors will move beyond bitcoin.”We expect more dispersion in the crypto world. Prices will move more based on adoption,” he said. “Cryptos won’t be trading in tandem as much.”
Bitcoin Will Hit $100,000
Just like “$1 million” is often tossed around in the financial press as a good target for a retirement nest egg, you’ll often hear “$100,000” as a price target for Bitcoin. Some pundits see Bitcoin reaching $100,000 in 2023, but others predict a six-digit price as soon as 2022.
According to Kate Waltman, a New York-based CPA specializing in crypto, “The most knowledgeable educators in the space are predicting $100,000 Bitcoin in Q1 2022 or sooner.”
There are certainly factors that could support a higher Bitcoin price, including greater acceptance by businesses and increasing demand from Bitcoin ETFs. But some pundits think a price target of even $100,000 is too modest. According to Forbes, a panel of 50 cryptocurrency experts sees a Bitcoin price of $250,000 by 2025 and $5 million by 2030.
More Countries Accept Bitcoin as Legal Tender
El Salvador made global headlines in September when it became the first country in the world to accept Bitcoin as legal tender. Many crypto bulls now see more countries taking the plunge and accepting Bitcoin as legal tender in 2022.
According to BitMEX CEO Alexander Höptner, “By the end of next year, we’ll have at least five countries that accept Bitcoin as legal tender. All of them will be developing countries.”
Global investment manager VanEck also sees the value of Bitcoin as a currency for certain emerging countries and predicts that at least one will adopt Bitcoin as legal tender in 2022.
More Digital Asset Companies Will IPO in 2022
Coinbase made waves in April as the first cryptocurrency exchange to go public.
According to investment manager VanEck and others, more digital asset companies will work their way to the public markets in 2022. Newly listed companies may include anything from digital asset miners to payment companies and other crypto-related businesses.
Bitcoin Mining Will Become More Sustainable
One of the knocks against some cryptocurrencies in general and Bitcoin, in particular, is that their production consumes too much energy.
Investment manager VanEck predicts that sustainability-focused mining companies will continue to grow their market share in 2022.
For example, Stronghold Digital Mining, which listed in the fourth quarter of 2021, uses a coal mining by-product to generate the power needed to mine Bitcoin; and, according to VanEck, other ESG-focused companies are likely to thrive in the space going forward.
Ethereum Will Overtake Bitcoin as the No. 1 Cryptocurrency
Bitcoin always has been the big dog in the arena, as the first and largest cryptocurrency, but Ethereum has been rapidly catching up. As of Dec. 20, Ethereum’s market cap sits at about $456 billion, not that far behind Bitcoin’s market-leading $875 billion. That gap has decreased significantly in 2021, as Ethereum gained about 500% over the past year vs. Bitcoin’s gain of “just” 110%.
Crypto hedge fund manager Rahul Rai, among others, feels that Ethereum could overtake Bitcoin as the world’s most valuable cryptocurrency as early as mid-2022.
The Bottom Line
Crypto is an exciting, explosive, speculative area of the market, and its future can’t be predicted with any certainty. Compared with the stock market, which is based on more predictable cash flows and earnings trends and still can’t be forecast with any degree of comfort, the crypto market is still the Wild West.
Yet, in many ways, predictions and beliefs in the crypto market can manifest into reality. Bitcoin was made up out of thin air by a still-unknown founder, yet it is now accepted as legal tender by at least one country (El Salvador) and is being accepted as payment by a growing number of merchants.
Dogecoin, which was literally created as a joke, now has a market cap of $22 billion, and the crypto market as a whole broke the $3 trillion market cap level in November.
So, whatever you believe about crypto in general, there’s no denying that the asset class is gaining in both size and popularity, trends that seem likely to continue into 2022.
If you are planning to invest in cryptocurrencies, there is no better time than now before 2022 begins
Half a decade ago, Bitcoin was just US$0.4 worth and Ethereum was not even in existence. But today, there is hardly any person in this world who doesn’t know about cryptocurrencies. A cryptocurrency (or “crypto”) is a digital currency that can be used to buy goods and services but uses an online ledger with strong cryptography to secure online transactions. This makes it overwhelming for new traders to curate a safe investment strategy. The most popular cryptocurrency, bitcoin, has had volatile price moves this year, reaching nearly US$65,000 in April before losing nearly half its value in May. However, not all cryptocurrencies carry the same value.
From Bitcoin and Ethereum to Dogecoin and Tether there are thousands of cryptocurrencies in regulation today. In this article, Analytics Insight lists the top 10 cryptocurrencies to watch and invest in before 2022 begins.
One cannot start the list of the top 10 cryptocurrencies without the king of them all. Launched in 2009 as the first digital token, Bitcoin has managed to break many records since its inception. It is a decentralized digital currency, without a central bank or single administrator that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries.
Ethereum is a technology that’s home to digital money, global payments, and applications. Ethereum is a decentralized software platform that enables smart contracts and decentralized applications (dApps) to be built and run effectively. Amongst cryptocurrencies, Ether is second only to Bitcoin in market capitalization.
Next on the list of the top 10 cryptocurrencies to watch and invest in before 2022 begins is Solana. The past few months were an eventful year for Solana as its price soared up by 17,500% since the beginning. Solana has been a top performer in 2021, rising through the ranks of altcoins to become the fifth-most-valuable cryptocurrency in the world.
After maintaining a low profile for a long time, Dogecoin entered the mainstream crypto market after the 2020 Bitcoin rally. Many different types of businesses accept DOGE, with some of the highest-profile including Elon Musk’s SpaceX and the Dallas Mavericks. Many Dogecoin holders use their DOGE to tip content creators on Reddit and other social media platforms.
Cardano is the third-generation cryptocurrency that integrates the hallmark features of the first-generation, Bitcoin, and the second generation, Ethereum. Its platform provides an efficient alternative to the standard Proof of Work (PoW) network used by Ethereum and similar tokens. It is one of the best cryptocurrencies to buy before 2022 begins.