As of this writing, the crypto winter has enveloped investors around the world. One estimate says that the market valuation for cryptocurrency has dropped at least $1 trillion in 2022. Most of the top crypto coins are worth 50% or less of what they were a few months ago.
Bitcoin as of July 2022 is trading at around $20,000 and Ethereum is trading for about $1,098. Given what has happened to crypto markets during this year’s economic turmoil, what is the outlook in the industry for 2022 and beyond?
Here are a few predictions to remember:
More Cryptocurrency And Blockchain Regulation
We can expect more conversations around the regulation of cryptocurrencies. As software development and technology improve and more cryptocurrencies are introduced, it’s likely that government agencies will want to get involved in regulating them.
Legislators in DC and around the world are mulling how to set up guidelines and rules to make crypto a safer bet for investors and less appealing for cyber thieves and hackers.
Despite what some people think, many people in the crypto and blockchain space would welcome clear regulation from the US government and other stakeholders worldwide.
The good news is Federal Reserve Chair Jerome Powell noted recently that there’s no chance the US government will ban major coins such as Ethereum in the United States. Also, the SEC has noted it has a major interest in regulating crypto markets in the US.
The SEC added that crypto investors are more likely to suffer severe losses if more US regulation isn’t written soon. Of course, the IRS also is interested in making sure investors know how to report currency when they report their taxes.
There should be more regulations coming soon specifically for stablecoins, which are coins where their value is pegged to other commodities such as the dollar, silver, or gold.
More Crypto Adoption
A recent Chainalysis report noted that by Q2 in 2021, the adoption of cryptocurrencies had increased 880% from 2020. We are seeing more investors plunging into the crypto markets and more companies are accepting it for payment.
We think this will continue this year, even with the slide in major coins’ value so far this year.
Institutions Still Moving Into Crypto
In spring 2022, Pantera Capital said that it would close its Pantera Blockchain Fund, which was its initial fund for blockchain. It had about $1.3 billion in capital invested, which was more than double what it expected when it was announced last fall.
Pantera Capital said at the time that the fund would invest in at least 10 companies in the next year and a half.
We’re confident that more institutions will be making major investments in crypto in 2022 and next year, too.
Some Coins Will Fail
Given the price volatility we have seen in recent weeks, it’s a good bet that some coins are going to fail, and some already have. Many current coin projects don’t have the money or other fundamentals to keep them going in a bear market.
It’s always worth remembering that crypto is a high-risk investment and you should only invest cash that you can afford to lose. It’s always a mistake to assume coins will continue to make large gains without corresponding declines in value.
There is no doubt that cryptocurrencies and blockchain have massive potential and we are only starting to tap it. But there is a lot of uncertainty in the current crypto market. However, we can say for certain that crypto’s future is bright and there are many intriguing developments on the horizon for this year and beyond.