What to expect from cryptocurrencies in 2022

The year 2021 was full of actions, with non-fungible tokens (NFTs) decentralized finance (DeFi) going full cycle to dominate the news on the crypto space. Additionally, we had the biggest rollercoaster of major crypto assets prices, debates on central bank-backed digital currencies, and many more. But what do we expect from cryptocurrency as a whole in 2022? 

The first month of 2022 hasn’t been kind to the crypto community. Bitcoin and Ethereum led to the sudden price dip as the New Year got underway amid a rising sell-off. The price of Bitcoin, for example, has fallen from its November all-time high of nearly $70,000 per coin to $33,000. Since the start of the year, Bitcoin and Ethereum have fallen 23% and 35%, respectively, sending investors into panic mode. The sell-off has led to an overall fall of cryptocurrency value by about 50 percent, from $3 trillion in November 2021 to $1.5 trillion at the time of writing this article (January 24, 2022), according to CoinMarketCap.com. Analysts believe the rush to sell off crypto holdings has been triggered by the Federal Reserve’s hint of raising interest rates sooner than expected. 

The expected Crypto Trends 

Green energy for crypto mining 

Cryptocurrency has grown significantly, but its Carbon footprint has raised intense debate over the last few years. Bitcoin, as one of the biggest crypto, is mined by energy-intensive computers competing to solve complex mathematical puzzles. This has raised concerns about the increased emission of greenhouse gases into the atmosphere. It is estimated that 0.5% of global electricity consumption goes to Bitcoin mining alone. To avert this challenge, more programs are emerging that work to address the sustainability challenge. For example, BitMEX, a leading cryptocurrency derivatives exchange, began the journey to go carbon neutral in November 2021. We expect more of such projects to trend in 2022. 

Central Banks Digital Currencies and Legislations

Central Banks-issued digital coins (CBDCs) are expected to rise in 2022 to compete with cryptocurrency. China’s Central Bank had begun the journey in 2021 and has now released a pilot version of a wallet app for its digital yuan in a push to encourage more people to adopt it. Russia, Chile, Japan, Sweden are already experimenting with their own respective digital currencies, which are scheduled to launch in 2022. The U.S. is mauling at the idea of its own CBDC, just to mention but a few. 

Cryptocurrency as a legal tender

We expect more countries to follow the path of El Salvador, which was the first country to adopt Bitcoin as a legal tender. This is despite some countries like China banning cryptocurrency in their jurisdiction. It’s predicted that more developing countries may opt to embrace cryptocurrency as a legal tender to shield the citizens from inflation and boost financial inclusion and investments. 

DeFi and NFTs

The signs that crypto is growing into importance are seen with more major retailers beginning to accept crypto as a currency in exchange for goods and services. Also, we expect DeFi to consolidate its usefulness in financial inclusion and NFTs to continue playing a significant role in the adoption of cryptocurrency. 

In a nutshell, there are positive vibes about cryptocurrency and its growth in 2022 but expect the rollercoaster price volatility to continue.  

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