These Trends Can Shape The Cryptocurrency Market In 2022

Friday, 4 February 2022, 5:00 pm
Press Release: Kalkine

Summary

• The COVID-19 pandemic has been a boon for the cryptocurrency market.
• Investors continuously on the lookout for innovation could tap fresh opportunities in the cryptocurrency space.
• Some trends that can emerge in the crypto market in 2022 include stablecoin regulation, the launch of central bank digital currencies and the rise of DeFi.

Over the last two years, cryptocurrencies have disrupted the existing financial ecosystem, piquing the interest of even novice investors. Indeed, the pandemic has been a boon for the cryptocurrency market, with several new investors entering the arena to tap the price boom. The diverse world of NFTs, decentralised finance and blockchain-backed securities provided investors exciting new ventures to choose from during the COVID-19 era.

While the crypto world is still shaping up, investors are continuously on the lookout for an innovation or a never-before-seen idea that they can invest in. One such example is the Metaverse. Although the Metaverse has been taken apprehensively by the market, it has seen booming popularity in a quick time.

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Many such prospects await the cryptocurrency space, which can unlock fresh doors of opportunities for investors and traders. Here is a list of five important trends that can emerge in the crypto market in 2022.

Stablecoin regulation

Cryptocurrencies are highly volatile as an asset class as they observe massive price fluctuations within a fraction of seconds. To prevent dubious scams due to high price volatility, authorities are exploring the autocratic regulation concept for the crypto world. In fact, cryptocurrency regulation is expected to be a focal point of several governments in 2022.

Within the cryptocurrency asset class, stablecoins are initially anticipated to be subject to regulation. As stablecoins are typically pegged to a commodity or a currency, they are expected to be relatively stable and less prone to erratic price changes. Owing to reduced price variations, governing bodies are more likely to prioritise stablecoins over other cryptocurrencies in the regulatory process.

Decentralised finance

The advancements in technological intelligence have created an environment where financial transactions can be self-conducted. One such prominent space is decentralised finance (DeFi), which forms the essence of blockchain operations like NFTs. Essentially, DeFi means algorithms underpinning cryptocurrencies, which are coherent enough to keep track of transaction records and avoid errors.

The market for decentralised finance has only grown with the rising popularity of cryptocurrencies. Besides, cryptocurrencies’ wide-scale applicability has been well-supported by decentralised finance.

Decentralised finance can take centre stage in 2022, witnessing robust growth. More specifically, the leftover momentum in the DeFi space from 2021 is likely to translate into a booming industry over the coming months.

Method of payment

The year 2021 saw several corporations embracing Bitcoin to facilitate payments on their online platforms. The new mode of payment emerged as a lucrative offering for crypto enthusiasts, drawing a larger proportion of the population towards such businesses.

The usage of cryptos as a mode of payment is expected to grow this year, even in a broader retailing environment. However, the pace of growth will depend on the retention of people’s trust in digital currencies, given recent market crashes in the cryptocurrency space.

Central bank digital currencies

The adoption of Bitcoin as a legal tender in El Salvador has cemented the cryptocurrency’s footing as an alternative to paper money, challenging the existing notions of money. Given these developments, many governments are considering developing their own cryptocurrencies to draw the public towards a safer alternative for their investments.

As cryptocurrencies are backed by powerful blockchain technology, they can offer governments a secure way to conduct transactions. Blockchain technology ensures that the users’ privacy is maintained at all stages of the transaction. These advantages offer a compelling argument in favour of the mass adoption of blockchain-backed currencies.

Exchange-traded funds

Exchange-traded funds or ETFs move in tandem with the market, allowing the investors to create a balanced portfolio. It further enables the investors to invest as per their risk appetite. Many new Bitcoin-linked ETFs were launched in 2021 after passing a phase of great scrutiny and debilitation.

Surprisingly, the crypto ETF space quickly grew into a large industry, partly because it offered some sense of security to those seeking stability in a relatively unsteady space. While crypto ETFs took some time to get approved, they were a boon for investors apprehensive about using cryptocurrencies as a portfolio diversifier.

Cryptocurrencies have undoubtedly formed the reputation of an asset class that is more than just a fad. Although the crypto industry continues to observe some hiccups in terms of price fluctuations and regulatory setbacks, the space is expected to remain in the limelight for one reason or another. It will be interesting to see how well these discussed trends catch on in 2022, defining a new year for cryptocurrencies.

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