How will the cryptocurrency market develop in 2022?
2021 is a watershed between blockchain and cryptocurrency, as global prices, recognition and adoption rates are rising. It is difficult to achieve more achievements in terms of price and recognition in 2022, but the technological advancement of top cryptocurrencies may help the market continue to be bullish.
In the cryptocurrency market, a clear pattern has emerged in the past 12 years. There is a year or a year and a half of bullish momentum and a record high, followed by a three to four year bear market, the value of tokens has fallen by more than 50%, and any tokens that are not suitable for investment will be eliminated. These bull markets occurred in 2013, 2017 and 2021. If history can learn from, this pattern may herald a long-term bear market beginning in 2022.
If the cryptocurrency market is down, the NFT market is likely to be down. In traditional market downturns, investors tend to sell high-risk and poorly liquid assets in favor of safer and more secure assets. NFT fully meets the definition of risk and poor liquidity, so it is the main target of selling in the event of a market crash.
Another concern in 2022 is the possibility of a regulatory crackdown. Throughout 2021, major U.S. regulatory agencies such as the SEC and FINRA have been discussing the regulation of cryptocurrencies and stablecoins. If done correctly, and will not prohibit innovation in this field, these regulations may become a ticket to the large-scale adoption and use of cryptocurrencies, because they will allow companies to use and invest in digital assets with greater confidence. However, if they kill the blockchain space and make investing and using cryptocurrencies a hassle, they may destroy the market in the medium term. Although there is no clear indication of how the United States will choose to regulate, it is almost certain that some kind of regulatory measures will be introduced in 2022.
Even if the valuation of the cryptocurrency market drops sharply, the progress of top projects will still proceed at an extremely fast speed, which is good for the entire market. For example, the "merge" of Ethereum is expected to take place in the first or second quarter of 2022. At that time, Ethereum will transform from proof of work to proof of equity, which is more efficient and consumes less energy. It is the first step for Ethereum to increase transaction speed and reduce costs through the sharding chain. This upgrade will help Ethereum compete with other smart contract platforms such as Avalanche and Cardano, and help it maintain the title of king of smart contract platforms.
Many other technological innovations will also occur next year. Polkadot's parachain will be launched, which will make dozens of blockchains interoperable. In addition, Ethereum's layer 2 solutions, such as Optimism and Arbitrum, will be more adopted after the release, which will help solve Ethereum's scalability issues. In addition, the first decentralized application on Cardano will go live. This will see the launch of decentralized exchanges such as SundaeSwap and currency markets such as Meld, and Cardano will eventually become a blockchain that provides use cases for ordinary people.
The adoption of cryptocurrency is going very fast in 2021 and is expected to continue until 2022. Like any new technology, the adoption of cryptocurrency will only increase over time until it proves to be a fanaticism or is used by billions of people and companies around the world. Over time, cryptocurrency will only become more common in our daily lives.
Although the possibility of a crash next year may scare some investors, those who have worked in the cryptocurrency field for more than four years know that continued development and adoption are the true measure of the success of cryptocurrencies. As long as this situation continues, the fate of the cryptocurrency market will be very optimistic.
