As we enter 2022, the crypto market is reeling from Bitcoin’s continued price declines since it set its new ATH in early November. While everyone is discussing the prospects of a bear market, the fundamentals for the space remain stronger than ever.

Some of the key developments in 2021 included institutional involvement in BTC, El Salvador making Bitcoin legal tender, the SEC approving an ETF, massive growth in NFTs and the start of the metaverse era.

We can expect some of these themes to persist in 2022 and evolve further. For instance, Web3 is likely to gain traction this year and we can see more crypto projects coming up with various usecases and integrations. Similarly, NFTs have proven their market fit to a great extent, and we can expect some of the more prominent ones to become even more mainstream, such as the Bored Apes Yacht Club. The metaverse concept is most probably going to evolve further and include tighter integrations with Web3 and NFT projects.

DeFi is also likely to remain a central sector for crypto, unlocking new opportunities for users around the world. However, one of the major stumbling blocks in DeFi’s mass adoption has been the high fees needed to use the Ethereum network. This, we believe, will be one of the big issues tackled in 2022 with Layer2 solutions making technological advancements (rollups and such).

With meaningful advances to improve scalability and fees, we are likely to see new, more intensive projects cropping up, such as blockchain-based games.

Ultimately, however, we believe crypto is on a path to becoming more accessible for the masses, and Ethereum’s scalability and lower fees will be a major catalyst for this in 2022.

In terms of market performance and prices, we expect monetary policy changes to continue having significant impact. 2022 will most likely be the year we see interest rates increasing, which is likely to hit market sentiment across the board. Moreover, new crypto regulations may also come out in the year, further complicating market trajectory.

We do, however, remain bullish on Bitcoin, and the prospects of a full-blown bear market like the one we saw in 2018 and 2019 remain weak in our view.

Disclosure:

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