Disclaimer: Forecasts of financial markets are the private opinion of their authors. The current analysis does not constitute a guide to trading. Cryplogger is not responsible for the results of work that may arise when using trading recommendations from the presented reviews.
Cryplogger spoke with experts about the main trends in the cryptocurrency market, which are worth following in 2022.
A little bit about everything
Gleb Kostarev, Director of Binance in Eastern Europe:
Since the beginning of 2021, the bitcoin dominance index has been steadily declining – from 70% to 43%. At this time, altcoins showed growth, especially Ethereum, BNB and USDT. This suggests that investors are locking in profits in bitcoin, especially after reaching a new all-time high of $68,000 in November. If the trend continues, Bitcoin’s dominance could fall below 40% for the first time.
Blue chips from altcoins are likely to strengthen in the market as investors move into them to maximize profits in the current bull market before the bear cycle. In the coming months, until the end of the first quarter of 2022, we expect greater volatility.
In 2021, the number of institutional investors increased by 22% compared to last year. In 2022, we also expect further growth in this direction.
New opportunities for the market will bring the DeFi segment. However, to create complex financial instruments such as bonds, fixed income and interest rate swaps, it will need more experts from the traditional industry. It is also necessary to work on increasing the liquidity and efficiency of capital.
NFT and GameFi will receive a huge boost, which will increase competition with traditional entertainment markets.
The main security threat to the cryptocurrency ecosystem remains social engineering and phishing. Exchanges can counteract this by two-factor authentication and training users in security rules.
The number of cryptocurrency users compared to traditional finance is still very small. The legalization of cryptocurrency through the emergence of regulatory standards can help in attracting people from traditional finance. In 2022, we will see a big breakthrough in this area.
About the rate of popular coins
Georgy Verbitsky, Asset Manager:
In 2022, Ethereum has every chance to catch up with Bitcoin in terms of market capitalization. Ether has the largest community of developers and decentralization of all blockchains with smart contracts. But new ecosystems will step on his heels. Interesting ones include Fantom, Cosmos, Polygon, Terra, NEAR Protocol, Avalanche and Polkadot.
Hopefully next year Web 3.0, DAO and PriFi will take off. GameFi and metaverse tokens are likely to go to the second wave of hype. In the gaming environment, active development of play-to-earn will continue.
Among the exchanges, judging by the dynamics, FTX in terms of turnover will bypass Coinbase, and Gate.io will bypass Huobi and KuCoin.
On mining and redistribution of the world’s computing power
Vadim Krutov, Executive Director of Bitfury Group:
In 2022, we expect an increase in the share of Proof-of-Stake and Proof-of-Authority protocols. The launch of ETH 2.0 can simultaneously and greatly change the ratio of Proof-of-Work and other consensus algorithms.
There will be a multiple increase in the computing power of the bitcoin network due to the placement of significant institutional capital in the mining sector and an increase in the share of computing power owned by public companies – Cipher, Hut 8, Riot and others.
There will be an increased emphasis on the concept of sustainable development, ESG and reducing the carbon footprint in mining. The transition of cryptocurrency mining to renewable energy sources – solar, wind and nuclear – will begin.
If the cyclical nature of the dynamics of bitcoin quotes continues, we will see a new price record for major cryptocurrencies, followed by a correction.
Roman Nekrasov, co-founder of the ENCRY Foundation:
The main trend that will finally take shape in 2022 is the leadership of the United States in the mining market. I admit that American enterprises next year will occupy at least 40% of the world’s bitcoin production.
Small and medium-sized mining companies from China, who emigrated to Kazakhstan, have already faced a shortage of electricity. And in the Russian Federation there is no clear legislative regulation of the industry, which is why many farms either illegally connect to power grids, or do not declare increased electricity consumption when renting a site.
The regulation of mining in the Russian Federation clearly follows a negative scenario. These are calls to raise electricity tariffs and the discussed introduction of licenses for miners. I believe that all this will appear in the Russian Federation in 2022, and only enterprises affiliated with large businesses and billionaires from the Forbes list will be able to obtain licenses.
I am sure that many Chinese entrepreneurs, who at first found Russia an excellent alternative with cheap electricity and a suitable climate, are now actively working to move their enterprises back to a more understandable and stable jurisdiction, ideally in the United States.
Anton Bukov, co-founder of 1inch Network:
Many venture capitalists have realized that the cryptocurrency sector is still IT, and not just speculation, as everyone thought during the last cycle of 2017. For them, it becomes another opportunity to invest in Google, Apple, Facebook, Amazon as 20 years ago.
In the past two years, we have seen a huge increase in the volume of the spot cryptocurrency market on centralized and decentralized exchanges. At the same time, derivatives for cryptocurrencies today are practically illiquid. I expect that in 2022 DeFi will have the opportunity to fill this gap, thanks to the arrival of institutional investors and market makers on the market.
A critical role will be played by the processes of interaction between blockchains. Some companies, such as NEAR Protocol and Aurora, build decentralized bridges (Rainbow Bridges) based on mutual smart contracts, unlike most other bridges supported by multisig validators.
About regulation in the Russian Federation
Eduard Davydov, partner of NOA Circle:
At the beginning of 2021, the law on “Digital Financial Assets” (DFA) came into force, but instead of restoring order, it made practically no adjustments in terms of the legal regulation of cryptocurrencies in Russia. Moreover, by the end of 2021, the central bank increasingly called for a complete ban on the turnover of cryptocurrencies.
It remains to be hoped for a “soft” ban, in which Russian banks will not participate in the chain of purchase and sale of cryptocurrencies, instead of a complete and total one, in which, under pain of criminal liability, Russians will be obliged to get rid of their assets and prohibit any transactions with them.
Michael Gerlis, CEO of EMCD:
I doubt that the Central Bank of the Russian Federation will decide on a strict ban on cryptocurrencies. Firstly, it is impossible to physically ban crypto – this will only mean the transition of the market underground. Secondly, the law “On CFA” is already working in the country. Thirdly, it was strange to personally destroy the unique sphere of national competence: a lot of successful crypto projects on the world market have Russian roots.
About crypto winter and the passage of time
Sergey Mendeleev, CEO of Indefibank:
I think a lot will depend on the total capitalization of the crypto market. Paradoxically, the industry receives the greatest development just during the “winter”, when the salaries of developers return to reasonable limits, and hypozhors who seek to follow the X instead of the development of technology are washed away from the market. The past crypto winter gave us DeFi and sidechains, the day before last a bunch of successful ICOs, ether and other cryptocurrencies were born even earlier.
I think that in the next cycle we can expect the development of crypto technologies that repeat the real sectors – tokenization of physical objects, DeFo (decentralized forex) and a bunch of interesting things that are now born only in the minds of a few crazy enthusiasts.
Alas, nothing good will have to be expected from regulators (russian, Western, Asian) in the cryptosphere, and, in fact, no one has been waiting for anything like this for a long time.
I think that over time, the crypto will generally cease to notice the very presence of regulators, about how now underage tiktokers with a million audience do not know about the existence of laws on the media, Roskomnadzor and other departments, the strange rules of which they must, sort of, comply.
We live in a new time, not all people over 40 keep up with it, it would be strange to demand this from bureaucratic clumsy mechanisms. But we must understand that over time they will inevitably find themselves approximately in the same place where the authors of the rules of conduct for horse-drawn carts on dirt roads are now sitting.
Artem Kozlyuk, head of the public organization “RosKomSvoboda”:
Despite the fact that earlier a number of cryptocurrency Internet resources were blocked in the Russian Federation – these are crypto exchanges, news portals, and even conference sites – there are constantly legal proceedings on the legality of such bans. And there were repeated examples of successful cases on unblocking cryptocurrency sites.
It seems to me that a similar plot will be repeated next year – prosecutors will file a statement in the courts that cryptocurrency sites “promote a prohibited money surrogate”, and then there will be successful appeals against these decisions. This takes time, nerves and resources from everyone.
At the same time, in 2022, we should expect the emergence of a new law on cryptocurrencies. Now two opposite strategies are being considered: negative with punishment and conditionally positive in the withdrawal of cryptocurrency from the gray legal zone. It is not yet possible to assume the beneficiaries of which of the strategies will benefit, but both options will have a serious impact on the development of the market in the Russian Federation.
Alexander Lutskevich, founder and CEO of CEX. IO:
The main challenge for the exchanges will be regulators using traditional approaches when creating norms for the advanced industry. We hope that market participants will help regulators implement a balanced approach when introducing innovations into the existing legislative framework.
Digital payment systems such as Venmo and PayPal are already working to provide cryptocurrency-related services. And although these platforms are limited in the number of coins and services provided, they remain multinational companies with tens of millions of users. Due to this, they can become strong competitors for companies focused on cryptocurrencies initially.
At the same time, exchanges still have ample opportunities for scaling, given their deeper integration into the blockchain and popularity among consumers. For example, the increase in the number of proof-of-stake-based cryptocurrencies will allow trading platforms to offer consumers staking services with a low entry threshold.
Finally, exchanges can offer additional services for storing coins in their wallets. More and more companies are beginning to accept digital currencies to pay for services, which means that they will need a custodian to store revenue, as well as a place to make calculations and convert to fiat.
About the digital concentration camp
Mikhail Chobanyan, founder of the Kuna cryptocurrency exchange:
The main trend of the next year will be metaverses and their internal cryptocurrencies. They can be both in native form and in the form of NFT.
As for regulation, in Ukraine it is likely to come in 2022. The only thing that can prevent this is the dissolution of parliament before the vote. Then everything will drag on.
Globally, everything has already happened in the industry: the widespread introduction of AML / KYC procedures, full transparency of all blockchains and operations. Therefore, we are already halfway into a digital dictatorship, into a digital concentration camp. The question of “what to do about it” remains open.
Alexander Gostev, Chief Technology Expert at Kaspersky Lab:
In 2022, attackers are likely to continue to use standard techniques. For example, steal cryptocurrency by gaining access to the user’s personal account on a crypto exchange. They can steal login data with the help of fake mobile applications or sites that simulate the work of real crypto-exchanges or wallets.
Schemes will also remain popular when attackers send out letters allegedly about the initial placement of coins or post similar information on social networks from a fake account of a famous person. Attempts to hack crypto exchanges and fraud with smart contracts will continue.
The interest of attackers in cryptocurrencies, as well as using them, for example, to obtain a ransom after an attack by ransomware, will potentially lead to the fact that regulators of various countries will continue to strengthen control over such assets.
Market participants should remember that it is possible to track cryptocurrency fraud, but after theft, it is almost impossible to fix anything. That is why it is better to think about security in advance: store currency on several hardware crypto wallets, do not transfer private keys to anyone, create backups, remain vigilant and remember cybersecurity rules.
About CBDC, NFT and metaverses
Denis Vasin, CTO of Waves Enterprise:
The NFT market, after explosive growth in 2021, will “mature” and go beyond art and speculative collections. There will be NFTs that implement financial primitives and tokens associated with real-world objects.
With a high probability, we will see the peak of hype of projects related to the metaverse. After the announcement of meta (formerly Facebook), the market received a huge impetus, but the creation of metaverses requires a large number of resources that are not available to constantly emerging startups. In this regard, we will see the beginning of market consolidation around several major players.
The corporate sector will also begin to integrate with the metaverse. In the near future, a representative office or an office in the metaverse will become the same mandatory attributes of the brand as an account in social networks.
Of course, we will see an acceleration in the development of the CBDC sector. In 2021, pilot and test projects were launched in many countries, which will be developed and will move into the phase of implementation and scaling in 2022.