Important Things You Need to Know About Cryptocurrencies in 2022

Important Things You Need to Know About Cryptocurrencies in 2022

Over the last few years, cryptocurrencies have grown in popularity to the point that the alternative investment class has practically gone mainstream.

While Bitcoin was the first and is currently the most well-known cryptocurrency, thousands of others have since appeared.

The phenomenal profits that some investors have made are part of the reason for the asset class’s popularity. From March 2011 to March 2021, Bitcoin, for example, was the best-performing asset, with a remarkable 230 percent annualized return.

The Nasdaq-100 ETF, symbol QQQ, was the next best-performing asset class over that time span, with a “mere” 20% annualized return.

But, what does the future hold for the burgeoning bitcoin market? Here are some of the most prominent cryptocurrency forecasts for the year 2022.

Ethereum Could Dethrone Bitcoin

Ethereum is less well-known than Bitcoin, but it deserves to be. Ethereum is currently the second-largest cryptocurrency, and its growth has outpaced Bitcoin’s.

Ethereum may very possibly overtake Bitcoin as the most valuable cryptocurrency sometime in 2022 if present trends continue.

This might make Ethereum an appealing option for investors wishing to diversify their cryptocurrency portfolios beyond Bitcoin.

Cryptocurrencies Will Gain More Acceptance as a Payment Method

One of the most significant disadvantages of cryptocurrencies is that it is not recognized as a viable substitute for regular currencies.

Many cryptocurrencies may become worthless if this scenario plays out. In 2021, however, the reverse has occurred, and the trend appears to be set to continue through 2022.

As more businesses accept cryptocurrencies as legal tenders, such as Bitcoin, the viability and value of cryptos are expected to rise.

More countries will accept cryptocurrency as legal tender.

El Salvador became the first country to recognize Bitcoin as legal money in September 2021. According to Alexander Höptner, CEO of the crypto exchange BitMEX, five or more countries could embrace cryptocurrency as legal tender in 2022.

If these adoptions are successful, it’s conceivable that other governments may consider crypto adoption as well.

Digital Currencies Will Be Issued by Central Banks

China has been at the forefront of the campaign for countries to adopt their own digital currency issued by their central banks.

Many other countries are looking to consider launching their own digital currencies in order to combat concerns posed by existing cryptocurrencies.

Countries can avoid the unregulated, decentralized nature of existing cryptocurrencies by administering and controlling their own digital currencies.

Investors and businesses may increase their cryptocurrency allocations.

As bitcoin grows more widespread, it is increasingly being included in the portfolios of both individuals and businesses.

Cryptocurrency allocations of a few percentage points are now recommended by some financial planners, and more organizations are allocating funds to cryptos and digital assets.

These types of shifts in asset allocation tend to gain traction on their own, implying that by 2022, more and more money will be flowing into cryptocurrencies.

Some, if not all, cryptos will lose their value.

While broad trends toward cryptocurrency acceptance appear to be improving, with thousands of cryptos contending for a spot in the business, some, if not many, will inevitably lose all of their value.

Bitcoin, the industry leader, still has a slew of significant investors betting against it, implying that the value of Bitcoin would eventually be zero.

If the largest and most well-known cryptocurrency collapses, thousands of lesser cryptos that aren’t nearly as helpful or accepted are likely to suffer.

Important Things You Need to Know About Cryptocurrencies in 2022

Although cryptocurrencies have grown in popularity and value, they are still a long way from being conventional currencies or payment methods.

Even if digital currencies eventually replace or coexist with traditional paper currencies, it’s difficult for investors to forecast which cryptocurrencies will survive, let alone which will emerge as the industry’s main long-term player.

Despite this, it appears that cryptocurrencies will continue to grow in popularity, awareness, and even value in 2022.

While not all of the predictions on this list will come true, at least a few of them are likely to. Consult your financial advisor to see if bitcoin should be included in your investment portfolio if you wish to join in this growing sector.

Leave a Reply