5 predictions for cryptocurrencies in 2022

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e’re now one month into 2022 with a very unsettled crypto market. This would seem like a good time to look ahead to the rest of the year. We’re going to make 5 predictions and then take a look back in 2023 to see just how close we were.

In this guide:

1. Bitcoin

2021 was an outstanding year for Bitcoin ($BTC - $38,943) with a new all-time-high exceeding $68,000 being set in November of last year. Our prediction is for a new a record breaking high of $75,000 during Q3 of 2022 – we don’t feel that the phycological price of $100,000 will be broken until 2023.

El Salvador led the adoption of Bitcoin by a nation state with legalisation that encouraged individuals to use the number one cryptocurrency as a means of payment. They may well have been nudged by the move of the Bank of England which continues to refuse the handover of $2 billion in Venezuelan gold held in UK vaults – i.e. unless you actually hold your assets then they are not actually yours ...

There are suggestions that 2022 will see an additional Latin American country become the next to legislate Bitcoin for legal tender. Bitcoin is clearly appealing in light of the Venezuelan experience with its gold.

2. Ethereum

2022 looks set to be a positive year for Ethereum ($ETH - $2,786.94) with the release of the “Ethereum 2.0” project expected towards the end of the year (or possibly into 2023). Much important has been placed upon this release as a means of resolving problems with high gas fees and slow transactions.

In August 2021, the London hard fork (or split) introduced coin burning which should support the future value of Ethereum by decreasing supply as usage grows. In October 2021, the Altair upgrade introduced changes to the proof-of-stake block mining. In 2022, the Ethereum chain will merge with the Beacon chain to complete the 2.0 upgrade plans.

In terms of Ethereum price predictions in 2022, we see a new high exceeding $5,000 but our feeling is that level 2 projects such as Polygon will continue to take value from Ethereum. Additionally, if Ethereum 2.0 is delayed into 2023, the price is likely to be negatively affected.

3. Play to Earn

2021 was the year that “Play to Earn” emerged as a new sector within the cryptocurrency industry. Axie Infinity ($$AXS - $54.03) was the pioneer of play to earn with great use of NFTs with revenues generated in excess of $1.3 billion.

The recent Microsoft acquisition of Blizzard for $68.7 billion is noteworthy as we may see such companies move into the play to earn space.

Growth of play to earn has been particularly apparent in south east Asia where poorer individuals have been earning from blockchain games by playing them.

Looking 5 years into the future, we can envisage a gaming world in which play to earn become the dominant type of gaming as players look for financial rewards for their time – gamers will no longer feel traditional gaming models as offering enough.

We see 2022 has being a huge year for play to earn gaming.

4. Regulatory developments

Thus far stablecoins have enjoyed very little in the way of regulatory attention. Given the importance of these tokens, 2022 will almost certainly be the year that authorities regulate stablecoins.

The U.S. Securities and Exchange Commission is likely to take the lead here with rules specifying how stablecoin backers should maintain the assets that back their respective tokens. It’s unlikely that they will continue to allow stablecoins to hold other cryptocurrencies as collateral.

It’s hard to see that DeFi will continue its run of avoiding regulatory oversight. Again, the U.S. is likely to take the lead here with a possible high profile legal action as a test of legislation.

5. Multi-chains

It was during 2021 that general acceptance was given to the thought that we will live in a multi-chain world. 2022 will be the year that these chains turn their focus to scaling, a problem that most chains still suffer. This is particularly acute during times of high market volatility in which transaction volumes vastly increase. 

In 2022 we see further TVL (total locked value) moving away from Ethereum and into other blockchains – a year this was 90% - today it has fallen to 62%.

We are particularly excited by the promise of Avalanche ($AVAX - $71.2) and its role as a smart contract platform. The low transaction fees and high transaction speeds are very appealing against the likes of Ethereum. Additionally, Avalanche has been able to proof itself during recent periods of high market volatility when the likes of Solana ($SOL - $111.27) struggled with the transaction volumes leading users to ensure several days of outage. 

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