CNBC published a report on the expectations of financial experts that the value of Bitcoin will decline and collapse in 2022, eliminating almost all of its gains achieved in the past 18 months. 2018, when it dropped to nearly $3,000.
The cryptocurrency rose to a record high of about $69,000 last November, but is currently in a position below $50,000, down about 30% from its peak.
Carol Alexander, a professor of finance at the University of Sussex, said she expects bitcoin to drop to $10,000 in 2022, wiping out nearly all of its gains in the past 18 months.
Financial experts predict that the price of Bitcoin will drop and crash in 2022, wiping out almost all of the gains made in the past 18 months.
“If I were an investor now, I would consider exiting bitcoin soon because its price is likely to collapse next year,” Carroll added. Its bearish claim is based on the idea that Bitcoin “has no fundamental value”, but rather a “dummy” rather than an investment.
Carol Alexander warned that history should repeat itself; In 2018, Bitcoin dropped to nearly $3,000 after surging to a high of around $20,000 a few months ago. Cryptocurrency backers often say things are different this time, as more institutional investors are jumping into the market.
Todd Lowenstein, chief equity strategist at Union Bank’s private banking arm, said: “There is no doubt that the bitcoin price chart looks like it tracks many historical asset bubbles and failures, and has a narrative – this time different – just like the others.”
A common investment case for bitcoin is that it serves as a hedge against rising inflation caused by government stimulus; In this regard, Lowenstein said there is a risk that a more hawkish Federal Reserve may take the winds away from Bitcoin’s sails.
“The wave of liquidity is receding, which will disproportionately hurt overvalued asset classes and speculative areas in the market, including cryptocurrencies,” he said.
However, not everyone is convinced that the crypto party will end in 2022. “The biggest risk factor, which is (quantitative easing) has been identified by the Federal Reserve, and it is likely that the biggest risk factor, which is (quantitative easing) has been identified by the Federal Reserve,” said Yuya Hasiyawa, crypto market analyst at the Japanese digital asset exchange BitBank. It is already priced.”
First Bitcoin ETF
The biggest development crypto investors are looking forward to in 2022 is the approval of the fund’s first ETF Bitcoin position in the United States.
Although the Securities and Exchange Commission has given the green light to launch bitcoin for equity investment this year, the product tracks bitcoin futures rather than direct investors’ exposure to the cryptocurrency itself.
Futures contracts are financial derivatives that obligate an investor to buy or sell an asset at a later date and at an agreed upon price. By tracking futures prices rather than bitcoin itself, experts say ETFs can be very risky for novice traders, many of whom invest in crypto.
“The bitcoin futures fund that was launched this year is widely seen as not very retail friendly given the high costs involved in trading the contracts,” said Vijay Ayyar, vice president of corporate development and global expansion at crypto exchange Luno. between 5 and 10 percent.
Decentralized Finance (DeFi)
With the development of the crypto industry, the market share of Bitcoin has diminished, with other digital currencies – such as Ethereum – playing a much larger role, and this is something analysts expect to continue next year, as investors increasingly look to other crypto products in the hope of making significant gains.
Carol Alexander described Ethereum, Solana, Polkadot and Cardano as worth pursuing in 2022.
“I expect the Bitcoin market cap to be half the maximum for smart contract currencies,” such as Ethereum and Solana, “or even lower,” she added.
Emerging developments in cryptography such as decentralized finance and decentralized autonomous organizations “are likely to be the highest growth areas in crypto,” said Brian Gross, network agent at crypto platform ICCHI. Decentralized finance aims to re-create traditional financial products without intermediaries, while decentralized autonomous organizations can be considered a new type of online community.
The total funds deposited in decentralized finance services exceeded $200 billion for the first time this year, and experts expect demand to grow even more in 2022.
Decentralized finance is part of a broader trend in technology known as ‘Web3’.
Busy year on the organizational front
Regulators flexed their muscles on cryptocurrencies last year, as China banned all crypto-related activities and US authorities cracked down on certain aspects of the market. Analysts widely expect regulation to be a major issue in 2022.
“The year 2022 will be a big year on the organizational front,” Figari May said.
He added that he is seeing some clarification about the legal “gray area” of cryptocurrencies other than Bitcoin and Ethereum, which the Securities and Exchange Commission has said are not securities.
Experts say that this year investors are likely to focus on “stable coins”, meaning stablecoins that are not subject to speculation.