The big crypto trends to watch in 2022 include more volatility, the failure of worthless projects, and the emergence of a core of spectacular winners.
The winners are likely to come from those offering more efficient business processes using the blockchain, such as Ethereum (ETH) and Solana (SOL); gaming cryptos such as Decentraland (MANA), Axie Infinity (AXS) and The Sandbox (SAND); and coins focused on what is known as Web 3.0 (or Web3), a largely untested concept that hopes to bring greater privacy and autonomy to the internet experience, along with the decentralisation and security of blockchain technology (removing that power from the likes of Google and Facebook).
Web 3.0 coins to watch are Helium (HNT), Flux (FLUX) and more familiar names such as Filecoin (FIL), Polkadot (DOT) and BitTorrent (BTT).
Helium aims to improve the communication capabilities of wireless Internet of Things (IoT) devices. “Its core appeal will be to device owners and those interested in the IoT space, with financial incentives providing further outreach possibilities,” says CoinMarketCap.
The FLUX cryptocurrency is up six-fold over the last three months as some of its Web 3.0 use cases start to ignite investor interest: among them, the intention to provide a decentralised alternative to the Amazon Web Services (AWS) platform.
Moneyweb asked four experts for their views on the trends to watch in 2022.
Farzam Ehsani, CEO of VALR
“The interaction between the traditional financial system and crypto will be magnified in 2022. We’ll see many more regulators, banks, hedge funds and institutions getting into crypto and we’ll also see price movements in crypto that have just as much, if not more, to do with the challenges in traditional finance than they do about the merits of crypto.”
Don’t expect crypto’s legendary volatility to disappear any time soon, adds Ehsani.
“We should expect to see continued volatility in price movements, but we may well see another record year for crypto from metrics as wide as adoption to crypto becoming legal tender in more nations, to all-time high prices.
“We’ll continue to see much more building in this space, from infrastructure players like VALR who help customers enter the world of crypto to artists embracing the world of NFTs [non-fungible tokens] to new blockchains and ideas [that] come to life in the blockchain space. We will likely see much more growth in decentralised social networks, not just decentralised finance. Banks, governments, central banks will become much more involved too.”
Richard de Sousa, CEO of crypto exchange AltCoinTrader
“I see crypto turning a corner in 2022, and a lot of worthless projects will fall by the wayside, while a core of viable and commercially sustainable projects will survive and thrive. Decentralised Finance [DeFi] is just getting started, so I see huge upside for yield-earning cryptocurrencies such as ETH, SOL, Bitcoin [BTC] and others. It’s still unclear which coins will dominate the DeFi space, but the frontrunners are ETH, SOL, DOT and Cardano [ADA]. But the list is growing by the week.
“Bitcoin will remain the gateway drug for new entrants to the crypto space,” says De Sousa.
“It is by far the largest crypto in terms of market cap because it is seen as digital gold, and all the latest stats show that people who buy it are less inclined to sell than at any time in the past.
“I am paying close attention to gaming coins such as Decentraland, and I was in fact buying land in the metaverse a few years ago when it was considered highly risky. These gaming coins have done exceptionally well over the last year and I expect this trend to continue, though I do have some reservations that they might be peaking too soon. Ultimately, I see Zoom and others offer[ing] their clients gateways to Decentraland, but we might need to see an improvement in metaverse headsets and smart glasses.
“Another project I am very keen on is Binance Smart Chain and the Binance Coin [BNB], which allows you to do pretty much anything you can do on decentralised blockchain networks but much faster and at much lower cost. This explains why BNB has performed so spectacularly over the last year, even though it is down quite a bit from its recent peak.”
Brett Hope Robertson, investment analyst at crypto platform Revix
Hope Robertson sees several keys trends to watch:
- Fantom hype – will it continue? Fantom (FTM) is a super-fast open-source smart contract platform for digital assets that recently announced a partnership with 123swap. It uses a novel blockchain technology for logging transactions, and its price is up more than 10-fold over the last year.
- Web 3.0 – keep your eyes on Web 3.0 coins such as Helium (HNT), Flux (FLUX), Filecoin (FIL), Polkadot (DOT) and BitTorrent (BTT).
- Gaming – these are incredibly volatile and a lot of fun. Coins that currently dominate this space are MANA, AXS, SAND, Gala (GALA) and Enjin Coin (ENJ).
- Algorithmic stablecoins, such as Luna which is algorithmically pegged to the US dollar (rather than collateralised). Stablecoins are backed by assets such as the US dollar, and are hugely popular among crypto traders since they allow them to park profits in stable assets and so avoid the type of volatility normally associated with cryptos such as BTC and ETH.
Dean Joffe, co-founder of crypto investment company BitFund
Joffe says 2022 “is going to be pivotal for cryptocurrencies, and we see these trends making headlines”.
Regulation: “The crypto industry has thrived thanks to the ability for innovators to innovate, without regulations stifling innovation. As the crypto market has grown (both from a market capitalisation and user adoption perspective), regulators have started paying close attention, with the aim of regulating various crypto asset trading platforms.
“In December 2021, the Financial Sector Conduct Authority indicated that they planned to unveil a regulatory framework covering cryptocurrencies early in the new year to help protect vulnerable members of society from highly risky assets. Thus, we are undoubtedly going to see some form of regulations in 2022, but whether these regulations will be appropriate for the industry remain to be seen.”
Crypto ETF approvals: “As regulators release crypto regulations, many more crypto ETFs [exchange-traded funds] may list on various stock exchanges, thus providing a regulated way to trade crypto assets. While there has been hesitation from the majority of the regulators and exchanges – and incorrectly so – as regulations become more clear, we believe crypto ETFs will be approved across numerous exchanges globally,” says Joffe.
DeFi: “2021 was a seminal year for the DeFi ecosystem, as it grew to $220 billion in total value locked in the system from $20 billion at the beginning of 2020. While many believe that DeFi will eventually replace the old financial system with its antiquated and costly layers of intermediaries, it is still a fraction of the trillions of assets locked in the traditional financial ecosystem. 2022 may be an explosive year for DeFi, due to the substantial investment pouring into this space. As various DeFi protocols continue to address key issues, such as minimising transaction costs and providing fair and easy access to finance to all people within the ecosystem, the large total addressable market to be unlocked with a better user experience, regulation and institutional adoption may lead to [an] explosion in this space.”
NFTs: “NFTs have launched an entire new economy, with a digital asset that can be bought and sold at will. NFTs’ programmability allows many industries to use tokens to create efficiencies, while eliminating [intermediaries]. It will come as no surprise that corporates may get involved in NFTs, while crypto industry players continue to develop metaverse and gaming-related tokens,” says Joffe.
“2022 may see NFTs grow even further as a subsector within crypto, as we expect to see further growth and maturation of the market with new and unique use cases of NFT technology. It would come as no surprise that gaming NFTs may be the most explosive, as they intersect with, or become complemented by, other kinds of NFTs. We will probably see utility- and purpose-driven NFTs this year, leading to even further adoption.”
Read: Moneyweb Crypto glossary
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