2022 is right around the corner, and we have once again gathered some interesting predictions about what the new year could hold for the crypto space. And as usual, opinions are divided on what to expect, with some fearing regulations could become a showstopper for crypto, and others expressing optimism.
Commenting on the growth of the Metaverse and crypto gaming, also known as play-to-earn or GameFi, was Marcus Sotiriou, an analyst at digital asset broker GlobalBlock. He said in comments shared with Cryptonews.com that,
The “extraordinary amount of funding” that is flowing into the crypto gaming sector could mean gaming tokens will see a “decoupling from bitcoin” in 2022.
“The metaverse is likely to be one of THE hot topics of 2022, especially following Facebook’s name change to Meta,” the analyst said, adding that it is possible the space will “go through a phase of hyper growth.”
A new crypto winter?
Asked whether 2022 will see another crypto winter like the one we saw in 2018, Sotiriou made it clear that he does not think so, with institutional participation being the main reason why.
“This is because the key difference between the market now and then is the fact that so many institutions are involved in the space now,” Sotiriou said.
“This means that the structure of the market is completely different,” the analyst argued, while explaining that a lower proportion of retail investors in the market means there are fewer people that will “panic and sell” when sentiment is bearish.
Similarly, Steve Ehrlich, CEO and co-founder of crypto platform Voyager Digital, also said a crypto winter is not expected in the near term.
“Adoption is too far along this time around, which may stave off and limit the volatility to the downside,” Ehrlich said.
However, the Voyager Digital CEO also said that “all markets move in cycles,” and added that “crypto is no exception.” Crypto is still young as an asset class, and volatility should be expected, Ehrlich said, while adding:
“But, as more liquidity enters the market, these cycles will smooth themselves out.”
Also sharing predictions for 2022, Eric Wall, chief investment officer at crypto hedge fund Arcane Assets, said that he expects the market next year to be “something inbetween” a bull and a bear market.
“No mega bear market,” but also “no supercycle,” Wall said, referring to the idea that crypto could continue to rise in value for an extended period that is much longer than the previous market cycles.
The next iteration of NFTs
Commenting on non-fungible tokens (NFTs), Arcane’s Eric Wall said in his Twitter thread that standard “jpegs” are likely just the first iteration of the innovation that will happen in this space.
“People will find new exciting use cases for NFTs,” he wrote.
Also bullish on the space, which until recently was mainly made up of digital art, was Matteo Dante Perruccio, President of digital asset manager Wave Financial, who said it will continue to evolve fast in the new year.
“[I]t is clear that the NFT space will continue to evolve rapidly and expand more and more into the financial sector finding applications in the mortgage and property markets,” Perruccio said.
He added that he believes NFTs can also have “a significant impact” on things like land ownership in developing countries.
On potential risks to further crypto adoption in 2022, GlobalBlock’s Sotiriou admitted that new regulations such as the much-discussed US Infrastructure Bill could become a problem.
“The infrastructure bill will introduce new definitions for what a ‘broker’ is,” Sotiriou explained, while adding that requirements placed on these players will be next to impossible to comply with as the bill stands today.
“[P]eople participating in the network may have to behave as node operators to report identifying information for crypto transactions that they have no way of gathering,” the analyst said.
The regulatory risks in 2022 were also pointed to as a potential showstopper for crypto by Voyager Digital’s Ehrlich, although he said that this is likely more of a problem for institutions than it is for the retail segment of the market.
“A [asset manager] Bitwise survey just found that 56% of financial advisors haven’t allocated to Bitcoin because of regulatory concerns,” Ehrlich said, noting that institutions tend to avoid investments in what they consider to be “a potential gray area.”
Meanwhile, on a more positive note, Wave Financial’s Perruccio said that he believes we’ll see “a more favourable regulatory stance in India,” as well as “more clarity” in the UK in terms of the regulatory status of exchanges and digital asset custody there.
Lastly, Perruccio argues that 2022 is the year when we will finally see a spot-based bitcoin exchange-traded fund (ETF) approved by regulators in the US, which would certainly be welcomed by the crypto community.
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Find more predictions for 2022 here.