The Future of Cryptocurrency: 5 Experts' Predictions After a 'Breakthrough' 2022
Bitcoin on the moon? More regulatory guidelines? What are experts predicting for the future of crypto and what that means for buyers.
2021 was an important year for cryptocurrency. What's the next step for cryptocurrency in 2022?
We've seen Bitcoin achieve a variety of new record-breaking rates, then huge dropswith more investment from institutional investors from big companies. Ethereum The second most popular cryptocurrency, also hit a highest-ever record recently and also. U.S. government officials and the Biden administration are showing increasing interest in new regulations for cryptocurrency.
The public's curiosity about crypto has exploded It's now a popular topic not only among investors but even in popular culture due to everybody whether it's long-time investors like Elon Musk to that kid in high school who you follow on Facebook.
In many ways, 2021 was a "breakthrough," says Dave Abner, head of global development at Gemini, a popular cryptocurrency exchange. "There's tremendous focus and attention being paid to the crypto industry."
However, the market is at its beginnings and is constantly changing. This is a major reason the reason that every Bitcoin peak can easily be and quickly followed by huge drop. It's hard to know the direction of things in the long run However, over the next months, experts are monitoring issues ranging from regulations to the institutional adoption of crypto payments for a better sense of the current market.
Though exact predictions are not possible However, we spoke to five crypto experts to share what they're looking out for regarding crypto in the near future.
Expect continued conversations about cryptocurrency regulation. Legislators in Washington D.C. and across the world are trying to determine how they can establish legal guidelines and laws to protect investors from the risks of cryptocurrency and more palatable to cyber criminals.
"Regulation is probably one of the biggest overhangs in the crypto industry globally," says Jeffrey Wang, head of the Americas at Amber Group, a Canada-based crypto finance firm. "We would very much welcome clear regulation."
China has announced that in September all cryptocurrency transactions in the country are illegal in effect putting a stop to any activities involving crypto within Chinese border. Within the U.S., things are not as clear. Federal Reserve Chair Jerome Powell said recently that he has "no intention" of banning cryptocurrency in the U.S while Security and Exchange Commission Chairman Gary Gensler has consistently commented on both his own agency's and the Commodity Futures Trading Commission's role in policing the industry.
Gensler recently went so far as to say investors have a "likely to get hurt" if stricter regulation is not introduced. Additionally it is true that the IRS obviously has an interest in ensuring that investors are aware of the proper way to file a tax return for virtual currencies when they file their taxes. Gensler's as well as Powell's views align with an increasingly popular opinion among members of the Biden administration and other U.S. lawmakers that more regulatory oversight of cryptocurrency is required.
Like most things with cryptocurrency, regulations come with hurdles. "There are different agencies that may or may not have jurisdiction to oversee everything," says Wang. "And it differs state by state."
An open and transparent regulation could mean the elimination of a "significant roadblock for cryptocurrency," says Wang as U.S. firms and investors are operating without clear guidelines at the moment.
Which new regulation might mean for investors?
The $1.2 trillion bipartisan infrastructure bill which was signed by President Obama in November contains cryptocurrency tax reporting rules that could make it easier to the IRS to track crypto activity among Americans. In the beginning, before the introduction of new legislation this is the reason experts recommend that it is important for investors to record any capital gains or losses on crypto assets. The new rules may also aid the investors to correctly report cryptocurrency transactions.
"Exchanges will have to issue 1099-B tax forms with cost basis information to investors," Shehan Chandrasekera, CPA, head of tax strategy at CoinTracker.io, a crypto tax software company, recently told NextAdvisor. "This will significantly reduce the crypto tax filing burden."
Regulations and announcements could also impact prices of cryptocurrency within highly volatile markets. This is one reason that investing experts recommend keeping any investment in cryptocurrency to less than 5% of your total portfolio and never invest anything which you're not comfortable losing.
Many experts agree that the regulation of businesses is beneficial for businesses. "Sensible regulation is a win for everyone," says Ben Weiss, CEO and cofounder of CoinFlip, a cryptocurrency buying platform and crypto ATM network. "It gives people more confidence in crypto, but I think it's something we have to take our time on and we have to get it right."
It's been an impressive advancement in this area and the very first Bitcoin ETF being launched with the New York Stock Exchange in October. This is a novel and better way to invest in crypto. This BITO Bitcoin ETF will allow buyers to purchase cryptocurrency from the traditional financial brokerages, which they could already have accounts with, such as Fidelity as well as Vanguard.
"We do it in the equity market, we do it in the bond markets, people might want it here," Gensler said at the Aspen Security Forum over the summer.
But some say some believe that the BITO ETF does not have sufficient because, while the fund is linked to Bitcoin However, it doesn't really hold Bitcoin directly. The fund instead holds Bitcoin Futures Contracts. Although Bitcoin futures are based on the trends that are common to Bitcoin, the actual cryptocurrency but experts suggest that it might not track the price of Bitcoin directly. As of now, investors need to remain patiently waiting for an ETF which will hold Bitcoin directly.
ETF approval has been in examination by the SEC numerous times in the past few years, however, BITO was the first one to be granted approval.
What exactly a cryptocurrency ETF actually means to investors
It's too soon to tell how many investors will get in on BITO -- but the fund did see lots of trading action in its first weeks. It's generally the case that the greater accessibility of cryptocurrency assets inside traditional investment options and the more Americans might invest in them and impact the market for crypto. Instead of learning how to navigate an exchange for cryptocurrency to trade your digital assets, you could join your crypto portfolio directly from the same brokerage with which you already are a member of a retirement account or other traditional investment account.
Although the investment in a crypto ETF like BITO has the same risks as every other crypto investment. It's still a speculative and risky choice. If you're not willing to make a loss of the funds you've put into cryptocurrency by purchasing on an exchange, then you shouldn't put it in a crypto-related fund. Take a moment to think about whether you're prepared to take the risk of having cryptocurrency in your portfolio at all.
Broader Institutional Cryptocurrency Adoption
Mainstream corporations from a range of industries were interested in and, sometimes even invested in -- cryptocurrency and blockchain in 2021. AMC, for example, recently announced it will be able to accept Bitcoin payments by the end of this year. Fintech firms like PayPal and Square are making bets on cryptocurrency by accepting transactions from users via their services. Tesla continues to go back and forth on its acceptance of Bitcoin payments, though the company holds billions in crypto assets. Experts predict more and more buy-ins to this.
"We've seen a tremendous amount of inflow of attention, and that's going to continue to drive the growth of the industry for a while now," Abner says. Abner.
Certain experts believe that larger, multinational corporations will be able to accelerate this trend even further in the final quarter of this year. "What we're looking at is institutions getting involved in crypto, whether it's Amazon or the big banks," Weiss says. Weiss. A huge retailer like Amazon could "create a chain reaction of others accepting it," as well as "add a lot of credibility."
Indeed, Amazon has recently sparked rumors that it's making moves to that end by sharing a job posting for a "digital currency and blockchain product lead." Walmart is also recruiting a crypto expert to oversee its blockchain strategy.
What more is the significance of institutional adoption for investors?
Even though paying for products and services using the form of cryptocurrency doesn't seem to be a sensible option for the vast majority of consumers at the moment but the increase in retailers that accept payment could change the landscape in the near future. It'll likely be much longer before it'll be a smart financial decision to spend Bitcoin on goods or services, but further institutional adoption may result in more possible uses that are accessible to everyday consumers, which will consequently, will have an impact on prices for crypto. Nothing is guaranteed, but should you decide to buy crypto as an investment that can last over time and you have more "real world" uses it will have, the higher the likelihood that demand and value will increase.
Bitcoin's Future Outlook
Bitcoin is a good indicator of the crypto market broadly, given that it's by market cap , and most of the market tends to follow its trends.
The Bitcoin price was affected by The wild ride will continue in 2021 the following month, November set a record-breaking all-time price as it went over $68,000. This latest record high follows prior highs of more than $60,000 in April and October along with the drop in summer to less than $30,000 during July. This kind of volatility is a major reason why experts suggest not investing in cryptos for less than 5% of your portfolio to begin with.
How high can Bitcoin rise? A lot of experts think it's just a matter of when, not if, that Bitcoin exceeds the $100,000 mark. Bitcoin's past may provide some clues as to what to expect looking forward, according to Kiana Danial, author of "Cryptocurrency Investing for Dummies."
Danial claims there's several huge surges and pullbacks on Bitcoin's prices since the beginning of 2011. "What I expect from Bitcoin is volatility short-term and growth long-term."
What Bitcoin price volatility is for investors?
Bitcoin's volatility is more reason to invest in a steady long game. If you're looking to invest in the hope of long-term growth and you're not worried about sudden price swings. The best thing you can do is not look at your cryptocurrency investment and then "set it and forget it." Experts continue to advise us every time there's a price swing regardless of whether it's up or down -- emotional emotions can trigger investors to act rashly and make decisions which could result in losses to their investment.
The Future of Cryptocurrency
We can speculate on what value cryptocurrency may have for investors in the coming weeks and months (and many will) However, the fact is that it's still an emerging and speculative investment, without any prior experience to base our predictions. No matter what a given expert thinks or says there is no way to know for sure. That's why it's important to only invest money you're willing to risk, as well as stick to the more standard investing strategies to build wealth in the long term.
"If you were to wake one morning to find that crypto has been banned by the developed nations and it became worthless, would you be OK?" Frederick Stanield, a CFP with Lifewater Wealth Management in Atlanta, Georgia, told NextAdvisor the news recently.