3 Cryptocurrency Investment Strategies That You Should Know in 2022
Key Takeaways:
1. Scaling wars: The scaling wars between public blockchains will continue to heat up until L2 solutions are comprehensively available;
2. Digital asset investors will shift from risky investment to conservative investment;
3. Metaverse, GameFi and P2E: The concept of Play to Earn opens the era of chain games, and gaming blockchains;
2021 has been a booming year for cryptocurrency: Bitcoin reached a record high; GameFi broadened blockchain’s reach; the birth of robust public blockchains such as Solana and Cosmos heated up the competition for public blockchains market share; and NFT value skyrocketed following the popularity of BAYC and cryptopunk. Massive wealth rained onto keen eyes. The key to unlocking the code of wealth is nothing more than the knowledge of the industry and the grasp of timing.
Here are three macroscopic changes that are going on in blockchain industry 2022
01. Scaling wars: The scaling wars between public blockchains will continue to heat up until L2 solutions are comprehensively available
Public blockchains are on the rise. Although intensive hype was seen on Ethereum’s L2 solutions, high gas fee is still an ever-haunting problem to Ethereum users. Alternative choices such as LUNA, SOL, and AVAX have been looting Ethereum’s market share.
2022 The “scaling war” will continue to heat up in 2019. Alternative public blockchains will use different methods to expand throughput, reduce transaction costs, and attract elite developers to compete for market share. Ethereum’s high fees and congestion will drive developers to other L1 until L2 solutions become practical enough (i.e. StarkNet, dYdX for transactions, Immutable X for NFT minting/trading).
Modular blockchains and data availability: The rise of Rollups gave birth to the concept of modular blockchains. A full-fledged blockchain consists of three core components: execution, settlement, consensus, and data availability.
However, a blockchain does not need to fulfill all of these components alone. In fact, modular blockchains specialize in one or more of these components and outsource the rest to other specialized blockchains to achieve greater scalability.
For example, a core element of that modular blockchain stacks is specialized data availability chain such as Celestia, which has very high data capacity. Many Rollups can take advantage of its capacity and dump their data to Celestia for shared security while focusing on scaling their own execution.
The Merge was arguably the most important milestone in Ethereum history, marking Ethereum’s transition from PoW to PoS. The Merge has been postponed multiple times as there was not clear deadline set for it. Ethereum.org expects The Merge to happen by the end of the second quarter 2022, you can follow updates here.
After EIP-1559, ETH fees are split into “base fees” and “tips”. When The Merge is shipped, the tip portion goes to validators/stakers along with block inflation, which will make ETH a yielding asset. In addition, Ethereum has become deflationary after the EIP-1559 upgrade in August 2021.
Notably, as increasingly more traditional institutional investors go down the cryptocurrency rabbit hole, institutional capital have begun to expand beyond BTC and ETH.
02. A shift from risky investment to conservative cryptocurrency investment;
Although many people are in for the long-term development currency industry, short-term bitcoin price volatility will impact market sentiment.
In addition, the Fed rate hike is getting closer, and some in the industry believe it is the end of the industry bull market.
As a result, many people prefer mainstream cryptocurrencies to those altcoins which tend to fluctuate. The drop in the number of futures contracts also shows people’s concerns about the market instability, and users are gradually shifting from risky investment to conservative investment.
03. Metaverse and GameFi are competing for P2E market share
In 2021, Axie Infinity prosperity has proven Play To Earn concept feasible. Now a series of P2E games are popping up and trying to replicate Axie’s success. With the surge in the number of chain game ecology, innovation and gameplay creativity will be vital for long-term development. Though most projects will eventually fade away, this is just the beginning of a new gaming era. Illuvium, Crypto Unicorns, and Ember Sword are bringing AAA-level graphics and gameplay to blockchain gaming industry. In addition, blockchains such as Immutable X, Ronin Chain, Solana and Polygon are also trying to take a slice of GameFi cake.
Games are, at the moment, the most similar concept to Metaverse. It is also the first application scenario of Metaverse, since Metaverse’s immersive, digital, economic system features can easily integrate with games.
In fact, Play to Earn is derived from the Bitcoin mining. Bitcoin miners make money by mining behaviors, and players in GameFi make money by playing games. Obviously the latter is much more interesting.
Although increasingly more users have turn to investing in Bitcoin and Ethereum using regular financial management with more stable returns, there are still many pitfalls for regular financial management in cryptocurrencies. For example, although some crypto exchanges have launched high APY products, the targeted currencies are relatively niche altcoins, which are prone to price volatility. This means even if investors choose the safest investment will also lose money whenever the currency price plummets.
On the other hand, when investors are redeeming the principal, some exchanges deliberately release their principal linearly in time, which prolongs the time of locking the user’s assets.
However, LuckyHash is rid of all these pain points: LuckyHash savings account yield 65% APY for USDT at top, an 90% for Filecoin! Also LuckyHash savings account returns investors’ principal as well as interests immediately by redemption date.
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In short, while macroscopic factors don’t affect the broader cryptocurrency market, specific industries and their associated assets will benefit from strong fundamentals, and users who know how to spot trends early will be better able to manage their assets.
