The Capital
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The Capital

The Future of Cryptocurrency

Last year was an important year for cryptocurrency. But now, investors are wondering what lies ahead for crypto.

Throughout 2021, Bitcoin (BTC) soared to new heights on the market but saw significant drops in price too. Ethereum (ETH) also had a big year, reaching its all-time highest price.

It’s not just crypto price that has risen, though: interest in digital currency has as well, and not just in the world of trading. Politicians, financial regulators, and the general public have all climbed aboard the cryptocurrency hype train.

Despite the breakthroughs made in 2021, the crypto industry is still in its early stages. This makes it difficult to anticipate how things are going to develop later down the line. However, there are certain themes to keep an eye on during 2022 and beyond. This article will provide examples of just a few.

Crypto Regulations

Going forward, it’s very likely that more and more lawmakers will take on the challenge of cryptocurrency regulation. Regulatory bodies all over the world are trying to put in place laws to help make crypto safer for consumers and less easy for criminals to abuse.

Clear, sensible regulation would only greatly benefit crypto and its investors. For one thing, it will make it far easier for investors and traders to report cryptocurrency transactions. It will also give consumers a greater level of confidence in crypto, which will no doubt see its popularity pushed to even greater heights.

Cryptocurrency ETF Approval

In October 2021, the world’s first Bitcoin ETF debuted on the NYSE — the BITO ETF. This recent development allows for a more traditional way for investors to buy in on crypto. They will even be able to invest in digital currency through the same brokers they already use for other types of investing.

If crypto ETFs become more mainstream, this will make cryptocurrency more accessible for traders. Crypto ETFs come with no less risk attached than any other crypto investments, but this heightened accessibility will still push crypto forward.

Wider Institutional Adoption of Crypto

In 2021, several well-known companies from a variety of industries showed interest in cryptocurrency and blockchain technology more broadly. AMC, PayPal, and Block are just a few examples of businesses that are beginning to show an interest in crypto. Experts estimate that more and more companies will jump on the crypto bandwagon.

The more businesses adopt cryptocurrency, the more everyday uses for it will come about as a result. As this demand increases, so too will crypto’s value.

Bitcoin Forecasts

As the largest crypto coin out there, Bitcoin’s performance can tell us something about cryptocurrency’s performance more generally since the market generally tends to follow BTC’s lead.

2021 was a turbulent year for Bitcoin. In November, it set an all-time price high of more than $68,000. However, only a few months earlier, in July, it dropped to less than $30,000. This kind of volatility is precisely why investors should focus on long-term crypto investments rather than short-term swings.

Conclusion

Forecasting the value of any kind of asset is always tricky, but especially so with cryptocurrency. This is because the crypto market is still relatively new, so there isn’t a great deal of historical data upon which to base speculations. This is why you should only invest in cryptocurrency if you’re willing to run the risk of losing some capital along the way.

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