It’s been another volatile year for cryptocurrency investors, with pools and trajectories amplifying the rewards and potential risks involved.
There is still intense excitement, as former Twitter chief Jack Dorsey claimed earlier this month that he believes bitcoin could replace the US dollar in the future.
But, governments and central banks are still dealing with crypto assets, and the coming year will be pivotal in terms of future regulatory interventions or drastic measures, as well as growth opportunities.
Here, This Is Money looks at what happened in the crypto space this year, and what could be in store for crypto investors in 2022.
What a year: It has been another bustling year for crypto investors, with an abundance of pools and paths
What happened to bitcoin this year?
Bitcoin, the original cryptocurrency, remains the largest and most popular cryptocurrency, with a market capitalization greater than all other currencies combined.
After jumping to a record high of over $68,000 in November, bitcoin is currently trading at $48,674.60.
Year-to-date, the price is up more than 65 percent, while Bitcoin has jumped nearly 4,900 percent over the past five years.
According to Finder’s Investment Tracker, a person who invested £1,000 in bitcoin at the start of the year would have seen their earnings grow around 62 per cent so far.
She said: “If you had invested £1,000 in bitcoin at the beginning of January, it would currently be worth £1,622, despite an astonishing 27 per cent drop in value over the past six weeks – it’s at £2,231 again. . In mid-November.
It follows that from 2020, an initial investment of £1,000 in bitcoin ended the year at £3,919.
Meanwhile, the price of Ethereum has increased by more than 400 percent in the past year, while the price of Solana has grown exponentially in the past 12 months.
“Some cryptocurrencies have seen amazing moves since Monday’s lows, notably LUNA, as well as CRV (Curve) — both of which have seen gains of more than 30 per cent in the past two days,” said Marcus Sotirio, analyst at Global Block.
Shifts: A chart showing what has happened to the price of Bitcoin over the past year
How many people own bitcoin fortune?
A recent study revealed that less than 0.01 percent of bitcoin investors own more than a quarter of the cryptocurrency in circulation.
Academics at the National Bureau of Economic Research have found investment in digital currency to be ‘too focused’, with 10,000 investors owning about five million out of the 19 million bitcoins in circulation, worth $230 billion.
In the United States, the top 1 percent of households own about a third of total wealth, according to the US Federal Reserve.
This level of focus brings, according to the findings, “systemic risk” in part because so few people can cause prices to crash if they sell their property all at once.
What’s in store for next year?
Within the crypto space, volatility remains an issue and appears set to continue into the next year.
Some bulls are anticipating higher bitcoin prices but others are anticipating a drop.
“The most experienced educators in this field expect to earn $100,000 in bitcoin in the first quarter of 2022 or earlier,” said Kate Waltman, a public accountant specializing in cryptocurrencies based in New York.
“What I expect from bitcoin is short-term volatility and long-term growth,” said Kiana Daniel, author of Crypto Investing For Dummies.
However, uncertainty remains at the forefront of many experts’ minds.
What will happen? Within the crypto space, volatility is still an issue and looks set to continue into the next year
“It is usually expected that whenever Bitcoin ever hits a new high, prices tend to reverse soon after,” said Olly Leech, director of learning at Coindesk. We saw it earlier this year and that seems to be the case again now.
Bitcoin has not printed a new high in more than 40 days, leading some analysts to believe that 2022 could turn out to be a repeat of the crypto winter of 2018.
Obviously, it’s impossible to know for sure, but there are a number of upcoming regulatory actions scheduled for 2022 that could affect the performance of bitcoin, specifically the new stablecoin regulations in the United States.
Not to mention that prices are dangerously close to crossing below the 200 daily moving average; An indicator that many traders use to gauge whether Bitcoin is in a bullish or bearish market.
Laith Khalaf, Head of Investment Analysis at AJ Bell, said: “Throwing the dice at the roulette wheel is likely to be as good a tool as any for predicting the trajectory of the cryptocurrency markets over the course of 2022.
However, there are five main things to watch out for in this emerging market that can be expected to have some impact on prices; Adopting new business and investment products, regulatory activity, environmental advancement, and central bank competition.
If cryptocurrencies begin to be used as a medium of exchange between businesses and consumers, this will strengthen the case for a bull.
Such adoption should be done in a meaningful way, not as a marketing gimmick, where companies accept payments in cryptocurrencies and then instantly convert them into fiat currencies.
He added: “Cryptocurrency volatility is a major sticking point that makes it difficult to see much progress being made, when companies have bills to pay in dollars, euros and sterling, and likewise big funds need to inform their investors in the traditional way.” currencies.
Growing environmental concerns?
Following the COP26 summit in Glasgow earlier this year, environmental concerns will remain on the agenda for businesses, industries and governments into 2022 and beyond.
Critics claim that cryptocurrency mining is energy-intensive, with most bitcoin mining taking place in the United States.
“The environmental part of the puzzle can swing either way, said AJ Bell’s successor, with Tesla CEO Elon Musk being the somewhat unpredictable leader on this particular issue.
Tesla made some bold plans to facilitate crypto-payments for cars at the beginning of 2021, but they were held back by concerns about the environmental impact of crypto mining.
Musk said Tesla will resume its plans once mining transitions to more sustainable energy, and this is already starting to happen. Watch this space, or more specifically, Elon Musk’s Twitter feed.
How will governments and central banks respond?
Governments and central banks around the world are still in the early stages of dealing with cryptocurrencies and people’s interest in them and their implications for the future of global markets.
Here in Britain, Bank of England policymakers led by Andrew Bailey have warned of the risks of investing in such assets.
In January, the UK’s Financial Conduct Authority said: `Investing in crypto assets, or investments and related lending, generally involves very high risk with investor money.
“If consumers invest in these types of products, they should be prepared to lose all of their money.”
Be careful: Bank of England policymakers led by Andrew Bailey have warned of the dangers of investing in cryptocurrencies
But central banks such as the Bank of England and the Federal Reserve in the US are considering whether to launch their own digital currencies. China, which has already done so, has cracked down on cryptocurrency trading and mining.
“Regulatory activity is likely to be negative for cryptocurrencies,” Khalaf said.
It turns out that regulators don’t like the idea of a financial system that can be used to launder money and defraud consumers, and can ultimately lead to huge losses among investors.
Campaigns in India and China could be replicated elsewhere, and more broadly, regulators and governments will turn their eyes to cryptocurrencies as they become more immersed in the traditional financial ecosystem.
Central banks, including in the UK, are also looking to launch their own digital currencies, which would be a downside for the crytpo as it could usurp some of the perceived benefits of Bitcoin et al, such as faster payments and transaction costs, particularly across borders.
Chris Dinga, payments analyst at GlobalData added: “While a lack of regulation is driving the growth of cryptocurrencies, their decentralized nature means that increased investment and dependence on the crypto sector can weaken governments’ control of the economy.”
This is not a situation that some governments are willing to tolerate, as India, already one of the largest economies in the world, moves to crush cryptocurrencies before they can gain more popularity. To survive, the sector needs to quickly become “too big to fail” by overcoming the limitations of TPS to continue its rapid growth.
What does the future hold for cryptocurrency?
Regardless of the concerns about regulation and volatility, there is still great excitement brewing in the crypto world about what the future will bring.
This previous month Jack Dorsey, the head of Twitter, caused a stir on the social networking site he helped found by sharing his thoughts on cryptocurrency.
Mr Dorsey, who recently quit his job as CEO of Twitter to focus on blockchain-oriented Fintech, tweeted that he believes Bitcoin will eventually replace the US dollar.
Companies like Visa have also become very involved in the crypto space.
Visa has partnered with 60 crypto platforms so consumers can spend cryptocurrency at 80 million merchants around the world.
It plans to launch crypto-linked cards to allow consumers to spend digital assets without requiring the merchant to accept crypto.
The Head of Cryptography at Visa said, “At Visa, the size and scope of our crypto business has grown exponentially.
“The number of people working in multiple jobs at Visa who work on crypto in some capacity is now in the hundreds — from just a handful of employees.”
The group has also launched a global crypto advisory service targeting clients such as banks and retailers who are keen to enter the world of crypto for the service of their clients.
Elsewhere, earlier this year, it was revealed that a cryptocurrency firm was on the way to purchase the Gibraltar Exchange.
Valereum Blockchain, a Gibraltar-based blockchain technology group, signed an option to snap up 80 percent of GSX in October.
Amid the constant activity, excitement, and – among some – concerns about the future of cryptocurrencies, anyone considering taking the initiative and investing their money should remember that they could end up losing all the money they put in.
Investing in cryptocurrency is unregulated, unprotected and highly volatile, and far from risky, it pays to keep calm before giving away your money, because as the Financial Conduct Authority (FCA) has warned, you could lose everything.
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