Cryptocurrencies were a major topic in financial news in 2021 and investors increasingly followed the sometimes volatile movements of tokens, such as Bitcoin and Ethereum. They are also increasingly attracting the attention of regulators and central banks. The Bank of England even announced an investigation into the idea of โโa central bank digital currency, dubbed Britcoin. So what does 2022 have in store for cryptocurrencies? Express.co.uk he has probed the opinions of brokers and analysts for his key predictions.
Bitcoin to reach new heights
A strong analyst consensus predicts that Bitcoin will break above $ 100k (ยฃ 75.38k) in 2022.
Steve Ehrlich, CEO of cryptocurrency platform Voyager Digital, said: "$ 100k (ยฃ 75.38k) is the next big psychological barrier for investors.
"It may take some time to consolidate, but once Bitcoin breaks that barrier, I hope it flies."
He added: "Bitcoin breaking $ 100,000 will put the market cap at around $ 2 trillion, nearly 20 percent of Gold's market cap.
"The greater the rise of Bitcoin relative to gold, the more investors will wake up and see Bitcoin as a digital alternative to hedge against traditional equity markets."
Matteo Dante Perruccio, chairman of digital asset manager Wave Financial, also predicted that Bitcoin would break the $ 100,000 barrier, suggesting it would hit $ 125,000 (ยฃ 94.23k) by the end of 2022.
However, Marcus Sotiriou, an analyst at digital asset broker GlobalBlock, set further predictions, explaining: "I am more interested in the price of Bitcoin five to ten years later, where I can see Bitcoin hit $ 500k (ยฃ 376k ) within that time period. "
Expect more regulation, but this may be a good thing
Last year, cryptocurrencies proved sensitive to government regulation with crackdowns in China and India, for example, hitting prices.
One change to watch out for in 2022 is the proposed US infrastructure law, which could affect cryptocurrencies by changing definitions and requirements for brokers.
Mr. Sotiriou explained: "This will mean that people participating in the network may have to behave as node operators to report identifying information for crypto transactions that they have no way to collect.
"Cryptocurrency enthusiasts are concerned with this legislation as it may hamper innovation in the digital asset space."
However, Perruccio did offer some potentially positive predictions, suggesting that 2022 could see "a more favorable regulatory stance in India, as well as more clarity in the UK."
Husam Al Kurdi, CEO of brokerage SquaredFinancial, said "the worst thing is not having any regulation."
"Some are better than strangers."
He predicted that much more detailed regulation would emerge in the UK and Europe, indicating that cryptocurrencies are "here to stay."
Cryptocurrencies go mainstream
Sotiriou predicted that the biggest change in 2022 would be an acceleration in the use of cryptocurrencies.
In particular, gaming could see blockchain-based technology playing a much bigger role with large amounts of investment already seen here.
Ehrlich pointed to other uses, saying: "AMC now accepts crypto for the sale of movie tickets.
"Particle is turning a $ 13 million Banksy artwork into 10,000 available NFTs.
"Crypto payments are being embraced in the real world and this is only going to accelerate.
"We're at it now, and the uses will only get more innovative and creative."
Cryptocurrencies are making their way among the young and attracting a new generation of investors.
Al Kurdi said he increasingly sees the new generation "talking and talking about digital currencies."
He added: "They come up with names that I don't even know."
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Expect new entrants, but beware of scams
Looking back at 2021, Al Kurdi noted the success of more recent entrants like Shiba Inu.
He predicted that Bitcoin and Ethereum would still be at the top, but would see some of the market share lost to the new currencies.
With the emergence of new cryptocurrencies, there is also the risk of possible scams.
Earlier this year, Action Fraud found that more than ยฃ 146 million had been lost to crypto fraud since early 2021.
Kurdi explained that unlike investing in publicly traded companies, cryptocurrency buyers needed to do more research and due diligence themselves.
One thing to look for, he added, is whether reputable exchanges and brokers are offering a new currency that would have some checks.
Keep an eye on Elon Musk
Elon Musk has proven to be a great driver of the cryptocurrency market with several tweets bringing significant boosts and losses to a variety of currencies.
Tesla itself has also played a role in this with an announcement in early 2021 that it would allow the use of cryptocurrencies to pay for cars, which it subsequently used again out of environmental concerns.
Laith Khalaf, head of Investment Analysis at AJ Bell, described Musk as a "somewhat unpredictable indicator", advising investors to "Look at this space, or more specifically, Elon Musk's Twitter feed."
