2021 was a remarkable year for the cryptocurrency market, witnessing the total market value rally beyond the $3 trillion mark in November. Bitcoin (BTC), the largest cryptocurrency by market value, and Ether (ETH), the second-largest, hit all-time highs. At the same time, altcoins, like meme-inspired Shiba Inu (SHIB) and Dogecoin (DOGE), surged in popularity.
2022 is expected to mark the implementation phase of a torrent of the market, regulatory and technical advancements proposed or started in preceding years. Some key trends are manifesting the digital currency in mainstream economics.
- More acceptances by traditional companies as exchange of value
- Rising number of retail investors perceiving BTC as an inflation hedge and store of value amidst the knee-jerk governance worldwide
- Regulators trying to cement a stakeholdership in the parallel finance system
- Rising demand of the Bitcoin ETFs and NFTs
Strong Macro-economic Outlook
Long-term holders continue to hold the majority of the coins. However, the speculative year-end downfall has led to a phase of accumulation, which is strongly bullish for Q1 2022.
Another interesting metric is the strength of accumulation by retail investors (with less than 1 BTC in total holdings). This is because bull markets end when retail stop buying at the latest price levels. Presently retail demand remains strong as they maneuver the opportunity to buy the dip.
Also worth the attention is the in-line price behavior with industry expectations of hedge funds selling down in December to book profits and redeployment of capital in January.
Bullish Short-term indicators
The HODLer heatmap reflects a rare buy zone with a low NVT signal suggesting the value of transactions outpacing the market value in the near term. This transcends the asset’s market sentiment at a discounted price. While speculative investors reverse from sellers to buyers, there are no signs of a near sell-off.
Better adoption than internet
As per the data from digital asset management firm CoinShares, Bitcoin adoption has seen a stark annual growth rate of 113%, while people adopted the internet at a meager 63%. If businesses and retail users continue to warm up to Bitcoin the same way, there will be 1 billion users by 2024 and 4 billion users by 2030.
CoinDesk reported the number of new wallets worldwide increased 45% from January 2020 to January 2021, to an estimated 66 million.
In addition, the popular crypto exchange Coinbase quoted it now has over 73 million worldwide users. In contrast, fellow exchange Gemini recently released its “State of U.S. Crypto Report,” which found 21.2 million Americans own some cryptocurrency.
Inconsistent price predictions for Bitcoin in 2022
Some experts believe that Bitcoin has the possibility of topping $100,000 by the end of 2023, while some analysts argue that this goal could be reached already by the end of the first quarter of 2022.
Several others are still cautious about choosing a specific date or year and expect Bitcoin to not reach more than $70,000 by the end of 2022. For example, Carol Alexander, professor of finance at Sussex University, said she expects Bitcoin to the tank to as low as $10,000 in 2022, virtually wiping out all of its gains in the past year and a half.
“What I expect from Bitcoin is volatility in the short-term and growth in the long-term,” says Kiana Danial, founder of Invest Diva and author of “Cryptocurrency Investing For Dummies.”