January 05, 2022

The cryptocurrency market in 2022: Part 1

The cryptocurrency market in 2022: Part 1

The outgoing year was eventful. Bitcoin historic maximum, China's abandonment of the status of the cryptocurrency capital, new projects, and now it seems that the industry has nothing else to surprise us with.

Or is there something?

About cryptocurrency

Cryptocurrency is an alternative payment instrument operating in a decentralized blockchain system. It is not popular in terms of direct use and is rarely used to pay for goods and services.

Cryptocurrencies are "digital representations of value" that cannot be issued, guaranteed, or controlled by central banks or government agencies. Such projects are usually developed by private issuers using highly specialized software. 

Typically, cryptocurrency coins are converted at a time-varying exchange rate into traditional (fiat) currencies like the dollar or euro, but don't confuse them with electronic payment systems. Storing, exchanging, buying, and selling cryptocurrency is impossible without an electronic wallet.

Digital assets are used as investment vehicles on specialized exchanges. 

Results of the year

In 2021, the BTC showed a positive trend. The all-time high was $69,000.

Other significant events of the outgoing year include:

  • The rapid popularization of the NFT market and the sale of tokenized art objects at record high prices.
  • Unexpected growth in old cryptocurrencies (DOGE), as well as demand for meme coins
  • El Salvador's policy towards the cryptocurrency sphere: the opening of a government fund, tokenized securities, and the announcement of a bitcoin city.
  • A portion of the incentives came from Elon Musk, who shook up the niche with provocative tweets.
  • Cryptocurrency venture capital growth: $88.3 billion in the first three quarters.
  • Getting to the top of the list of new promising cryptocurrencies

Currency capitalization, statisticsanddata.org report

Bloomchain statistics showing the main trends as of the third quarter:

Selection of projects in 2022

New cryptocurrency projects are expected to emerge in 2022. You need to select them for tracking, study them, and only then look for entry points for the cryptocurrency you are interested in.

The criteria for defining scam projects will remain the same in the coming year:

  1. The presence or absence of a useful concept, novelty, and uniqueness;
  2. The technical documentation, open-source WhitePaper, which describes in detail the principles for implementing the idea, the financial model;
  3. A roadmap and a description of the implementation stages;
  4. Tokens released on the exchange are issued, capitalized, and traded.
  5. the coin's availability on reputable trading platforms;
  6. The presence or absence of unrealistic promises of earnings and dividends;
  7. Compliance with roadmap deadlines, updates, and media coverage.

The presence of partners and experienced team members with LinkedIn profiles are additional marker factors of a potential reliable startup.

Market entry points will help determine technical analysis, support, and resistance lines.

Significant events in the coming year

Market forecasting would be incomplete without an overview of the expected events in 2022.

  • The US Senate will publish a global cryptocurrency bill. According to a representative of the document's author, it will contain information on definitions, classifications, and rules for stable coin issuers. An initiative is expected to establish an agency to regulate the industry. If this proposal is accepted, we should expect a new US regulatory policy and its impact on the market situation.
  • BTC-ETF. A hypothetical event is expected due to the SEC's approval by ProShare to use digital Bitcoin ETF futures. This tool is imperfect and not suitable for private investment, but it gives reason to count on the appearance of a physical analog. 
  • The massive launch of the digital yuan. China has taken several preventive measures ahead of the launch of the national cryptocurrency system, and numerous bans in this sector are among them. This is expected with interest and some degree of apprehension: Jeremy Fleming, head of the UK Government Communications Center, noted that the spread of the Chinese CBDC around the world carries risks for the financial systems of other countries.
  • increase in the key rate. On December 14, the US Federal Reserve released its updated monetary policy forecast. A forced measure to combat inflation is expected: six rate hikes are expected, and the volume of the reduction in securities redemption is doubled. These measures can either strengthen traditional financial tools or, on the contrary, increase interest in bitcoins.


General forecast

The general forecast for Bitcoin in 2022 can be called favorable. The US government is aiming to become the center of the industry. We assume that in 2022, the period of mass acceptance of digital assets and the emergence of new regulatory trends will begin in the country. Acceptance is a green light for investors and a potential harbinger of a bullish trend.

The Bloomberg report indicates the likely growth of not only the main cryptocurrency but also altcoins against the backdrop of the actions of the American authorities, in particular, the Federal Reserve System.

And most experts predict significant growth in Bitcoin, which is usually followed by the rest of the market.

Read about this in the second part of the article.

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