What Does the Future of Cryptocurrency Look Like?
Crypto experts have identified 2021 as a “breakthrough” year for cryptocurrency in many ways.
Public interest in crypto boomed worldwide that year, permeating not only investing discussions, but also popular culture through social media networks, instant messaging platforms, and memes.
The largest cryptos in the world, Bitcoin and Ethereum, both managed to ride this surge of interest successfully and achieve all-time highs in the latter months of 2021.
Governments around the world, most notably the Biden administration in the US, also began to express increasing interest in new crypto regulations.
In contrast to the promising and highly exciting climate of 2021, the first half of 2022 has been largely sobering for the crypto market.
Bitcoin and Ethereum are now down more than 50% from the highs of late last year, and the crypto market as a whole has largely stalled, with only a few intermittent surges.
Many experts say most coins will likely continue to depreciate in the near term before the industry sees any sustained recovery and eventual growth, though nobody can tell for sure.
Cryptocurrency’s famous volatility makes it hard to predict where things are headed in the long term.
Even so, experts are watching for developments in areas like institutional adoption and regulation to get a sense of what the crypto market will be like over the coming months. Here’s what they project about the future of crypto so far:
Continuing Price Volatility Even for Larger Coins
The crypto industry has come a long way since the invention of Bitcoin in the early 2000s. Nowadays, there are thousands of altcoins available for investors to choose from.
Certain specialty crypto projects promise specific benefits, such as faster transactions or lower fees.
One especially successful altcoin is the privacy-focused Monero (XMR), which enables users to send and receive the coin completely anonymously through a dedicated XMR wallet. At this point, it’s safe to say there’s a crypto project out there to suit the investing interests of every potential trader and then some.
Be that as it may, it makes sense for crypto traders to continue looking at the largest and most popular coins as indicators of the market in general. This is because the cryptocurrencies with the largest market caps tend to set trends that dictate the movement of the market as a whole.
After riding high in the last months of 2021, the value of Bitcoin and the broader crypto market have been sinking all throughout 2022. This is due in large part to adverse macroeconomic conditions like rising interest rates and inflation, recession fears, and an increasingly unsteady stock market.
Extreme price swings from high to low and back again are extremely common in crypto, which is why experts advise investors to play the long game. Buying crypto for its long-term growth potential can make it easier to weather even extreme short-term price fluctuations.
Maintaining a long-term perspective also helps keep investors from making rash decisions in the face of price swings that may ultimately lead to losses.
More Regulation Worldwide
Governments around the world are searching for ways to make using crypto safer for legitimate investors and harder for cybercriminals. Hence, cryptocurrency regulation continues to be a hot button topic for legislators and other government officials.
In the United States, for instance, the Biden administration has urged government agencies to do more research on the “responsible development” of cryptocurrencies and other digital assets via an executive order issued in March 2022.
American legislators are also looking into ways to improve investor protection around crypto service providers, feasible ways to report virtual currencies on tax returns, and other salient regulatory concerns.
While crypto regulation continues to be a contentious topic within the industry, many experts say it could ultimately benefit both individual investors and the sector as a whole.
Clearer laws and guidelines to govern crypto could bring greater stability to what has historically been a notoriously unpredictable business environment.
Balanced regulation also has the potential to minimize fraud, protect investor interests, and even encourage innovation.
More Widespread Institutional Adoption
At present, it doesn’t make sense for most people to buy goods and services using cryptocurrency.
As more companies come around to the idea of supporting crypto payments, however, that landscape might well change in the future. As institutional adoption rises and crypto gains more utility for everyday users, its value is also likely to increase significantly.
More and more companies across a range of industries are also taking interest and even investing in both cryptocurrency and its core technology blockchain.
From retailers accepting crypto payments to fintech companies allowing users to buy and sell crypto on their platforms, interest in crypto and institutional buy-in are steadily increasing.
Experts predict that the support of large corporations could propel the crypto industry’s global credibility to game-changing heights.
Whether you’re a seasoned investor, a novice crypto trader, or simply an interested observer, it can be exciting to speculate on what value cryptocurrency might have in the coming months and years.
One important thing to remember, however, is that crypto remains a young and constantly changing industry. Without much history to base predictions on, it’s still best to do lots of research, invest cautiously, and keep your eyes open for new developments.