Cryptocurrencies were a major theme in financial news in 2021 with investors increasingly tracking the at times volatile movements in 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 a central bank digital currency – dubbed Britcoin. So what does 2022 have in store for cryptocurrencies? Express.co.uk has canvassed the views of brokers and analysts for their key predictions.
Bitcoin to reach new heights
A strong consensus of analysts predict Bitcoin will go over $100k (£75.38k) in 2022.
Steve Ehrlich, CEO of cryptocurrency platform Voyager Digital, said: “$100k (£75.38k) is the next major psychological barrier for investors.
“It might take some consolidation time, but once Bitcoin breaks that barrier, I expect it to fly.”
He added: “Bitcoin breaking $100,000 will put the market cap at about $2 trillion, nearly 20 percent of Gold’s market cap.
“The higher Bitcoin climbs relative to gold, the more investors will wake up and see Bitcoin as a digital alternative to hedge against the traditional equity markets.”
Matteo Dante Perruccio, president of digital asset manager Wave Financial, also predicted Bitcoin would break the $100k barrier, suggesting it would reach $125k (£94.23k) by the end of 2022.
Marcus Sotiriou, analyst at digital asset broker GlobalBlock, set predictions even further though, explaining: “I am more interested in the price of Bitcoin five to 10 years out where I can see Bitcoin hitting $500k (£376k) within that timeframe.”
Expect greater regulation, but this may be good
Last year cryptocurrencies proved sensitive to government regulation with crackdowns in China and India, for example, impacting prices.
One change to keep an eye on in 2022 is the proposed US infrastructure bill which could impact 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 of gathering.
“Crypto enthusiasts are concerned with this legislation as it may stunt innovation in the digital asset space.”
Mr Perruccio offered some potentially positive predictions though, suggesting 2022 could see “a more favourable regulatory stance in India, as well as more clarity in the UK”.
Husam Al Kurdi, CEO of broker SquaredFinancial, said “The worst thing is not to have any regulation.”
“Some is better than unknowns.”
He predicted much more detailed regulation would emerge in the UK and Europe which would indicate cryptocurrencies are “here to stay.”
Crypto goes mainstream
Mr Sotiriou predicted 2022’s biggest change would be an acceleration in cryptocurrencies finding mainstream usage.
In particular, gaming could see blockchain based technology play a much bigger role with large amounts of investing already seen here.
Mr Ehrlich pointed to other uses, saying: “AMC now accepts crypto for movie ticket sales.
“Particle is turning a $13 million Banksy work of art into 10,000 ownable NFTs.
“Crypto payments are seeing real-world adoption and this is only going to accelerate.
“We’re in it now, and the uses are only going to get more innovative and creative.”
Cryptocurrencies are particularly breaking through with younger people and attracting a new generation of investors.
Mr Al Kurdi said he increasingly sees the new generation “talking and speaking about digital currencies”.
He added: “They come up with names I don’t even know.”
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Expect new entrants, but look out for scams
Looking back at 2021 Mr Al Kurdi noted the success of more recent entrants such as Shiba Inu.
He predicted Bitcoin and Ethereum would continue to stay on top but would see some market share lost to new currencies.
With new cryptocurrencies emerging there is also a risk of potential scams.
Earlier this year, Action Fraud found over £146m had been lost to cryptocurrency fraud since the start of 2021.
Mr Kurdi explained, unlike investing in listed companies, crypto buyers needed to do more research and due diligence themselves.
One thing to look for, he added, is whether a new coin is being offered by recognised exchanges and brokers who would have down some checks themselves.
Keep an eye on Elon Musk
Elon Musk has proved a big market mover in cryptocurrencies with various tweets providing boosts and major losses to an array of coins.
Tesla itself has also played a roll in this with an announcement early in 2021 that it would allow cryptocurrencies to be used to pay for cars which it subsequently went back on over environmental concerns.
Laith Khalaf, head of Investment Analysis at AJ Bell, described Mr Musk as being a “somewhat unpredictable bellwether”, advising investors “Watch this space, or more specifically, Elon Musk’s twitter feed.”