Publication date: 20 Dec 2021
In short: in 2022, the sector expects more hacking attacks, metaverse wars, and a convergence of the crypto market and the state.
Results of 2021 for the crypto industry
- According to CoinMarketCap website, in 10 months of 2021 total cryptocurrency market capitalization increased almost 4 times, reaching $3 trillion. The growth of the market is impressive. By the end of 2021, more than 50 companies with a total capitalization of $7.1 trillion had decided to invest in crypto assets. These include publicly traded Coinbase, MicroStrategy, Tesla and others. The BlackRock investment fund has started buying bitcoin futures. “Two years ago, the funds thought bitcoin was a crazy idea, a year ago they wanted to discuss it later, today they are increasingly worried that they will lose clients if they don’t invest in bitcoin“, James Butterfill, investment strategist at digital asset investment platform CoinShares, told Coin Telegraph.
- According to figures reported by CNN, five of the 10 largest cryptocurrency thefts of all time occurred in 2021. This included the biggest ever in the history of the decentralised finance market. In August, an anonymous hacker stole nearly $600 million in cryptocurrency from financial platform Poly Network. The most recent successful hack occurred in early December, stealing at least $150 million from the “hot wallets” (accounts with a permanent internet connection) of two depositors of the Bitmart cryptocurrency exchange. In total, hackers organized 169 blockchain hacks worth nearly $7 billion in 2021.
- El Salvador became the first country that legalised bitcoin.
How much will bitcoin cost in 2022?
- In 2021, bitcoin has set historical records for its price more than 10 times.
“In the first half of 2022, the value of bitcoin could surpass $100,000 and Ethereum $10,000,” Aton analyst Valentin Rodionov told Forbes.
On December 14, 2021, they were trading at $47,500 and $3,830 respectively. The final stage of growth in this cycle is near, when the price could rise above those marks, after which a correction of more than 50% should be expected. “This is indicated by the last couple of months, in which long-term investors have been reducing their positions, and this trend could continue for a few more months,” Rodionov said.
Major crypto risks in 2022
One of the main risks for cryptocurrency in 2022 is an increase in hacking attacks, says Ruslan Botashev, portfolio manager of crypto investment bank Hash CIB.
Next year, Benjamin Whitby, director of product and technology at Qredo Protocol, predicts the world’s first $1 billion hack. In 2022, state-sponsored hacker groups will orchestrate more attacks that will target crypto assets, according to a Kaspersky Lab report. The main targets of the attackers will be to collect wallet private keys, credentials and verification codes, said Binance Eastern Europe CEO Gleb Kostarev.
Some companies have already responded to such predictions. For example, the insurance company Lloyd’s of London caught the trend with the activity of hackers and in early December changed the terms of their policies, excluding from the insurance coverage damage from cyberwar or cyberterrorism.
Metaverse wars and the rise of GameFi
In 2022, a “metaverse race” will happen. “Expect a battle between metaverses with cryptocurrency and metaverses run by games and corporations like Meta,” Bitcoin Foundation chairman Brock Pierce told Business Insider.
Meta began testing crypto transactions in its WhatsApp app in late 2021. The messenger has received test support for the Novi wallet, which can be used to exchange Pax Dollar Stablecoins pegged to the US dollar. Users can transfer crypto into fiat money without any fee, with no limit on the number of transactions or their amount. The wallet can also be deposited with a bank card, also without a fee. So far, the pilot function is only available to a small number of US users. In the future, the company plans to introduce new financial services not only on WhatsApp, but also on Facebook and Instagram.
Investment firm Grayscale predicts that by 2025, companies will generate $400 billion in revenues from metaverses. The play-to-earn, or GameFi, sector has great growth prospects because of this. These are playgrounds with their own internal settlements in tokens, which can be used to make money, for example, by winning competitions or selling “game assets,” lending tokens and making a profit on the borrowers’ winnings.
- The market already has successful examples. Since its release in 2017, the Decentraland metaverse’s Mana token has risen in value by more than 12,000%.
Government control of cryptocurrency will increase
All through 2021, the US Securities and Exchange Commission has been trying to figure out how the decentralised finance market and cryptocurrency settlement flows should be controlled. Currently, this is all in a grey area, and cryptocurrency transaction companies won’t have to report to the US IRS until 2024 at the earliest. But it is possible that the US could approve cryptocurrency regulations as early as 2022, US Forbes quoted Bloomberg Intelligence senior strategist Mike McGlone as saying.
There will likely be five countries in the developing world where bitcoin will be fully legalised by the end of 2022. El Salvador has already approved it, Brazil, the Philippines, Lebanon, and Kenya are ready to pass new laws. This prediction was made by Alexander Heptner, CEO of cryptocurrency exchange BitMEX.
The Russian Federal Council has set up a working group to develop rules for cryptocurrencies in Russia. It includes lawmakers and lawyers, representatives from the Ministry of Finance and Ministry of Economic Development, the Financial Monitoring Organisation and the Ministry of Finance, the Bank of Russia, the Federal Tax Service and the Ministry of Economic Development. There are also plans to invite representatives of the crypto market. This move by the authorities is due to Russia’s rapidly growing crypto space, which requires proper regulation. Authorities recognise that much more regulation is needed for the industry to operate safely and efficiently, covering various aspects of crypto circulation and taxation.
The European Central Bank is concerned about the threat posed by the digital euro. According to experts, such a currency could undermine the stability of the countries with weaker economies that are not members of the EU. According to Fabio Panetta, an ECB board member, the digital euro has the potential to displace the national currencies of third countries. This would trigger a “euroization” that would lead to financial instability and make it impossible to manage the monetary policy of states.
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