what to expect from the cryptocurrency

 

 what to expect from the cryptocurrency

Even though by the end of last year the cost of the main cryptocurrency sank, 2021 as

a whole turned out to be successful for the crypto market. During this time, Bitcoin has grown

by 64%. At the same time, in November, the coin set a historical maximum value at $69,000,

and the capitalization of the entire sector for the first time exceeded $2 trillion. But does this

mean that digital assets will continue to grow in value compared to fiat money this year? Denis

Chernyshov, the founder and CEO of the law firm Eternity Law International tells specifically for

Mind what dynamics to expect from the crypto market next year.

The capitalization of cryptocurrencies has been growing exponentially in recent years,

and this is due to many factors. Many experts talk about instability, in particular, that the market

is approaching a fall, and bitcoin will drop to $10,000 this year. Such a forecast is based on the

fact that coins have no fundamental value. Despite this, cryptocurrency fans believe that the

situation will turn out completely differently, and expect growth - no less than $100,000 per 1

bitcoin.

What factors influence the price of bitcoin in 2022?

 

 

Cryptocurrency is a promising way to earn money, being an ideal tool for saving, financing, and

investing. Its fundamental value is formed by the equipment and electricity that are necessary

for mining.

Also, a significant growth factor is a regulation of the crypto market in several countries, which

helps to clear the sphere of scammers and protect the interests of its participants. In this

regard, large institutional players with more significant investments entered the market in 2021

, they are aimed at the long-term accumulation of digital assets.

These factors indicate that with the advent of more institutions, the volatility of cryptocurrencies

will decrease, and the scenario of Bitcoin falling to $10,000 is unlikely. But it is worth

considering that the virtual asset market still depends on the rapid development of new

technologies, changes in regulations and policies in the traditional financial sector, as well as

the influence of large players.

How is global inflation affecting crypto?

Over the 13 years of its existence, bitcoin has not only acted as a hedge against inflation but

has outperformed all stocks from the S&P500 index. Its popularity is largely due to the desire

of investors to protect themselves from record inflation. Todd Lowenstein, the strategist at

Union Bank, predicts that the Fed's move to tighter monetary policy in 2022 will slow inflation

and reduce liquidity, which could significantly reduce the attractiveness of the digital currency.

However, other experts believe that this aspect cannot reduce the popularity and popularization

of cryptocurrency, since such a concept as inflation is not inherent in digital assets.

The price of cryptocurrencies is formed due to other factors, such as decentralization and the

number of those people who mine and trade coins. Some companies use only cryptocurrencies

as their work, receiving Bitcoin, Ethereum, or other altcoins as profit, thus forming the value of

cryptocurrencies.

How do political events and the news background influence?

Due to the ban on the issuance and trading of cryptocurrencies in China, a large amount of

equipment was moved to Kazakhstan, and now it does not work there either. Experts consider

this a temporary effect and predict a change in the situation in the coming months. The

equipment can be moved to other countries where there are appropriate conditions for mining

digital assets.

Against the backdrop of protests in Kazakhstan, where 18% of the world's mining power is

located, the price of bitcoin has plummeted. This is an important parameter because the price

of cryptocurrency is formed by equipment and electricity, and given the low electricity tariffs and

lack of regulation in this country, at the moment there is a lot of mining equipment concentrated

there.

How will the appearance of an exchange-traded bitcoin fund affect it?

 

 

The list of the most anticipated events in 2022 by the crypto community includes the entry into

the US stock market of the first physical bitcoin ETF. The US Securities and Exchange

Commission has already permitted the Bitcoin Strategy ETF from ProShare. It is worth noting

that this fund is pegged to bitcoin futures contracts, and not to the cryptocurrency itself.

The use of this instrument has a positive effect on the cryptocurrency market: only on the first

day of trading, the asset has already traded about $984 million. Thus, certain assets have

grown. But it cannot be said that this is exactly Bitcoin trading since this is futures trading, which

determines the price of a crypto asset in the future.

The fund allowed institutional investors to invest in bitcoin. Previously, they did not have such

an opportunity since investment funds must operate following the licensing regime of countries.

Therefore, even more infusion of funds into cryptocurrency can be expected in the coming

years, because it is very profitable.

Will Bitcoin lose its market leadership?

 

An increase in the popularity and exchange rate of other promising coins may lead to Bitcoin

losing market share to other cryptocurrencies. Nevertheless, he continues to dictate the trend

line, because this is the first cryptocurrency to appear and it is the final one (21 million coins

can be mined in total).

However, trading in new tokens can be tens or hundreds of times more profitable than trading

in bitcoin. But besides the potential profit, such investments carry more risk.

How is the legal regulation of the cryptocurrency sphere developing?

With the growth of market capitalization, virtual assets are attracting more and more attention

from regulators. For example, in the US, the Securities and Exchange Commission did not

allow several transactions, designating them as requiring a license. The Chinese government

has taken a tough stance on cryptocurrencies, banning not only trading it but also mining it,

which caused the miners to move and the bitcoin rate to fall. Analysts expect regulation to

be an issue for the crypto industry in 2022.

In Ukraine, last year the Verkhovna Rada adopted the law “On virtual assets”. It is currently under development. The new law introduces cryptocurrency into the legal field, thanks to which market participants will be able to open accounts for operations with crypto assets.