Three Things to Know About the Cryptocurrency Market in 2022

Cryptocurrency’s market value soared past the $3 trillion mark in 2021. Suffice to say, crypto isn’t going away anytime soon.

With all that growth, what’s going to happen to crypto in 2022? What are some predictions or other factors to look out for?

That’s what we’re here to look at today. Read on to find out more about the three essential things to know about cryptocurrency in 2021.

1. The First Bitcoin ETF

One of the most essential things to look out for as it relates to crypto is the possibility of the first bitcoin exchange-traded fund in the U.S. Investors are eagerly hoping for this approval.

In 2021, the Securities and Exchange Commission approved ProShare’s Bitcoin Strategy ETF. However, this tracks bitcoin futures instead of giving the investors exposure to the actual cryptocurrency itself.

Futures act as financial derivatives that provide obligations for investors to buy or sell an asset later or for an agreed price. Tracking futures for bitcoin is seen as too risky for traders who are invested in crypto.

As such, the ProShare Bitcoin ETF is seen as not very retail-friendly due to its higher costs. However, there’s mounting pressure for a Bitcoin Spot ETF due to higher demands in the crypto market.

There are plenty of bitcoin ETF applications in the works. Be on the lookout for approvals for one or a few of these applications in 2022.

2. Smaller Crypto Pockets

As the cryptocurrency market continues to grow, bitcoin’s share of the overall landscape is shrinking. Other digital currencies, such as ethereum, are beginning to play a larger role.

Analysts expect that this will continue going into 2022. Investors are looking at these smaller pockets to make bigger gains in the market.

Ethereum, Polkadot, and Cardano are some of the digital currencies that people are looking to invest in as 2022 approaches. These currencies have a higher emphasis on decentralized finance.

3. More Regulation

Countries like China have placed regulations on cryptocurrency like never before in 2021. With so many people getting their own Crypto Wallet and using other innovative crypto technologies, regulation is sure to come in the near future.

Due to the perceived legal gray area associated with cryptocurrency, it’s no surprise that governments are trying to impose more regulations. There will also be higher clarification of these gray areas for lawmakers in 2022.

The U.S. government has already begun to place regulations on crypto. While this shouldn’t be surprising given the market’s growth, currencies like Tether, which are stable coins, will get the majority of the heat.

That’s because stable coins are tied to existing assets, namely the U.S. dollar. The amount of collateral and leverage involved make stable coins a hot topic for regulation.

The aforementioned decentralized finance space is being scrutinized as well. Some are calling for the regulation of the decentralized finance space, or DeFi for short.

Understanding State Of The Cryptocurrency Market

The cryptocurrency market is ever-evolving, so expect to see plenty of different developments for this space in 2022. Use this guide to help you understand what these changes are and know what to look out for this year.

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