- 2021 was an amazing year for digital assets, but 2022 can be even more exciting.
- Arcane Research, a blockchain research firm, made dozen of crypto predictions for 2022.
- Insiders picked five of them, including fading-in-the-dark meme coins.
It was an outstanding year for digital assets in 2021, and in the new year cryptocurrencies should hit new milestones.
cryptocurrency investors followed another roller coaster ride in 2021. Nearly all cryptocurrencies, from Bitcoin to Dogecoin, hit record highs and delivered staggering profits, but in May around 50% of total market value was wiped out in just seven days. In September, China’s crackdown on cryptocurrencies escalated into a ban on all transactions.
Other wild crypto moments of 2021 came when El Salvador made bitcoin legal tender, meme tokens exploded, and an NFT sold for $69 million.
So what’s in store for us in 2022? Arcane Research, a blockchain research firm, made dozen of crypto predictions for 2022. Here are five:
Bitcoin will outperform or underperform the S&P 500
Despite the threat to the global economic recovery from rising coronavirus cases, both Bitcoin and the benchmark index achieved impressive gains in 2021: Bitcoin rose 66% and the SandP 500 rose around 27%.
However, as Bitcoin has increasingly behaved as a risky investment, Arcane Research said it will continue to amplify the significant movements in the stock market.
So if the stock market continues to rise in 2022, Bitcoin will likely outperform,” the company said. But if we see a red year for the stock market, Bitcoin is likely to perform worse.
Ether will outperform bitcoin again
Long was considered second fiddle, Ethereum far outperforming Bitcoin in 2021, gaining 418% compared to 66% for Bitcoin.
This performance gap is the largest since 2015, when Ethereum first launched, Arcane said.
One of the reasons Ether will continue to outperform in 2022 is because of the increase in NFT sales volume; most of these tokens are still running on the Ethereum blockchain; and this year’s major upgrades from the Berlin upgrade to the London hard fork, have helped to improve the network’s ability to handle more transactions.
Most meme coins will fade into obscurity
Investors have seen meme coins appear left and right in 2021. For example, the dogecoin spinoff shiba inu rose 44,540,000% last year. And squid, a cryptocurrency named after the popular Netflix series “Squid Game,” jumped more than 75,000% in less than a week and fell into oblivion soon after.
“We cannot summarize the 2021 market without mentioning the absurd meme coin rally of 2021,” Arcane Research said, adding the phenomena will be “a historical relic of the absurd times that was 2021.”
USD Coin will overtake Tether as biggest stablecoin
Tether has been the largest stablecoin by market valuation for quite some time, but you should be careful this year, especially given USD Coin’s decision to join the credit wave.
Innovative credit products that generate high returns on stablecoin deposits have been the primary driver of stablecoin growth, said Arcane Research.
Bitcoin will remain closely linked to the VIX
The stock market had an excellent run last year, but a pattern emerged, according to Arcane Research: “Fear in the broader financial markets had a direct impact on Bitcoin’s performance.”
Spikes in the Cboe volatility index or VIX accompanied the massive Bitcoin sales. Arcane Research warned that market headwinds in 2022 could have an impact on Bitcoin’s short-term price movement.
