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21 crypto predictions and then in 2022

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2021 is the biggest year in the cryptocurrency industry. And it's not just that token prices have gone up, which some have done by thousands of percentage points, proving that crypto's epic gains are still on the table. More importantly, the growth of cryptocurrencies this year has taken the form of widespread adoption, integration, and innovation, such as El Salvador's Bitcoin policy and mass adoption of NFT by big brands and celebrities.

What happened after the biggest year? Maybe not so big in a year
The past year has been unique, especially as the daily trading momentum that erupted during the COVID blockade in 2020 has translated into real adoption and innovation by the likes of Twitter. And cryptocurrencies are generally very cyclical as newcomers get tired and burned out, then back off to lick their wounds and learn before diving back in. However, 2021 has broken the rhythm of the previous cryptocurrency boom and bust, so anything is possible.
Even if it's less spectacular than 2021, there will be big moves in 2022 like the release of Ethereum 2.0 (finally!) and the withdrawal of NFT mania (maybe!). And as the industry matures, there will be plenty of capital to fund the construction of exciting projects
going on and lots of opportunities to get involved if you're careful. There are also important real-world factors that will affect cryptocurrencies, from US interest rates to inflation to the COVID variant – some more predictable than others.
What follows is a mix of my impressions of what lies ahead and (mostly much better) insights from other crypto watchers. None of this is financial advice, and most of it may be wrong - but I hope it will help you form your picture of the road ahead.

The general token market is down
Expect at least periods of a volatile and essentially flat token market. I'm becoming increasingly convinced that we won't see a big 2018 style drop, but 2021 is a big year so, mathematically, it's likely to return to average. I think there's a good chance Bitcoin will hit a new all-time high above $69,000 by the end of 2022, although I wouldn't bet that this will continue until 2023.
To be honest, I was too pessimistic last time - I thought we'd see a high of around $30,000 in 2020, but it turned out to be far from another cycle. Heart rate can go up very well, so consider this a slightly delayed projection.

Elon Musk will continue to mislead and confuse people new to crypto
In late 2022, upon realizing that this is not Nick Sabo, Elon will pose as Satoshi despite not "receiving" proof of employment (PoW). Craig Wright would sue him for libel and that would be great fun.

NFT is still increasing
This is a minor omission because long before the irreplaceable high dollar tokens bleed, and many of those prices are most likely due primarily to money laundering, so they should continue to fall. I see the celebrity-branded "profile picture" market and NFT hitting back again as their price action over the last 18 months is based on the false assumption that they are "art" and traded like Van Gogh's Basque Country.They don't and won't. To get a better idea of what makes real art like NFT or in other forms valuable, check out my work on the art and generative art market.

ETH2 arrived
This has been planned for years, but the transition from Ethereum to Proof-of-Stake (PoS) will finally take one final step forward next year when a new PoS beacon chain joins the current PoW chain. This implies some of the major risks and rewards of the transition may not materialize until 2023 when Ethereum just starts rolling out sharding.
Perhaps the most important thing to note is that the transition to PoS is unlikely to impact Ethereum transaction fees, at least until the split is implemented. High fees last year and beyond are largely responsible for the popularity of another Layer 1 blockchains like Avalanche, so upgrading Ethereum should not disrupt this dynamic too much (see below). (Note: February's ETHEnver conference will be a great opportunity to learn the nuances of all this.)

Layer 1 diversity is real
One of the real downsides I've seen this year is the fragmentation of consumer interest in real and meaningful uses across several blockchains. In the NFT sector, for example, we have seen serious penetration not only from Solana but also from Tezos and other blockchains. However, as the Bankless team discussed in "5 Things We Fix," there's good reason to believe that in the long run there are two or three dominant chains for smart contracts rather than, say, five or six. In the next year, the variety of platforms used is expected to expand, but real competition and eventual consolidation follow.

Major token releases continue
"Breakdown" here means that various crypto assets will stop at just tracking the price of Bitcoin. Instead, everyone sees returns based on their value proposition. The split has been slow over the years, but the process accelerated in 2021.
The difference between the highest and lowest crypto returns is dramatic: Layer 1 Solana (SOL) and Terra (LUNA) tokens return 8000% or more, while obsolete or damaged projects such as EOS and internet computers decline by more than 80%. The lesson is clear: It is no longer enough to be “in cryptocurrency”. As with any investment, where you put your money is important. For more on the release, check out this year's issue of Messaris Crypto, a must-read yearbook and a great way to catch up on the year's many transformative moments.

Bitcoin mining is big
Arcane Research predicts that next year we will see more Bitcoin mining bans in countries with weak grids or low energy supply, "while other high energy jurisdictions will take over the industry." It is said that the country and its citizens see restrictions on their participation in Bitcoin, both on their initiative and because more distributed mining is better for the network itself.
But there are also positives here in the medium term. Bans on production in countries without sufficiently stable or sustainable power grids should push more hash power toward cleaner energy and perhaps mitigate some of the one-sided environmental, social and governance (ESG) criticisms that have surfaced this year to Elon Musk of Tesla.

Stocks continued to rise, but more slowly
Goldman Sachs expects 9% growth for the S&P 500. That's not as much this year when the index is up 27%, but it will still be very strong. From today's perspective, it's a fair bet - the latest unemployment report, for example, fell short of projections and consumer demand will remain high for months after the pandemic stimulus payments end.
The constant question is whether stocks have much leeway given the excessive price/earnings ratio. Tech and growth stocks like Tesla have been volatile in recent months, with innovation fund Cathie Wood's Ark down 20%. And a recent study of CNBC millionaires found that wealthy investors lost their risk appetite, which could damage their tires even more.

The Fed is getting tighter
The US Federal Reserve will reduce its bond-buying program from January and is also expected to raise interest rates in 2022. This will have complex and frankly uncertain consequences for crypto. In theory, this would help lower inflation, but could also put pressure on speculative investment, which has attracted some free money in recent years.
However, keep in mind that this is good news, at least in conventional economic terms. Nearly zero interest rates only benefit those who sell low-quality, high-risk assets. An increase of one point (or even two) means that when the recession hits, we will have room to go down, which will be of great benefit to the long-term stability of the United States.

Bitcoin's inflation history has been put to the test
As I recently wrote, Bitcoin is not reacting to rising inflation as it should, according to proponents of the "inflation hedge" thesis. As I said earlier, this is because adoption has not yet reached a point where the price floor is stable enough. But if inflation continues or picks up in the first half of the year, Bitcoin will need to show a market reaction to keep the narrative credible in the medium term.

The tungsten cube collapses
Look for used dice on eBay, but be aware of these shipping costs.

Mem-Coins will be removed
Mem Coin is a casino, but they enjoy positive feedback as the winners attract a lot of public interest which keeps the winnings going. On the other hand, the down or side cycle can be quite brutal. In 2022, we will see ape-like behaviour among cryptocurrency startups and consolidation around informed investing. This means that coins like Doge will continue to lose steam (peaking in May) and new pumps will have limited upgrades.
(Shiba Inu is an interesting exception here, and a possible demonstration of how to make a real project out of a meme. His ShibaSwap DEX is pretty interesting, personally at least, though I can't say for sure if he'll elevate the project beyond meme status even if it works.)

BUIDLers keep building
Believe it or not, a flat market or a downtrend is usually a very exciting time for cryptocurrencies. The distractions of color play are gone, and the engineers and other people who develop things have time to focus on the task at hand. Some of the projects I look forward to in the next phase of BUIDL include Arweave, an innovative distributed storage system; Signing up with Ethereum, which sounds like a lot; and whatever Jack Dorsey was planning on the Block (formerly Square).

Storm water for old hands
The appearance of Avalanche, Terra, Solana and Polkadot this year marks the end of a real dynamic for many projects that have been around for a long time. They promised great things over the years, but in the biggest crypto year, they haven't proven themselves either technically or in the market. An incomplete list of projects I would put in this category includes Litecoin, IOTA, Cardano, EOS, and Hedera, based on a lack of interest from developers or on the technology's inconsistency with the direction the ecosystem is headed.

US dollar inflation will peak
He could even retire at the end of next year. The sentiment is a big factor in inflation because it indicates future prices and wages. Inflation is likely to last into early 2022 - food producers, for example, have announced price hikes that will take effect in January. But there are reasons for the slowdown in the last half of the year. The death of President Biden's Build Back Better is a symbol of business sentiment and inflation planning - regardless of your opinion of the bill itself, its potential benefits to Americans, or the extent of its actual potential impact on the money supply.
In addition, early signs from South Africa suggest that the Omicron wave of COVID-19 will be relatively short (especially as it is highly contagious). This could mean that most of the inflationary pressures in the US could ease in the last six months of June or July. These include supply bottlenecks due to farm labour shortages and production shutdowns in China, as well as an unprecedented spike in demand for durable goods that must be reduced to return to "normal" life.
Also keep in mind that, as the bigger COVID picture may emerge, summer is likely to be a very low period that will at least temporarily depress consumption of goods, which is a major part of inflation.

The DAO will attract serious regulatory attention
But theoretically abstract, we might not see any real rules or enforcement unless someone uses a decentralized autonomous organization to do something insane. There is a lot of talks that the DAO is a "startup" and that the government is ready to regulate it. Again, Rubber is on the path to decentralization: there will be some truly decentralized organizations that can ignore regulation to some extent. Whoever fakes it will be defeated.

Stable coins can be customized
That means more enforcement action by the US Securities and Exchange Commission and at least the start of a real push in the rule-making process. The good news is that U.S. regulators seem open to allowing stablecoins to exist. As investor Lynn Alden points out, a stable, regulated coin market would essentially mean a huge new injection of liquidity backed by Treasury bills around the world. To me, this sounds like a formula for putting pressure on crypto asset prices, for better or for worse.

More and more countries are accepting Bitcoin
Soon after El Salvador announced its new Bitcoin policy, there were reports that other countries, mostly in South America, were considering a similar move. They just received a hefty push from the Bank of England, which received the green light on Dec. 21 to seize nearly $2 billion of Venezuela's gold reserves. Instead, he could turn the gold over to Juan Guaido, a Venezuelan "opposition leader" beloved by Western intelligence agencies. This sends a clear message to any country that dares to fend off neoliberal hegemony: not your bank, not your gold. Bitcoin is an attractive alternative to this threat.

Turkey is in chaos
President Tayyip Erdogan's long campaign for full power ended where these things usually happen: with an out-of-control autocrat making bad decisions because no one was able to tell him the truth. Prisoners' dilemma monetary policy oddly takes weeks, not months. Bitcoin traffic in Turkey continues to grow. This is the hyperinflation you warned your parents about.

The pandemic is almost over
In a year-end blog post, Bill Gates predicts that next year will see an effective end to the COVID-19 pandemic. While Gates has focused on vaccines, it now seems much more likely that a hyperinflated variant of Omicron will end the pandemic by infecting more or less those who haven't been vaccinated (and killing a large number of them).

The "metaverse" of Facebook eats absolute crap
Initial quarterly reports on virtual reality sales and use were either overlooked or ignored. The company went on to redefine what it meant by "metauniverse", just as it kept recalling Libra. Hundreds of millions of dollars have been wasted. Come to think of it, everyone agrees that the idea of a social network you put your glasses on is pretty ridiculous all along.

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