Another major player in the cryptocurrency world is forecasting a bleak year for Bitcoin (BTC) in 2022. After tightening liquidity measures by the US Federal Reserve and other central banks, Huobi Research believes that BTC will enter a bear market. On the other hand, Decentralized Finance (DeFi) will continue to expand and adapt, and governance of Decentralized Autonomous Organizations (DAOs) will eventually become an important driver of network activity.
Bitcoin and Ether (ETH) prices plummeted Thursday night in the crypto market, taking about $150 billion out of the market. Over the past 24 hours, Bitcoin has lost about 7.9% of its value and is down to $38,788 at the time of writing.
2021 was a watershed year for cryptocurrencies, as industrial growth reached new heights. DeFi, non-fungible tokens, cryptocurrency adoption, blockchain use, and other factions have been around for many years. Blockchain technology has also been brought to the fore by Web3 and the metaverse. Regulators are also catching up, with 40 countries creating over 150 different cryptocurrency regulations, according to the Global Crypto Industry Trends and Overview report published by Huobi Research in collaboration with Blockchain Association Singapore.
While some of these industries will continue to grow this year, this year may not be easy for BTC. According to his analysis, the US Federal Reserve has begun to slow, indicating that dollar liquidity is losing its returns.
The Fed took a similar step in 2013, followed by a two-year bear market. While the market has changed dramatically and there is a lot of liquidity and bitcoin holders, Huobi believes that another such move may not be out of reach.
Despite the bleak outlook for BTC, Huobi believes that there will be significant development in other sectors of the broader industry. DeFi is one of them, a market that grew from $19 billion in January 2021 to a total value of $250 billion recorded at the end of the year. According to a Huobi report, we will see DeFi 2.0 enter the scene in 2022.
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According to Hubei, DAOs will also become a powerful on-chain governance mechanism. The report highlights that the demand for DAO management and DAO fund managers will increase in the future. DAO money management can be linked to many DeFi applications, allowing for financial management.