2021 was an important year for cryptocurrencies. El Salvador has become the first country to use Bitcoin (BTC) as a legal currency. In November 2021, the price of Bitcoin reached an all-time high, approaching the psychologically important level of $70,000. All the while, industry influencers like Elon Musk have been increasingly tweeting about their enthusiasm for cryptocurrency.

I expect 2022 to be more successful for digital currencies as the market grows to a billion people. Here are five of the top trends I see on the horizon for the coming year.

Institutional trading volume will increase
2022 will be the year when institutional and retail adoption of cryptocurrencies, and trading in particular, will continue to grow. Trusted fintech, PayPal, Square and mobile stock trading platform Robinhood has made it easy to buy, sell and trade cryptocurrency. Public companies such as MicroStrategy, Tesla, Galaxy, and Square added large amounts of bitcoin to their balance sheets in 2021.

What is driving this growth? Aside from the general upward momentum, two facts reflect the continued maturation of the institutional crypto market: market capitalization and infrastructure.

In 2015, the total cryptocurrency market cap was around $5 billion. Since December 2021, it has grown significantly to more than $2 trillion. The market capitalization of Bitcoin alone on January 4, 2015 was $3.6 billion, and the current market capitalization is around $900 billion. Even the second digital currency, Ether (ETH), which has a large ecosystem of enterprise applications, has a market capitalization of around $400 billion, close to that of Visa or JPMorgan Chase.

Even five years ago, the underlying infrastructure in cryptography was much less developed. Institutions have struggled to learn how to safely store, trade, clear, and settle cryptocurrencies. There were no real mainstream brokers in cryptocurrency. Now, the infrastructure is more sophisticated and organizations are more able to understand and feel comfortable in the crypto landscape. Thus, I expect institutional trade to continue to grow.

However, the volume of spot cryptocurrencies, especially bitcoin, is still very fragmented.

Institutional accreditation will also accelerate the growth of the crypto derivatives market. There will also be more regulation, which would be a very positive development if it included public feedback and tailored to industrial products to enable adoption and innovation while meeting the needs of regulators.

Related: What should the crypto industry expect from regulators in 2022? Expert Answer Part 1 and Part 2

In July 2021, Treasury Secretary Janet Yellen urged regulators to move quickly to create a regulatory framework for cryptocurrencies. Since then, US Securities and Exchange Commission (SEC) Chairman Gary Gensler has also called for regulation in this area and noted that it is on the SEC’s agenda.

More providers of institutional services and tools will enter the market
However, organizations are in dire need of appropriate services and tools. There has been a lot of activity among startups wanting to offer support services such as cryptocurrency storage, security, management and investment products, as well as hardware, software and payment infrastructure mining.

By August 2021, several companies had raised at least $300 million in funding, including Blockchain.com, BlockFi, Fireblocks, Ledger, and Paxos. I expect this to continue as new companies emerge that provide greater access to the crypto market than ever before. This, in turn, will open new doors for small and medium-sized funds.

Altcoins will become more popular
In the coming year, I also expect altcoins to grow in popularity as enthusiasts learn more about their various uses. Ether (ETH), for example, is driven by the development of DApps with a strong ecosystem. However, due to Ethereum’s scalability issues and high gas fees, it has also been challenged by blockchain newcomers such as Solana (SOL), Cardano (ADA), and Avalanche (AVAX). Investors see huge upside opportunities while traders see opportunities for volatility and arbitrage across pairs.

Overall, I expect altcoins to become more popular as investors look for ways to diversify their crypto portfolios. The Nasdaq report notes that there are over 100 altcoins worth over $1 billion as of October 2021, “[indicating] a thriving digital ecosystem.” While the prices of altcoins can be quite volatile – and investors should do their research first – many altcoins, including Solana and Polkadot, still top the list.

Source: CoinTelegraph