When 2022 arrived, cryptocurrency investors were nervous. The dominant token, Bitcoin, saw a price increase of 61%, and Ethereum’s price increased over 2021 to 409%. Nevertheless, in the spring of 2022, bearish indicators overcame the largely bullish market trend of 2021.
Due to rising prices, Ukraine’s invasion, and other macroeconomic difficulties, the stock market collapsed. People continued to have a lot of interest in cryptocurrencies, though. Even though Bitcoin had a difficult time at the start of 2022, analysts still believe it will reach $100,000 in the next five years.
The cryptocurrency sector is still in its fancy and continually changing. That partly explains why any new peak for bitcoin can quickly be followed by severe falls. What will the future hold? The 2023 calendar may clarify unresolved issues, establishing a long-term direction for digital currencies and the investors who support them. Let’s look at more details.
How Has Crypto Fared, And What Does The Future Look Like?
While crypto investors have been gradually increasing globally for some time, the recent rise has been spectacular. Additionally, the characteristics of investors have changed. People have viewed this new asset category as supplementing their portfolios with possibly more lucrative assets.
The support for cryptocurrency is growing. Nearly half of American consumers who plan to invest in cryptocurrencies in the next six months are aged over 35. For many of these existing and prospective investors, cryptocurrency offers a novel approach to managing their money. People have also begun to realize the flexibility of cryptocurrency can shelter them from the constraints of conventional banking services.
By 2030, analysts predict that the market for cryptocurrencies will have tripled, reaching a value of close to $5 billion. Investors, companies, and brands can’t ignore the increasing wave of cryptocurrency for too long.
Bitcoin Trends
Since the introduction of Bitcoin by its developer in 2009, the currency has sparked thousands of other ventures, resulting in a dynamic and lucrative market for investors. Today, there are many different types of investors. What was originally a small community of intellectual believers has grown to include many people, including cypherpunks, major mainstream corporations, and significant investment firms.
Institutions did not view cryptocurrencies as an asset class till 2019. But since then, a few events have contributed to crypto receiving significant attention. This involves PayPal launching its Bitcoin trading and custody services and the U.S. government launching the money printer while COVID-19 was at its peak.
The start of 2022 saw Bitcoin nearly double in value from January 2021, completing a year that saw cryptocurrencies experience a meteoric rise in popularity. But before the first month of 2022, bitcoin had almost completely erased its gains, falling to below $33,000 in January.
Recently, cryptocurrencies have taken a severe blow. The price of Bitcoin, for instance, fluctuated between approximately $70,000 in November 2021 and under $20,000 in June 2022 before dropping to $19,733 on September 15 this year
Since its inception, Bitcoin has traditionally been profitable for those who invested in it. Just five years ago, its value in relation to the dollar was less than $3,000. However, there are some areas where many bitcoin supporters have been let down. For instance, cryptocurrency has not taken off as a common form of payment. It has proven to be a weak barrier to inflation and moments of uncertainty regarding the value of money. This is highly unexpected. The total number of bitcoins available is 21 million. Most people anticipated that the limit would have led to a continuous increase in its dollar-denominated value because more than 19 million units of Bitcoin have been distributed already.
The drawbacks of Bitcoin result from a sequence of unfavorable economic statistics that have been negatively affecting the market. This includes, particularly, the most current inflation figures. Nevertheless, Bitcoin has performed better recently than other assets, such as gold, stocks, the Japanese Yen, the British Pound, and the Chinese Yuan, amid the price reductions. This may be because the token is developing into a fantastic channel for U.S. dollars while other currencies struggle. According to analysts, it’s also possible that long-term cryptocurrency investors are unaffected by the latest economic setbacks in the United States. Bitcoin’s price has decreased by more than 60% since the beginning of 2022, although it is still low and stable compared to other assets.
Some people question if cryptocurrency is showing indicators that it will stop following the stock market because of the terrible stock performance versus the more consistent crypto record. That may not yet be the case, according to experts. Although the price connection between stocks and cryptocurrencies has weakened recently, analysts believe it will still take some time for cryptocurrencies to diverge.
Even though Bitcoin remains stable, it is still not without risks. Events that could change the course of the year include the midterm elections, Federal Reserve meetings, inflation statistics, and perhaps the pinnacle of the strength of the U.S. currency.
Despite the trials and tribulations, Bitcoin’s current price is still far from its most recent record high, reached in November last year when it surpassed $68,000. Despite the current price decrease, Bitcoin is worth over twice as much as it was just a few years ago. These price variations are nothing unusual for bitcoin.
The Future of Bitcoin
Experts predict that bitcoin will eventually reach $100,000, although it might happen later than initially anticipated. For the rest of 2022, they forecast an increase of $28,000 and a peak of $100,000 from 2023 to 2024. There is a wide variety of forecasts for the years 2030 and ahead, with some speculating that it may still be worth millions of dollars at a certain point down the road.
Cryptocurrencies and the stock market experienced a miserable first half in 2022. As a result, investors have steered away from potentially risky investments in a period of a weakening economy, increased inflation, and high-interest rates.
Based on a Deutsche Bank estimate, bitcoin might return to $28,000 by the end of 2022 because Wall Street is now in a bear market, and analysts anticipate it to continue for another few months. A 53-expert committee quoted by Finder predicts that by the end of the year, bitcoin will be worth at least $25,000. Given how new bitcoin is, price estimates are typically speculative assumptions. Therefore, investors must be careful when putting their money into bitcoin and only invest what they can afford to lose.
Ethereum Trends
Ethereum is a renowned altcoin. Since its inception in 2015, Ether, the local currency of Ethereum, has experienced tremendous value growth. Computer engineer Vitalik Buterin created Ether, and its price has climbed from $0.311 at its inception in 2015 to $4,800 at its peak in late 2021, with significant price fluctuations throughout.
Ethereum is not only a revolutionary technology, but it is also a fantastic investment. It is less likely to crash and burn than other cryptocurrencies and can still skyrocket and yield enormous returns for investors.
Ethereum’s usefulness as a software network that enables developers to create and run new applications, tools, and NFTs is a distinctive feature. This blockchain-based network offers various functions and uses in the I.T. industry, particularly for gaming, leisure, music, and DeFi.
Given the public’s growing unhappiness with NFTs, Ethereum’s chances might not look as promising as they once did. Still, the Ethereum system is sufficiently broad to prevent this from slowing it down. NFTs are just components of the jigsaw within the Ethereum environment, and it includes other projects under development too.
The Future of Ethereum
Ultimately, Ethereum has switched from a proof-of-work to a proof-of-stake consensus method. The change, known as “The Merge,” is a component of the Ethereum 2.0 update. Considering how volatile the crypto industry is, there is much speculation about what will happen after The Merge.
In reality, no one is certain, but there are some predictions. It was expected that the coin’s value would soar after The Merge. However, the opposite happened, with the value of ETH dropping by over 20% to a bottom of $1,209.28 on October 13 as the cryptocurrency battled under severe market conditions.
The token recovered, though, and on October 25, 2022, it passed the $1,500 threshold thanks to the announcement that Google was creating a blockchain node hosting service built on its cloud service and originally compliant with the Ethereum network.
Chief investment officer of IDX Digital Assets, Ben McMillan, believes that Ethereum will surpass $2,000 by the end of 2022. This price forecast is optimistic, but a number of things could change it.
According to several cryptocurrency experts, investors may wish to consider macroeconomic variables like inflation and governmental cryptocurrency restrictions while deciding on their investment plans for the remainder of this year.
Bitcoin’s early supporters, who stated that cryptocurrencies would act as an inflation hedge, have been proven wrong. Instead, many virtual currencies, and ETH especially, have started moving in sync with risky stocks such as those traded on the Nasdaq.
This indicates that pressure on the price of ETH has been applied by macroeconomic variables like inflation and may still be present. Many investors will turn to goods such as gold and oil in an inflationary atmosphere and are less likely to be intrigued by riskier asset classes like cryptocurrencies.
The U.S. government and other foreign regulators are also being closely watched for impending legislation because laws significantly impact cryptocurrency values. According to a recent forecast by Bloomberg intelligence expert Mike McGlone, the value of Ethereum might range between $4,000 and $4,500 by the conclusion of 2022.
A cryptocurrency news website, Coinpedia, initially reported that if the positive upsurge that began in mid-2021 persists, ETH might be worth $6,500 – $7,500 by the end of 2022. Nevertheless, a bearish fall in the cryptocurrency market in 2022 demonstrated that Ethereum’s price would not rise solely based on sentiment. In fact, Coinpedia has since changed its 2022 forecast to $2,500. Given that the Ether’s value has declined to around $500, this year might see the currency experience yet another meltdown.
According to Wendy O, an industry analyst who deals with cryptocurrencies, ETH is set to decline by almost 85% from its peak of $4,800, this will bring its value down to about $750. According to venture capitalist Kavita Gupta, ETH might drop as low as $500.
Additionally, Coinpedia forecasts that ETH will begin 2023 on a high note at over $3,000. However, it might end 2023 at close to $2,400 if the network fails to boost adoption after the update or if the cryptocurrency market remains slow. As per Coin Price Forecast, by the end of 2023, ETH may have reached $2,600.
According to some analysts, the value of ETH will soon be much more unpredictable than the price of Bitcoin, mainly because of Ethereum’s switch to the Merge. The improvements to Ethereum may make it more desirable and viable for wider adoption. However, until that happens, experts are observing how investors and businesses who develop their technology on Ethereum’s platform will react to the improvements.
Whatever transpires in the immediate future, investors will witness improved consumption and functionality. While the Ethereum community strives to move to its second-generation upgrades, other platforms are working on addressing the blockchain’s inadequacies and pose a significant threat to it.
Final Thoughts
In a nutshell, cryptocurrency is characterized by extreme volatility. Thus, experts advise investors to limit their cryptocurrency holdings to no more than 5% of their whole portfolio and never engage in cryptocurrencies at the expense of emergency funds or a large debt. Individuals who wish to save for retirement and achieve long-term prosperity should engage in diversified assets like low-cost index funds, with cryptocurrency making up a relatively small portion of their portfolio.
