The value of Bitcoin has dropped by more than half from its peak in November 2021, which has caused the collapse of the cryptocurrency industry as a whole (HWD, 2022). However, the crypto market has had a terrible first half of 2022. From their all-time highs in late 2021, the prices of bitcoin and Ethereum have fallen by more than 50%. Despite some minor gains in recent weeks, the cryptocurrency market as a whole is mainly stagnant (Gailey & Haar, 2022). Although no one can be certain, several experts believe that before a sustainable rebound, cryptocurrency values may fall considerably further.
Multiple new all-time high prices for bitcoin were reached in 2021, followed by significant declines, and more institutional investment from significant firms. Late last year, Ethereum, the second-largest cry
ptocurrency, reached its new record high as well. However, in June, it fell below$900, its lowest point since the beginning of 2021. The Biden administration and U.S. government representatives have shown an increasing interest in new cryptocurrency legislation.
What will happen in the remaining months of 2022?
Long-term forecasting is challenging, but shortly, industry professionals will be watching developments like institutional acceptance of cryptocurrency payments and regulation to try and gain a better understanding of the business.
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Future of NFTs
Non-fungible tokens, or NFTs, have existed since 2014, but it wasn’t until 2021 that this cutting-edge technology became widely accepted.
NFTs, which stand for digital ownership of a variety of unreplicable intangible goods, has caught the interest of prominent people and large corporations like American Express and Gucci. According to data gathered by DappRadar, an app store for decentralized applications, total NFT sales reached $25 billion in 2021 as opposed to $94.9 million the previous year.
NFTs may be a trend or just a fad, but this is still up for dispute. NFT sales fell below $1 billion in June for the first time in the preceding 12 months, according to statistics from DappRadar.
The opinions of experts are still divided; some call NFTs a “bubble,” while others argue that the smart contracts used in blockchain technology, which underlie them, are what provide genuine value. Artists and producers are asserting that this is the newest method of income in the meantime.
People working on cryptocurrency research topics in recent times must know that evidence suggests that the market may finally be slowing down. At the beginning of the year, nearly a million accounts were actively buying or selling NFTs; however, as of recently, only roughly 491,000 accounts were doing so. Because of the dropping value of cryptocurrencies, and other macroeconomic factors including inflation, rising interest rates, and Russia’s conflict in Ukraine, several experts predict that the NFT industry will continue to be negatively impacted.
According to Chainalysis’ study, “NFTs enjoyed tremendous growth in 2021, but this growth hasn’t been continuous and has leveled off so far in 2022.”
Future of DeFi
If you have any cryptocurrency investments, you’ve probably heard of the phrase “DeFi.” It stands for “decentralized finance” and alludes to a digital environment where alternative financial services run on blockchain and cryptocurrency technologies.
DeFi replaces conventional intermediaries like banks and lenders with “smart contracts.” In essence, the software is replacing the companies we deal with daily to handle our accounts. As a result, there is no central authority to which DeFi entities must answer.
DeFi, however, is still in its relative infancy, much like the early days of the internet, when there were few websites, few online services, and primitive chat rooms, giving the impression of the “Wild West.” With that in mind, analysts predict that there may be some hiccups along the way with its development, but eventually, there may be a Google or Amazon of the DeFi space.
According to Dr. Merav Ozair, a professor of fintech at Rutgers Business School and a blockchain expert, further improvement is the next critical step for DeFi. The next step, he says, is to learn how to write good code and turn everything up a notch.
Outlook for Bitcoin’s Future
Since it is the most valuable cryptocurrency by market cap and the rest of the market tends to mimic its tendencies, Bitcoin is an excellent predictor of the crypto market as a whole.
After a tumultuous ride in 2021, the price of bitcoin reached a new record high in November when it surpassed $68,000. But in 2022, it all came tumbling down.
Amid continued macroeconomic uncertainty brought on by rising inflation, a weak stock market, rising interest rates, and worries about a recession, Bitcoin and the larger crypto market has been declining this year. Since last November, Bitcoin has lost more than two-thirds of its value and recently fallen as low as $17,500. On whether bitcoin has bottomed out yet, experts are divided. Some claim it has already happened, while others predict a drop to $10,000 for bitcoin in 2022.
Because of this volatility, experts advise keeping your initial cryptocurrency investments to less than 5% of your overall portfolio.
But how far can bitcoin advance over the long run? Despite bitcoin’s rough start to the year, analysts continue to predict that it will reach $100,000; it is more a question of when than if. According to Kiana Danial, author of “Cryptocurrency Investing for Dummies,” Bitcoin’s background may offer some hints as to what to anticipate moving forward.
Since 2011, Danial claims there have been numerous significant price surges followed by declines in Bitcoin. “I anticipate short-term volatility and long-term growth from Bitcoin.”
The Future of Cryptocurrency
The reality is that cryptocurrency is still a new and speculative investment with little historical data on which to base predictions. We can guess what value bitcoin may have for investors in the coming months and years (and many wills). No of what a particular expert believes or claims, nobody truly knows. For long-term wealth creation, it is crucial to only invest what you are willing to lose and to stay with more traditional investments.
Would you be alright if you awoke one morning to learn that developed countries had outlawed cryptocurrency and that it was now worthless? NextAdvisor was informed by Frederick Stanfield, a CFP with Lifewater Wealth Management in Atlanta, Georgia.
Keep your investments modest, and never prioritize cryptocurrencies over other financial objectives like retirement savings and debt repayment with high-interest rates.
References
Alex Gailey & Ryan Haar (2022). The Future of Cryptocurrency: 8 Experts Share Predictions for the Second Half of 2022. https://time.com/nextadvisor/investing/cryptocurrency/future-of-cryptocurrency/
HWD (2022). Crypto Crash: What Investors Need to Know. https://www.helpwithdissertation.co.uk/blog/crypto-crash-what-investors-need-to-know/