My Crypto Market Forecast And Challenges For 2022

The year 2021 has introduced some significant developments for the cryptocurrency and blockchain industry. There was a lot to be excited about, ranging from DeFi to NFTs and overall all-time highs for Bitcoin, Ethereum, and other assets. Figuring out what 2022 will offer is challenging, although, as the CEO of KuCoin Exchange, I am keeping my eye on several aspects of this industry.

One of the biggest developments in 2021 is the sheer number of publicly traded companies setting up a Bitcoin treasury. I fully expect MicroStrategy to keep pushing the envelope on this front and aggressively pick up BTC whenever the opportunity arises.

However, the challenge is getting other companies on board, even though dozens already have a Bitcoin treasury in place. As these firms keep accumulating BTC, fewer Bitcoin will be available to buy for everyone else. It is a bullish signal, even if it may take a while for the price to respond.

A similar trend may occur in small nations embracing Bitcoin as legal tender. El Salvador has created an exciting precedent that no one expected to happen this decade. However, now that one country sees Bitcoin as a legal tender - and seemingly remains bullish on BTC - I'm excited to see which regions will take a similar approach. As inflation runs rampant due to COVID-19 - even if it was a threat to various nations before the global pandemic - Bitcoin may present itself as a more stable alternative, despite being volatile in nature.

Furthermore, I expect new all-time highs for most, if not, all of the top cryptocurrencies by market cap. Bitcoin and Ethereum will likely soar to new highs in the coming months, as their fundamentals are still bullish. In addition, Bitcoin has become more scarce, and Ethereum has its major proof-of-stake upgrade on the horizon. If either of these currencies notes a new all-time high in 2022, other markets will likely benefit over time.

One aspect I personally keep a close eye on is the ongoing evolution of the regulatory landscape. Although there are still many uncertainties, I expect policymakers to introduce more frameworks in the next 12 months. Establishing that framework will determine whether crypto assets can thrive or will be nipped in the bud. However, a sensible approach to regulation can bring more financial institutions into the crypto fold.

The other core challenge, in my opinion, is the stablecoin industry. More specifically, there are dozens of currencies pegging their value to fiat currencies, either through bank reserves, algorithms, or otherwise. However, we have all witnessed that these stablecoins are not that stable, as deviations by a few cents can occur at any time. Moreover, there is also a growing need for auditing issuers and their reserves to ensure the redemption of stablecoins doesn't become a potential problem.

I am both excited and fearful about technology companies entering the crypto space in the back of my mind. More specifically, numerous companies want to explore the Metaverse and the commercial opportunities it represents. The concern is whether these firms can adhere to decentralization in any capacity or try to control their corner of the broader Metaverse. That latter approach can put a negative spotlight on an industry segment designed to empower people rather than locking them in siloed environments.

The crypto and blockchain industry is home to many "sub-trends”, including Non-fungible Tokens (NFT), Decentralized Finance (DeFi), GameFi, play-to-earn gaming, etc. As NFT fatigue seems to kick in at this tie, I look forward to what 2022 will bring. The demand for utility is greater than ever before, as building a project that has "cool images" will no longer be sufficient.

Moreover, the role of NFTs in DeFi and GameFi is something to keep tabs on. Unique assets have a high degree of potential across different segments, although their monetary value differs greatly. That makes them tough assets to integrate into a lending, borrowing, or yield farming environment, although innovators continue to explore new opportunities on that front.

While some may argue 2021 was the year of crypto going mainstream, the year 2022 will either confirm or refute that sentiment. Over 12 months, the landscape has undergone tremendous evolution, yet some key aspects remain unchanged. The speculative approach to these assets is more outspoken than before, and there is still much work on the regulatory front. I fear that, without regulatory clarity, mainstream adoption of crypto, unfortunately, will take a few more years.

On the other side of the spectrum, there are many potential opportunities for the sub-trends in this industry. However, it remains up to developers to build the necessary infrastructure, elevating their projects beyond "barely long-term viable" and introducing more utility. Anyone can create a new token or NFT, but making it useful is a different matter. Nevertheless, I am excited about future progress in this industry.

Johnny Lyu