{"id":3143,"date":"2021-12-28T20:56:21","date_gmt":"2021-12-28T20:56:21","guid":{"rendered":"http:\/\/egrowonline.com\/?p=3143"},"modified":"2021-12-28T20:56:21","modified_gmt":"2021-12-28T20:56:21","slug":"bitcoin-prices-and-other-cryptos-are-slumping-whats-ahead-for-2022","status":"publish","type":"post","link":"http:\/\/egrowonline.com\/?p=3143","title":{"rendered":"Bitcoin Prices and Other Cryptos Are Slumping. What’s Ahead for 2022."},"content":{"rendered":"


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A year-end rally in cryptocurrencies appeared to fizzle on Tuesday, with <\/p>\n


\n Bitcoin<\/a><\/span>
\n and <\/p>\n


\n Ether<\/a><\/span>
\n both falling more than 6%, trading around $48,400 and $3,840. <\/p>\n

Cryptos had been participating in a \u201cSanta Claus rally\u201d for risk-assets with Bitcoin up more than 13% since Dec. 17 to around $52,000. However, it remains well below its all-time high of $68,790 on Nov. 10.<\/p>\n

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What\u2019s ahead for 2022? The crypto economy should continue to expand with more applications and uses for tokens and underlying blockchain networks. \u201cDeFi,\u201d or decentralized finance, is likely to continue its expansion, fueled by demand for swapping, lending, and borrowing cryptos\u2014all based on \u201csmart contracts\u201d that automatically set the conditions of a trade or lending criteria.<\/p>\n

Other burgeoning uses for blockchain networks and their tokens include online gaming, supply-chain management, distributed storage, and international money transfers, or remittances. <\/p>\n

Also thriving are NFTs, or non-fungible tokens\u2014digital collectibles that can be swapped like other assets. The NFT marketplace exploded in 2021 with more than $23 billion in volume, including surging market values for NFTs such as Bored Ape Yacht Club and NBA TopShots. <\/p>\n

Adidas recently sold nearly 30,000 \u201cInto the Metaverse\u201d NFTs, granting owners the rights to exchange their tokens for hoodies, tracksuits, and a beanie emblazoned with popular NFT imagery. The sale earned more than $22 million for Adidas, which priced each NFT at 0.2 ETH token, or about $780 each at recent prices. <\/p>\n

Yet even some crypto advocates say prices are looking frothy, following a 74% gain in 2021 for Bitcoin, 424% return for Ether, and even bigger gains for many alt-coins. <\/p>\n

\u201cGrowth investments are very stretched and I think crypto is in that high price\/sales multiple category,\u201d said Jan van Eck, CEO of fund company VanEck, in an interview with Barron\u2019s<\/em>. \u201cPrices are more reasonable than they were six months ago, but the only answer is to dollar-cost average,\u201d he said, referring to continuously investing a set amount.<\/p>\n

With inflation a top concern, Bitcoin is likely to be tested as a store of value or \u201cdigital gold,\u201d as its proponents see it. Bitcoin didn\u2019t pass that test as inflation readings soared recently, prompting equities and cryptos to sell off. Bitcoin trades similarly to high-growth tech stocks and assets that come under pressure as investors opt for safer investments in a tougher macro climate. <\/p>\n

One compelling growth area is tokens used for DeFi and other smart contracts, says Van Eck. \u201cExposure to smart contracts protocols is the best thing for investors to focus on,\u201d he says.<\/p>\n

Ether is the giant in smart-contract protocols. But the Ethereum network is now clogged and suffers from high transaction fees. Other networks and tokens are gaining traction, including Solana, Polkadot, Cardano, Avalanche, and Algorand. <\/p>\n

The MVIS CryptoCompare Smart Contract Leaders Index tracks a basket of these cryptos. It\u2019s ahead 635% in 2021. However, there\u2019s no way to invest directly in the index or through an exchange-traded fund\u2014investors would need to buy the tokens individually or track them through a private fund.<\/p>\n

Another headwind for digital assets, of course, may be tougher regulation. The Biden administration and Congress are looking at how to establish new rules for the industry, including stablecoins\u2014tokens designed to maintain a fixed value. <\/p>\n

But crypto is a tough legal area and Washington can\u2019t seem to agree on how to oversee it. Congress recently held hearings on cryptos, revealing a wide rift between Democrats and Republicans on how to establish new rules. <\/p>\n

\u201cWashington is at a standstill in terms of crypto regulation,\u201d says Van Eck. \u201cI don\u2019t see movement in any direction.\u201d <\/p>\n

The fund industry, of course, is lobbying hard for an ETF that owns Bitcoin directly, rather than through futures contracts\u2014the type of Bitcoin ETFs that the Securities and Exchange Commission has approved. <\/p>\n

But Van Eck, for one, doesn\u2019t sound optimistic that the SEC, under chairman Gary Gensler, will sign off on a spot-based ETF. \u201cIt\u2019s clear that the SEC wants jurisdiction over the cash crypto markets,\u201d he said. \u201cIt doesn\u2019t seem like they\u2019ll approve a Bitcoin ETF unless they\u2019re forced to by a federal court.\u201d <\/p>\n

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