Bitcoin ETF issuers' 2022 forecast: IPO, ETH, and the next El Salvador

2021 Highlights and 5 Crypto Predictions for 2022

John Patrick Lee, Product Manager, VanEck

Chen Zou, BitpushNews

2021 was a milestone year for cryptocurrency adoption and breakthroughs, and we expect this momentum to continue into 2022. Here, we take a look at five big things in cryptocurrency in 2021 and share our predictions for what's likely to happen in 2022.

2021 Crypto market highlight: Disruption and the rise of crypto movers and shakers

1. Fintech companies and traditional payment players are embracing blockchain and adopting cryptographic solutions at the same time

It is widely believed that the financial services industry is one of the main targets of blockchain technology. We believe that blockchain technology is deflationary in nature as it provides greater efficiency and transparency to the system as a whole, which greatly reduces transaction costs. In 2018, Square established itself as an early adopter of cryptocurrencies by allowing users to buy and sell bitcoins on the app. In 2021, PayPal, Venmo, Mastercard and even Twitter began allowing customers to make transactions in Bitcoin. As Mexican crypto money transfer company Bitso points out, offering money transfer solutions at an affordable price can immediately grab more market share than established financial companies like Western Union.

2. The use of blockchain transactions and the adoption of smart contracts has exploded, with transactions on the Ethereum network reaching $3.5 trillion

All sorts of cryptography applications have sprouting on ethereum's fertile ground, from NFT to smart contracts. In 2021, ethereum network transactions saw massive growth on the back of widespread proliferation and adoption of Ethereum-based projects such as NFT. Going forward, we expect smart contract networks like Ethereum and Solana to grow significantly as the number of participants and network use cases continue to grow.

The total value of transactions on the Ethereum network exploded in 2021

3. Bitcoin is starting to unleash its full potential as a fiat currency disrupter, especially for emerging market countries

Since its launch in 2009, many bitcoin extremists have tended to view bitcoin as a safe haven that protects investors from the negative effects of monetary and fiscal policies implemented in both developed and emerging markets. Because bitcoin is decentralized and has a fixed supply, it doesn't face the inflationary pressures that affect fiat currencies around the world. From a geopolitical perspective, Bitcoin could offer emerging market countries a viable currency alternative to relying solely on IMF/World Bank loans, which sometimes even exacerbate rather than solve problems.

In September 2021, El Salvador officially recognized Bitcoin as legal tender, the first country to do so.

4. China's crypto ban shifts global mining market share to US miners

China has had a love-hate relationship with Bitcoin since the digital currency was introduced in 2009. On the one hand, Chinese miners control most of the world's computing power and are among the leading producers of the ASIC chips used to mine bitcoin. On the other hand, the Chinese government threatened to ban the mining and trading of Bitcoin and escalated its restrictions on cryptocurrencies, eventually banning the trading, mining and exchange of cryptocurrencies altogether. While the long-term impact remains to be seen, the short-term impact is clear. Cryptocurrency miners fled the country, and global mining market share immediately began to flow to miners in the U.S. and elsewhere. With Chinese trading platforms and mining out of the way, American and other miners face less competition and more opportunities to increase their share of global computing power.

5. Crypto ipos highlight the massive growth in the digital asset business, while crypto pioneers are closing in on traditional market players

2021 is going to be a huge year for companies going public in the cryptocurrency space. Coinbase made history as the largest crypto company ever to go public, listing at a valuation twice that of Nasdaq and almost the same size as INTERCONTINENTAL Exchange (ICE), the parent company of the New York Stock Exchange. In addition to Coinbase, a number of Mining companies and other cryptocurrency boosters have gone public, including Coinshares, Bakkt and Stronghold Digital Mining.

As a group, market valuations of crypto pioneers, represented by the MVIS Global Digital Assets Equity Index, surged in 2021 on the back of a wave of ipos and superior share price performance. These crypto pioneers are now approaching the market valuations of the gold miners they have long had in mind.

Crypto pioneer valuations are approaching those of gold miners

Cryptocurrency predictions for 2022: More ipos, more use cases, wider adoption

1. In 2022, even more crypto-intensive companies will go public

We believe that the number of crypto companies preparing to go public remains large and that 2022 will continue the trend of new listings in 2021. And crypto companies can be involved in a wide range of businesses -- from trading platforms to digital asset miners to payment companies. As the cryptocurrency market continues to grow and evolve, we expect the market to grow as new companies go public and shift as companies win and lose market share.

The top 7 crypto listed companies are likely to be involved in payment nodes (credit cards, digital payments, etc.), hardware (mining-related hardware manufacturers), digital mining, trading platforms, participating in holding/trading cryptocurrencies (such as Microstrategy), software services (cryptographic-related digital infrastructure), banks & AMP. Asset management.

2.  As NFT (Non-Fungible Token) enters the mainstream culture and millions of users flood the market, the next major use cases will be sports ticketing, loyalty points, and esports

NFT has a new lease of life in 2021, but we believe better things are yet to come. In our view, two things stand in the way of wider adoption of NFT. The first is that the USER interface (UI) of the NFT platform needs to be made more accessible to non-encrypted native users. The NBA's TopShot is a good example of an NFT project that makes it easy for non-encrypted native users to purchase NFT. The second stumbling block to its widespread adoption is the current narrow NFT use case. There are already a few applications on the market, but we think. Sports tickets, loyalty points & NBSP; And & have spent E-sports & have spent Will become the next important field of NFT. The smart contract system provided by the NFT platform will attract people to participate, and once it can provide more features such as VIP lottery, it will greatly increase the participation and enthusiasm of fans.

3. Ethereum will undergo a major network upgrade, moving away from energy-intensive proof-of-work mechanisms and significantly increasing network capacity

Both Bitcoin and Ethereum use a "proof of work" (PoW) mechanism to verify information recorded on the blockchain and prevent malicious attacks. In 2022, Ethereum plans to switch from "proof of work" to "proof of stake" (PoS), which will dramatically change the landscape for miners centered around Taifang. Rather than expend effort to solve computation-intensive problems (PoW), proof of stake will provide better energy efficiency, increase network capacity, lower barriers to entry, and provide stronger centralized immunity to the Ethereum blockchain. One of the major downsides of the proposed upgrade is that hardware mining for Ethereum will no longer exist, meaning miners focused on Ethereum will have to look elsewhere.

4. Bitcoin continues to mature in terms of broader institutional ownership and adoption, as another emerging market country may declare bitcoin legal tender (El Salvador 2.0)

As the broader market for digital assets grows, we expect more companies to add Bitcoin to their balance sheets and expand mining operations to increase potential revenue streams. As El Salvador has demonstrated, certain emerging market countries may also find Bitcoin useful as a monetary tool, a potential solution to avoid relying too heavily on IMF/World Bank debt assistance alone.

5. ESG investors eventually found bitcoin to be an accelerator for adoption of green energy and financial inclusion (ESG: Environment, Social Responsibility, Corporate Governance)

Unfortunately, misinformed and ill-informed ESG investors' concerns continue to plague the cryptocurrency industry, particularly around the use of energy needed to mine bitcoin. While the debate continues, we believe cryptocurrency miners will continue to play a prominent role in green energy adoption and financial inclusion. Riot Blockchain, a leading BITCOIN miner in the US, has been an advocate and supporter of the bitcoin mining industry and a force for good in the conversation around sustainable energy use. Stronghold Digital Mining, which went public in the fourth quarter of 2021, is another ESG-focused bitcoin Mining company that uses coal Mining waste (a by-product of coal Mining) to generate electricity for Mining bitcoin. We expect sustainable mining companies to continue to increase their market share.

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