If you think 2021 was not a great year for the cryptocurrency market compared to 2020, just because the market failed to close near its high, stop for a while and read this blog till the end.
Bitcoin may not have performed too well in terms of annual returns, but the overall crypto market has evolved a lot in terms of functionality, adoption, and maturity. The need of the hour.
If you have missed what the crypto market achieved in 2021, read our year-end crypto market review. Where we discussed the significant accomplishments of the crypto market during the year in detail.
Now, what do you think the year 2022 will look like for the crypto market, and which coins will drive the market? Let’s analyse the market trends to identify new investment ideas in 2022.
- DeFi ecosystem will grow bigger
- NFTs and NFT marketplaces will continue to grow
- Metaverse will influence 2022’s tech trend
- Web 3.0 projects will be crowd favourites
Crypto Investing Trends in 2021
In 2021, the crypto market had evolved much more robustly and gave many clues on what will drive the market in 2022. So, it won’t be too difficult for you to identify new market trends and opportunities.
By closely analysing the crypto market, you would find three investing themes were in play over the past year-
- NFTs- Non-fungible Token
- Layer-1 smart contracts protocol
- DeFi or decentralised finance
The NFT mania gripped the crypto market in 2021, with investors pouring in millions of dollars in digital collectables. In the first half of 2021, trading volume in NFTs reached $633 million, and for the whole year, it generated $23 billion in trading volume.
On the back of solid demand and unprecedented success, OpenSea, the largest marketplace for NFTs, got a massive boost in valuation at $13.3 billion in the recently conducted series-c funding.
Before 2021, Ethereum dominated the Layer 1 smart contracts segment market, but that changed completely. Crypto projects like Polkadot (DOT), Avalanche (AVAX), Solana (SOL), Binance Coin (BNB), Cardano (ADA) became investor’s darling tokens on the back of strong adoption rates and advanced technical features.
DeFi or decentralised finance was a thing in the crypto market but never got that relevance due to lack of scalability and higher transaction costs of layer 1 smart contracts protocol. With the emergence of new layer 1 smart contracts protocols and Layer 2 solution networks, the DeFi ecosystem boosted considerably. For example, Uniswap, the leading decentralized exchange, has witnessed strong growth in the past year, with an average daily trading volume ranging between $2-4 billion.
Total Value Locked (TVL) on different DeFi protocols during the year crossed over $250 billion during 2021, a growth of up to 20X in just a year’s timeframe.
We are not considering memecoins (DOGE, SHIB) that were also in the craze in 2021 because they are highly susceptible to many pumps and dumps in the market and don’t have any utility.
Crypto Investing Ideas in 2022
If you are not new to investing, you must have heard this sentence too often- markets are unpredictable, and it’s tough to predict what will happen next.
But, if you are riding the trend, you may find yourself in a much better position than investing in just random coins and projects.
Now, as we speak of the trends in the crypto market, metaverse and Web 3.0 are emerging ones, attracting huge investors interest.
You may be thinking, what about the trends in play in 2021? Have they died down?
No, not yet. The trends are getting stronger with each passing day, and DeFi still has a lot of room for growth. Whatever we have seen is just the tip of the iceberg.
One of the expected trends in the DeFi ecosystem this year is the growth of centralized-decentralized finance, where traditional financial products will be offered in scale on the DeFi ecosystem. For example, Synthetx Network (SNX) offers crypto-synthetic assets, which offers traditional financial instruments like stocks in tokenised format and are traded on crypto exchanges, providing access to global liquidity.
Layer 1 smart contract platforms and layer 2 scaling solution networks will play a significant role in developing the DeFi ecosystem. There will be many learning curves as the adoption of DeFi grows stronger.
Fact check: Layer 2 blockchain platform is a network that operates on top of any underlying blockchain (Layer 1), eg. Ethereum, to improve its throughput and speed of transaction.
Metaverse and Web 3.0
Metaverse and Web 3.0 are now the booming sectors in the crypto market, attracting tons of investors’ money.
Since Facebook renamed itself, Meta, the segment has caught massive investors attention. Metaverse tokens like SAND, MANA, and GALA witnessed a sudden spurt in the valuation and were top trending tokens back then.
Metaverse is an alternate virtual world- a disconnected reality and mirror world. You can possibly do everything, from buying virtual assets like land, digital collection in the form of NFTs, creating a virtual avatar of yourself, socialising, entertainment, playing games, etc.
Read here: The metaverse explained and cryptocurrencies.
It may be difficult to believe, but the metaverse is getting bigger every passing day. To understand its use case, let’s take the example of blockchain gaming.
With the advent of the internet and web 2.0 technologies, the gaming industry has witnessed explosive growth. But now, things are changing. During the 2021-2028 period, the global gaming market size is expected to reach $545 billion, exhibiting a CAGR growth of 13.2%.
As the gaming technology evolves, gaming will move away from walled-off data networks to the blockchain (into metaverse), where players can play with real gamers instead of bots.
It will be the turning point for the whole gaming industry and the crypto market because blockchain gaming will introduce cryptos, NFTs to more people than any other element of the crypto market. Furthermore, resulting in a rapid learning curve and adoption among the masses.
On top of blockchain games, gaming studios are coming up with the concept GameFi. It is a combination of DeFi and blockchain games and works on the idea of play-to-earn.
GameFi is a subset of the metaverse, where NFTs will also play a crucial role. For example, NFTs will enable in-game purchases, which can be used by the players and traded with other players. In the gaming space, die-hard gamers don’t mind spending huge amounts of money to improve their prospects in winning and showcase their gaming skills.
Read here: Beginners Guide to Web 3.0
In 2022, the focus will also be on Web 3.0 applications and the cryptos that power them. For example, Basic Attention Token (BAT), Internet Computer (ICP), Decentraland (MANA), Polkadot (DOT), Filecoin (FIL) are actively engaged in the development of the Web 3.0 ecosystem.
Web 3.0 will enable smooth and greater access to a decentralised ecosystem under one roof without the need to exit the network.
2021 was an eventful year for the cryptocurrency market, and 2022 may follow similar lines. The next big developments that you should keep a close eye on are:
- Launch of Ethereum 2.0
- Launch of CBDCs
- Institutional crypto investing pattern
- Interoperability of blockchain protocols
- Blockchain and IoT integration
- Government’s stance on regulations
Crypto is a rapidly growing market and always like to throw up surprises. Like metaverse and NFTs surprised us with their rapid growth and acceptance, new products will keep coming into the market, which are hard to imagine now. And at last, you should not forget this line by Martin Zweig- The Trend is Your Friend.
If you are convinced enough about the future of the cryptocurrency market, don’t wait anymore. Download the CoinSwitch Kuber App and start exploring.
Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.
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