The Crypto Market
1. Users – We predict that the user base will rise from an estimated 300 million+ globally and 3.3 million in the UK, today to 600-900 million worldwide and over 5 million in the UK by the end of 2022.
2. Market Capitalisation – The market capitalisation of the crypto economy will rise from a peak of around US$3 trillion in 2021, to one of over US$7.5 trillion at some point during the course of 2022. The market cap of Ethereum (ETH) could overtake that of Bitcoin (BTC) during 2022 – at least temporarily. This will be driven by a combination of factors including the launch of ETH2.0 and the shift from a ‘proof work’ to a ‘proof of stake’ transaction verification approach; growing financial service sector and corporate adoption and holding of ETH; an increase in ETH based issuance of Non Fungible Tokens (NFTs) by global consumer brands; and a “follow the money” mindset among new retail investors looking for blue chip crypto opportunities.
3. Crypto Asset Prices – The price of Bitcoin will reach at least US$150,000 and Ethereum US25,000 at some point during the course of 2022. As result, Bitcoin’s market cap will be second only to that of Apple and could exceed it.
4. Crypto Acceptance – Crypto acceptance facilities for all participating banks and merchants are already offered, or will be in 2022, by payment companies such as Mastercard, Visa, PayPal, and Square. This, plus adoption of crypto as legal tender by many countries, will drive the worldwide number of businesses accepting crypto from over 18,000 today to over one million by the end of 2022.
5. The Tokenisation Wave – We will see a wave of tokenisation projects for assets such as domestic and commercial real estate and infrastructure, new ventures, corporate spinouts, and community initiatives – such as local facilities. The launch of individual activities – even from global corporates – could be driven by initial offerings of tokens for individual games, products, services, and experiences. The profits of individual sporting events, albums, artworks, and concerts could all be shared with those who participated in the initial token offering – where the proceeds were used to help fund the development of the activity.
Innovation
6. Applications and Business Models (Tokenomics) – We will see an acceleration in development and launch of new functionality and underlying technology concepts. This will be paralleled by ever smarter and complex underlying economic models (tokenomics) for new ventures. These will challenge those responsible for quality assurance of the applications and regulatory validation of the tokenomics to prevent the risk of fraud.
7. Decentralised Finance (DeFi) – There will be an explosion of new DeFi platforms, with many failures among existing ones. Growing user numbers will help drive usage and consolidate the top 25 crypto market cap ranking of some of the leading platforms such as Avalanche and Algorand. Governments will increasingly try to regulate the DeFi market for fear of losing ever more control of the financial system – particularly amongst the young and wealthier segments of the population.
8. Decentralised Autonomous Organisations (DAOs) – An increasing number of crypto ventures will seek to establish DAO based applications. These have no employees or management, “answer only to their own code,” and are governed in all regards by the community of token holders or their nominated representatives. For DAO based business applications, the end users may see this model as particularly attractive as it would give them total control over evolution of functionality, the economic model, and service pricing.
Governments and Crypto
9. Regulation and Enforcement – The next year will see a lot of strong enforcement moves and regulatory warning noises – led by the US. A number of crypto ventures will receive fines, sanctions, and may even be closed down because of their marketing practices, lack of oversight, and potentially illegal behaviour. Moves will be made to restrict the ability for people to stake their stablecoins and earn interest rates significantly higher than for conventional savings or bond yields. Many nations may attempt to clampdown on DeFi projects and crypto ventures offering eye watering and incomprehensible interest rates of 10,000% to one quadrillion percent APY.
10. Country Adoption – Between 25 and 50 countries will follow El Salvador’s lead and allow one or more crypto assets to be accepted as legal tender.
11. Central Bank Digital Currency / CBDCs – Between 25 and 50 countries will follow El Salvador’s lead […]
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