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The Future of Cryptocurrency | The Motley Fool

The Future of Cryptocurrency | The Motley Fool
Written by publisher team

Crypto investors were on the edge of a cliff when 2021 entered the price of the leading token Bitcoin (CRYPTO: BTC) increased by 309% and Ethereum (CRYPTO: ETH) It is up 459% from the previous year. But the recent massive rally in 2017 was followed by an ice bath in 2018. Was the cryptocurrency market heading for another sharp correction in 2021?

As it turns out, the market’s positive momentum for 2020 moved into solid gains in 2021. Bitcoin and Ethereum both surged, followed by thousands of altcoins getting their first taste of mainstream success. It was a rocky road with plenty of speed bumps, but the general market trend is steadily upwards.

The 2022 calendar will answer some of the important questions left unanswered in previous years, setting the course for cryptocurrencies and their long-term investors. Here’s what to expect.

Image source: Getty Images.

Crypto Market Outlook 2022

It is impossible to say exactly what will happen to the cryptocurrency market in 2022 and beyond. Questions are much more than answers. But by keeping an eye on some of the overall cryptocurrency trends, you will be able to make better investment decisions as the market continues to evolve.

Three particularly important details must be followed:

As these issues evolve and resolve, the long-term future of the cryptocurrency sector will take shape. A clearer picture should emerge by the end of 2022. However, the series of small steps that began with the creation of Bitcoin 2009 is likely to continue for many more years.

Why Cryptocurrency Could Be the Future of Money

In one of the best-case scenarios for 2022, regulators around the world will come up with a global framework to regulate cryptocurrency. The Biden administration has put together a highly qualified team to guide the crypto-regulation process led by US Treasury Secretary Janet Yellen and US Securities and Exchange Commission Chairman Gary Gensler. Yellen has been following this sector for years, although she sometimes takes a skeptical view. Gensler taught classes on bitcoin, blockchain, and other cryptocurrency topics at MIT in 2018.

With highly knowledgeable people setting the tone for future regulations, there is real hope that a viable system can be developed for investors, consumers, crypto companies, and traditional banks. Knowledgeable regulators will understand critical and meaningful issues such as the differences between a value storage system such as Bitcoin and a complex ledger with smart contracts such as Ethereum.

With government entities establishing a legal framework and tax system, cryptocurrencies could find their way into the digital wallets of American consumers at scale. But even though Bitcoin became legal tender in El Salvador in 2021, the US is unlikely to follow suit anytime soon.

However, many retailers are likely to start accepting payments with cash-like digital currencies such as Bitcoin and Ripple’s XRP (CRYPTO: XRP), or Litecoin (CRYPTO: LTC). The increasing use of cryptocurrencies should motivate regulatory agencies and politicians to take action, and blockchain systems should benefit from widespread use.

These operations will spread across the crypto market in 2022 and beyond. Investors can’t stand the uncertainty, so a very strict regulatory framework is likely an improvement over today’s crumbling supervision.

Why Cryptocurrency May Not Be the Future of Money

A bright future can be delayed in several ways:

  • Policymakers are slow and failing to reach a reasonable regulatory framework in 2022.
  • They can decide that currencies like Bitcoin and Litecoin serve only illegal activities and bad actors, none of which belong to the US soil.
  • Retailers may reject the unexpected value of digital currencies and instead insist on traditional cash or credit card transactions.

Under any combination of these conditions, the digital currency revolution could be delayed by several years. Assuming it finally arrives, it could look very different from the Bitcoin-led sea change that gained momentum in 2021. In the very long term, it seems unlikely that any government or group of countries will stop the idea of ​​cryptocurrency completely, but they can slow the movement and guide the end product. in different directions.

These risks may seem hypothetical, but they are very real. Ultimately, the crypto community must cooperate with regulators around the world. Failure to do so can create huge barriers to the advancement of the cryptocurrency sector.

This is why you should not farm bet on Bitcoin, Ethereum or crypto in general. The next move in the heart-stopping market could be negative with the echoes of the 2018 crash. Informed investors want to build a long-term diversified portfolio that can withstand massive setbacks in any given sector.

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