The team at Blockchain.com, a leading block explorer, crypto wallet, and trading platform, says that 2021 witnessed a “fourth” major bull cycle for Bitcoin (BTC) and other crypto-assets.
Historically, in the years that followed the previous large bull markets, we’ve seen “a struggle to hold gains (to put it politely),” the Blockchain.com team wrote in an extensive report.
According to the crypto platform, one of the main lessons of economic history has been the “frequent temptation to incorrectly believe ‘this time is different.'” The team added that it “may seem reasonable to expect a crypto market crash in 2022.”
However, Blockchain.com thinks there are several reasons to be “optimistic that crypto prices could break with the historical pattern and finish 2022 even higher than where they ended in 2021.”
For one, there is a now “near universal recognition that crypto is not going away.” This was “not the case after any of the prior bull runs, including the most recent 2017 initial coin offering fueled boom,” the update noted.
Further, with fast-growing interest in new categories like crypto art, blockchain-based gaming, stablecoin payments, and other large economic sectors, the present multi-trillion dollar total market value of all crypto-assets is “defensible in our view,” the team at Blockchain.com writes in a blog post.
According to Blockchain.com, a few factors that are “likely to drive crypto higher” in 2022 are as follows:
- A record-setting “wall of crypto VC money raised in 2021 that is being deployed ($25b vs. a previous high of $6b)”
- Bitcoin is “still valued at a small fraction of the total market value of gold and yet is increasingly recognized as the future of ‘store of value'”
- As legendary investor Bill Miller stated, bitcoin “gets less risky the higher it goes”. This is “the opposite of what happens to most stocks”, Miller added, “lending support to the thesis that more institutions (which are underexposed to crypto and arguably overexposed to stocks) will allocate more capital into crypto in 2022”
- Numerous fundamental technical improvements “expected in 2022 including the Ethereum 2.0 proof-of-stake protocol upgrade and improvements to layer 2 scaling solutions.”
To be clear, we are “not expecting it to be all roses” this year, Blockchain.com noted while adding:
As cryptocurrency investors become more discerning, Blockchain.com sees a growing chance of a “shakeout amongst the many (too many, in our view) competing ‘Ethereum killer’ smart contract platforms.”
According to Blockchain.com, the “ambitious development roadmap and associated technical and execution risks that many crypto players face in 2022 may not be priced-in.”
Regulatory developments will “continue to play an important role in how crypto markets evolve,” the company predicted. And “in short, continued crypto turbulence should be expected,” they added.
They also shared that for 2021, crypto-asset markets “massively outperformed other asset classes with Bitcoin (BTC) up a solid 60% and Ethereum (ETH) up a whopping 397%.”
On the year, many crypto-assets “were up a staggering 1,000%+, such as Dogecoin ($DOGE), with a select group up over 10,000%+ including Polygon (MATIC), Solana (SOL), Terra (LUNA), Axie Infinity (AXS).”
Meanwhile, gold “suffered a historic setback as a store of value, dropping 4% in a year with the highest consumer price inflation in four decades.”
While sharing other updates, Blockchain.com noted that Bitcoin’s estimated hash rate “increased 7.1% in December, alongside a 0.6% gain on the average daily active addresses.” And, overall bitcoin on-chain payments and transaction “activity decreased in the month of December.”
For more details on this update, check here.