Cryptocurrencies began the new year on a firm note, with aggregate market capitalization increasing to $2.26 trillion, from $2.21 trillion at the end of December 2021. Bitcoin is trading at $47,258.96 and Ethereum is trading at $3,825.89. Despite the subdued trading sentiment, 2022 is expected to be as eventful as 2021, with a dramatic tryst between regulation, innovation and mainstream acceptance likely to influence price trends, peaks and troughs.
Currently, the Smart Contracts category has a market capitalization of $694 billion and a dominance of around 31 percent. Ethereum (ETH) which has a market dominance of 20.2 percent tops the Smart Contracts category. ETH’s 2.0 upgrade project, a set of interconnected upgrades that would make Ethereum more scalable, more secure, and more sustainable, is predicted to be a strong momentum generator for the lead alternate coin in 2022.
The other big names in the smart contracts category viz Binance Coin (BNB), Cardano (ADA) and Avalanche (AVAX) are also looking forward to a 2022 that will better the gains made in 2021.
DeFi market capitalization is $183 billion currently and the dominance is around 8 percent. Terra (LUNA) and Avalanche (AVAX) which currently contribute around a third to the category’s market capitalization are hoping for strong demand in 2022.
In 2022, we can perhaps see DeFi space embrace regulations. Regulated DeFi, on-chain KYC attestation, etc. could be some of the evolving themes. Innovations in DeFi could also see a growth of institutional interest in the space.
Stablecoin market cap is at $164 billion, commanding a dominance of 7.3 percent. Stablecoins have become immensely popular as it provides dollar or fiat currency exposure in crypto space. The stable medium of exchange and the easy on-and-off ramp to fiat currencies that stablecoins offer have attracted fresh money and interest in the space.
Regulation of stablecoins is expected to hit the headlines in 2022. Concerns about the adequacy of collateralization of stablecoins and the likely impact on financial stability have drawn regulatory interest to this segment more than anywhere else in crypto world. How regulators strike the fine balance between building in safeguards without stifling innovation. is what the crypto markets would be keenly watching.
With a $82 billion market cap, the Web3 category enjoys a dominance of 3.6 percent. Research category follows with a market capitalization of $63 billion (2.8%). NFTs and Collectibles ($60 billion,2.7%), Memes ($43 billion, 1.9%), Metaverse ($40 billion, 1.8%), Gaming ($37 billion, 1.7 %), DAO ($35 billion, 1.6 percent) and Yield Farming ($32 billion and 1.4%) are the other major categories.
NFTs, Metaverse, Blockchain gaming as well as Web 3 could be more disruptive than in 2021. Social media, branding, advertising would all need to brace for the change process.
It however is doubtful whether meme-cryptos would still enjoy fancy valuations as in 2021.
Privacy-centric crypto innovations and the regulatory response to that could also be a major development in 2022.
Considering the whipsawing prices that 2021 was a testimony to, investors are unlikely to be much perturbed by the volatility in prices in 2022. Despite all the turbulence in year ago, investors are expected to flock to the crypto space in 2022.
It is not just the millennials or the billionaires that are expected to test and taste the digital assets spectrum, but businesses both conventional and otherwise. And not just to Bitcoin and to Ethereum but to the wider crypto space.
The current dominance chart lays it bare. Bitcoin now commands 39.6 percent of market share whereas Ethereum holds 20.2 percent share and the major share of 40.2 percent is held by alternate coins or Altcoins. The rising trend of altcoins is expected to be more pronounced in 2022.
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