It’s fair to say that Bitcoin and other cryptocurrencies haven’t had the best start to the year.
A massive flash sale has dropped the value of digital currencies by more than $300 million.
But crypto believers remain unconvinced that Bitcoin and other digital assets will rally to reach new highs in 2022.
That’s the opinion of 6,000 investors who took part in a global LinkedIn poll that finds probably the best financial performance of Bitcoin, other cryptos, or non-fungible tokens (NFTs).
Nearly a third (30 percent) believe a cryptocurrency that competes with bitcoin will provide the best investment return, while one in four (25 percent) will opt for a mix of bitcoin and NFTs, and one in five (20 percent) will stick with stocks and equities.
Stocks fall out of favor
Nigel Green, CEO of deVere Group, one of the world’s largest independent financial advisory firms, which conducted the survey, found the survey results surprising.
“Equities, which have traditionally made up the bulk of successful investors’ portfolios, are falling out of favor as a means of creating and building wealth, with digital assets taking the upper hand,” Green said.
“It is surprising that investors believe that other cryptocurrencies and not the dominant Bitcoin will make more money than any other investment this year.”
He posits that the results have three main explanations.
“First, investors are predicting that markets in 2022 will perform similarly to 2021. That means cryptocurrencies will have another remarkable year despite December’s plunge,” Green said.
Shield against inflation
“Bitcoin ended the year up almost 65 percent, while the US Standard & Poor’s 500 – the benchmark index of the world’s largest economy – posted growth of around 28 percent and gold lost around 7 percent.
“Second, rising prices due to supply chain bottlenecks and a shortage of skilled workers are driving inflation further up, which is of great concern to investors who see their purchasing power being eroded by inflation.
“Bitcoin and other digital currencies are widely seen as a shield against inflation, largely because cryptocurrencies are in limited supply and are not affected by price.”
“Finally, investors are increasingly confident that digital currencies are the inevitable future of money. In our increasingly technology-driven, globalized world, holding digital, borderless, decentralized currencies or other digital assets like NFTs makes sense.”
That mysterious other cryptocurrency that’s likely to outperform Bitcoin is likely Ethereum, Green says.
Game changing transition
“More people understand the intricacies of crypto,” he said. “I think when respondents to the survey said that they believed ‘another cryptocurrency’ would perform better than Bitcoin this year, they were probably thinking of Ethereum, the second most popular cryptocurrency and Bitcoin’s main competitor.
“Ether has higher real-world usage potential as Ethereum – the platform on which it is the native cryptocurrency – is the most sought-after smart contract development platform, highlighting the value of this network not only as a platform for developers but also as a global financial services company .
“There is also tremendous enthusiasm for the groundbreaking transition to ETH 2.0, a software upgrade that will make the Ethereum network vastly more scalable, sustainable and secure. These upgrades represent a major boost not only for Ethereum but also for blockchain technology itself.”
The survey also suggests that NFTs are increasingly perceived as a future-proof asset class. NFTs are one-of-a-kind digital collectibles that are grafted onto a blockchain — the same technology that runs cryptocurrencies — and create a unique digital watermark showing ownership and digital rights to that collectible.
signals from investors
Over the past year, many major global sports franchises, fashion brands, and well-known artists and musicians have launched NFTS.
Nigel Green, a longtime and high-profile tech advocate, reiterates that portfolio diversification is the best way for an investor to seize opportunity and balance risk.
“This survey may only be a snapshot of current sentiment, but it signals that investors are ready to embrace forward-looking digital assets that they believe will continue to outperform other assets in 2022,” he said.
Meanwhile, a separate study by Web3 and blockchain early-stage venture firm Electric Capital Developer examined how crypto-asset development is shaping up.
In an emerging sector, the report found, 18,000 developers were working on crypto projects every month in 2021. Two thirds of them started work in the same year.
Smart contracts strengthen Ethereum
Most worked on Ethereum, Polkadot, Cosmos, Solana, and Bitcoin, the top five blockchains.
The number of developers increased by 42 percent for Ethereum, but only by 9 percent for Bitcoin.
But Polkadot, Solana, NEAR, BSC, Avalanche, and Terra are all ahead of Ethereum’s development at the same time in their existence.
“Ethereum, Polkadot, Cosmos, Solana and Bitcoin were the top five developer ecosystems in 2021. Solana broke out with 5x growth while NEAR moved up to sixth place with 4x growth. Polygon, Binance Smart Chain, and Cardano all more than doubled their ecosystems in 2021,” the report said.
“Ethereum has the most tools, apps and protocols, with a developer community nearly three times the size of the next largest ecosystem, attracting one in five new crypto developers.”
Two more countries ready for Bitcoin Switch
The tiny Central American republic of El Salvador has gone down in history as the first country to adopt Bitcoin as legal tender.
The country was pegged to the US dollar but broke those economic shackles in June last year.
Now President Nayib Bukele has hinted that two more countries are ready to transition to a bitcoin economy.
He also revealed that he believes bitcoin will break the $100,000 price cap in 2022 and that he wants to build a bitcoin city at the base of a volcano. The city will use the volcano’s geothermal power to mine more bitcoin.
Loss of $10 million sued
The value of bitcoin and other cryptocurrencies has plummeted this year, starting with a price of $47,196 on January 1st. The current price is $43,994, trending down.
Bitcoin hit a record $67,549 on November 8, 2021 and has risen from a recent low of $29,795 since July 2019.
So far, El Salvador has bought 1,241 Bitcoin worth $63.21 million since September 6, 2021. Experts believe the country’s treasury has lost around $10 million in transactions since November thanks to the crumbling bitcoin price.
“What has been dubbed ‘The Bitcoin Experiment’ is nothing other than the world watching as mass adoption transforms a country’s economy. If it’s for good, it’s game over for fiat money. El Salvador is the spark that ignites the real revolution,” said Bukele.
Bitcoin price change: July 2021 – January 2022
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