Frank Holmes
Crypto SWOT: In 2021 bitcoin reached $69,000. What price will we see in 2022?
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Strengths
- Of the cryptocurrencies tracked by Messari, the best performer for 2021 was PieDAO Metaverse, rising 291,592.72%.
- One of the major stories in crypto this year happened on June 5, when El Salvador President Nayib Bukele declared that Bitcoin would become legal tender in El Salvador. Just a few days later the law was passed and scheduled to take effect on September 7. In El Salvador, all businesses are now required to accept Bitcoin as payment.
- The first Bitcoin ETF in the United States launched on October 19, 2021. The ProShares Bitcoin Strategy ETF, trading under ticker symbol BITO, offers investors an opportunity to gain exposure to Bitcoin returns through futures contracts traded at the CME.
Weaknesses
- Of the cryptocurrencies tracked by Messari, the worst performer for 2021 was Cardstack, down 99.99%.
- China’s most powerful regulators intensified the crackdown on cryptocurrencies this year, with a blanket ban on all crypto transactions and mining, hitting Bitcoin and other major coins hard. Beijing-based regulators, in particular, joined forces to explicitly ban all cryptocurrency-related activity in the country.
- Elon Musk had a sudden change of heart over accepting Bitcoin to buy his electric vehicles, citing concerns over "rapidly increasing use of fossil fuels for Bitcoin mining and transactions." According to some sources, at current rates Bitcoin mining uses the same amount of energy annually as the Netherlands, and depending on the mining company, can rely on fossil fuels, particularly coal.
Opportunities
- India’s highly anticipated crypto regulation bill will probably be introduced to Parliament in late January or early February 2022. The Cabinet has already had informal discussions around the draft bill. Once the bill is approved by the Cabinet, it is likely to go to the standing committee on finance in parliament.
- Web 3.0 has yet to come but is the next step to web evolution, making the internet more intelligent. Web 3.0 should also be able to process information with near-human-like intelligence through the power of A.I. systems that run smart programs to assist its users. Content creation and decision-making processes will involve both humans and machines. This would enable the intelligent creation and distribution of highly tailored content straight to every internet consumer.
- 2022 could be the year that the SEC approves the first spot Bitcoin ETF. The CEO of Grayscale is among a few others that are very optimistic about the acceptance of such an ETF in the new year.
Threats
- Some experts believe that Bitcoin is due for a sharp decline in the coming months. The cryptocurrency surged to a record high of $69,000 in November 2021 to retrace back under $50,000, down almost 30% from its peak. Some believe that Bitcoin will drop to as low as $10,000 in 2022 wiping out all of its gains in the past year and half.
- According to Palo Alto Network, an increase in scams related to cryptocurrency, data breaches, and frequent identity thefts and frauds, are top cyber security threats for 2022.
- The aggregate growth of stablecoins could have important implications for the financial system and the macroeconomy. If insured depository institutions lose retail deposits to stablecoins, and the reserve assets that back stablecoins do not support credit creation, the aggregate growth of stablecoins could increase borrowing costs and impair credit availability in the real economy.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
 |
