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Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders?

Currencies / cryptocurrency Nov 30, 2021 - 12:57 PM GMT

By: Submissions


Cryptocurrency in all of its complexity and ambiguity has seen yet another successful year. 

Following the several peaks the crypto market has undergone in 2021, with May presenting itself to be the most volatile out of all. Novice and veteran traders have gone to extreme lengths to cash in on the craze, as U.S. investors made more than $4 billion from Bitcoin (BTC) in 2020.

Crypto is looking more and more as the digital currency of tomorrow with more than 6,000 cryptocurrencies already accessible on the market. While many raise scepticism concerning the volatility of cryptocurrencies, the market size has surged on numerous occasions and we can expect an even more exciting year ahead. 

2022 the Year of the Novice Trader 

In the last few years, we’ve seen a growing interest in new crypto traders throwing their hats in the ring. The growing contribution of new traders has a stark connotation to the global pandemic which saw millions looking for ingenious ways to diversify their income streams. 

All the while diversification is a good idea, crypto wallet users grew by 3 million in Quarter 1 of 2020, and as of Quarter 1 of 2021, there were more than 68 million wallet users around the world. Although these estimations reveal the ever-growing interest in crypto trading, 2022 will be no different. 

In January 2021, the cryptocurrency market tanked and lost more than $100 billion in just 24 hours. The downfall the market experienced saw BTC losing 10% of its value and Etheruem falling by 15%. Speculation around contributing factors is still somewhat unclear, but many have raised concern over the flood of new traders looking to quickly cash in on valuable coins. 

We can expect that young, enthusiastic traders will be looking to join the market. Although the risks these new traders will be taking is solely based on personal choice, we must consider how new traders will fluctuate the market in the new year. 

Stricter Government Regulations

Concerned governments and financial entities have turned a cold shoulder towards crypto investing and mining in recent months. Although crypto is mainly decentralized, governments are looking to gain some superiority over crypto traders. With talks of crypto tax or transaction fees between centralized and decentralized banking systems, influences from the government can see crypto fall in value. 

The Chinese government told all banks to stop facilitating transactions, issuing a ban on crypto mining in June 2021. The country with the highest number of BTC mining managed to rock the price of BTC by nearly 38%. The impact saw many investors and traders losing millions of dollars in just under 24 hours. 

In mid-November, Australian Securities & Investments Commission (ASIC) issued a warning to more than 600,000 crypto traders in the country - stating that all trading is unprotected under current laws. The warning didn’t receive a warm welcome, with the Commonwealth Bank of Australia seeing it more as a digital gamble. 

In India, the government will deliver a bill on cryptocurrency in Parliament this upcoming month. The Parliamentary Standing Committee on Finance may swing towards the adoption of crypto as a legal currency. Though many remain sceptical, public scrutiny has revealed Indian traders and investors call out against the regulation and government intervention on the blockchain market. 

Whether governments are looking to assist and, perhaps protect traders from failing platforms and crypto hackers - many traders regard it as a way for the government to have a firm hold on how crypto is mined, traded, and used within the national banking system. 

Explosive Market Growth 

In November 2021, month-on-month growth for top crypto coins saw an increase of 50%-150%. The rapid surge in growth is mainly linked to traders diversifying their portfolios with various altcoins and the popularity of Non-Fungible Tokens (NFT) rocking the market. 

Based on this growth, we can expect the market size of cryptocurrencies investment to outgrow expectations. Statistics from 2018 and 2019 revealed the blockchain market to be worth more than $1.2 billion and $2.2 billion, respectively. With these estimates, some are predicting that the blockchain market will reach $23.3 billion by 2023. 

In Europe, the market is expecting to topple $425 million, as blockchain consultants and crypto startups are looking to meet market demand. While the growth is set to only expand in the coming years, 2022 is looking somewhat promising for traders. 

Crypto Payment Platforms 

With the prospects of cryptocurrency looking to make headline news in the coming year, El Salvador out bet all nations, becoming the first country in the world to offer BTC as an official legal currency in September 2021. The move came after the national government realised the potential BTC can have for domestic and foreign investment. 

The more than 2.7 million El Salvador citizens have already become familiarised with the country’s Chivo wallet, an electronic wallet that stores cryptocurrencies. It’s not just El Salvador experimenting with crypto, in Europe and China, development for blockchain technology and platforms are rapidly taking off. 

Sweden is now in the testing phase of its e-krona, while China is set to launch its digital E-CBY (yaun) before the start of the 2022 Beijing Winter Olympics. Furthermore, PayPal has already mentioned that it’s looking to launch a new service that will allow the transaction and storing of cryptocurrency in October 2020. 

The head start these countries and financial platforms have, reveals how swift the move to digital cryptocurrencies will be in the coming year. With more investors and traders, financial institutions might just consider the switch to cryptocurrency. 

Rapid Diversification 

Crypto trading is a risky business, and if you don’t know what you’re doing, you’ll quickly see your investments plummet. It’s no surprise traders are already diversifying their crypto portfolios. Some consider this as one of the key elements when you start trading. 

In 2022, whether by estimate or prediction we might see traders rapidly diversify their portfolios. Even with new coins and the development of the blockchain market, many investors recommend distributing investments among various assets, and not just crypto. 

Looking for assets that will have long-term financial gains can offer better financial security. Non-Fungible Tokens (NFT) have seen massive growth, with more than 275,00 buyers and sellers as of August 2021. Popularity for NFT was largely contributed by the sales of Axie Infinitie, a high-demand NFT in Asia. 

Although varying interests can influence the overall performance of individual portfolios, diversification will remain an important factor for 2022. Traders aren’t much considered with lower-performing coins, with the top 20 coins making up 90% of daily trading. 

But trading platforms such as Coinbase are already offering improved modes of diversification. With the help of educational tools and artificial guidance, novice traders might have it easier than initially intended. 

Investor Drive in Crypto Startups

Media coverage on crypto-startups has increased closer to the end of 2021. Sector financing has managed to grow by 384% in Quarter 3 of 2020. From blockchain to crypto, investors are looking to get their hands on the most sought after startups in the coming years. It’s becoming a race to reveal the most profitable startups, as the market bubble is ever-growing. 

Swiss CV Labs Global Incubation Programme, operated by CV VC, has managed to roll out plans to secure financing for African blockchain startups. With plans to invest in more than 100 different tech startups in the next four years, the Swiss company is rapidly expanding on the African continent. 

Four startups including, Mazzuma, HouseAfrica, Pravica and CARMA have secured funding of more than $125,000 each this month. So why are developed nations looking to invest their financial resources in these startups?

CV VC is looking to create a world-first. A blockchain-focused accelerator in Africa. CV VC in partnership with the Swiss State Secretariat for Economic Affairs (SECO) is building a community of tech-driven startups that will see Africa become a key player in the blockchain market. 

Final Thoughts 

The crypto market may remain volatile, but it has surely caught the attention of millions. Novice traders eager to join the coming year will hopefully come prepared. With raised awareness from governments on the risk of crypto trading, there is a growing number of investors who have witnessed the financial potential a digital currency can have. 

While uncertainty regarding the success of the crypto and blockchain market in 2022, investors and traders are risking it all for the future of decentralized banking. A craze yet understood by many, but the coming year will nonetheless be a prosperous one. 

By Pierre Raymond

Pierre Raymond is a 25-year veteran of the Financial Services industry. Driven by his passion for financial technology he has transitioned from being a quantitative stock picker, to an award-winning hedge fund manager, credit risk manager to currently a RISK IT Business Consultant. Pierre is the cofounder of Global Equity Analytics & Research Services LLC (GEARS) and a current partner at OTOS Inc.

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