Crypto was hit by a cold wintry blast in the last week of 2021, as roughly $200 billion was wiped off the global market. Which raises an obvious question: Will 2022 be a boom time for bulls or will the bears come home to roost?
In December, Carol Alexander, professor of finance at Sussex University, predicted that Bitcoin will slump as low as $10,000 in 2022, losing all the gains it made in the past year.
“If I were an investor now I would think about coming out of bitcoin soon because its price will probably crash next year,” Alexander said.
However, many crypto supporters disagree with her claim that crypto is a “toy” with “no fundamental value”.
Bitcoin Foundation chairman Brock Pierce appeared on Fox Business to give a more optimistic prediction about the next year.
“This is an alternative asset and it isn’t a hedge like gold or real estate because it has more risk and greater volatility,” he said. “Financial uncertainty in the broader global financial system will be the primary driver. I would not be surprised if we saw a Bitcoin price next year over $100,000 and it’s not inconceivable that it could break $200,000.”
The price of Bitcoin is now sitting at below $47,000 after falling from $57,000 at the beginning of December. To distract you from the festive lull, here are a few stories to keep you warm in January.
Recentralizing Crypto
One of the key advantages of decentralized cryptocurrencies is, well, the fact they are decentralized.
But Binance CEO Changpeng “CZ” Zhao believes that there has to be some element of centralization in order for crypto to interact with traditional financial institutions.
“Today, we still need the centralized systems to integrate with the traditional financial industry so that we can bring the money into and out of crypto,” he said during a video responding to questions from Binance’s Twitter followers.
He was also asked whether crypto was “a Ponzi scheme for people who think they are smart”.
“Honesty, there are hackers, Ponzi schemes and scammers,” he replied. “The industry is very nascent so do your own research and only get involved in projects or coins you’re familiar with.”
CZ previously said that Binance would have to centralize in order to work with regulators more effectively, telling the South China Morning Post his company was “making changes”.
Binance has operated on a decentralized basis but has faced regulatory warnings and clampdowns around the world.
Could this be the dawn of crypto recentralization?
Elon’s Satoshi Secret
The world has speculated about the identity of Bitcoin creator Satoshi Nakamoto ever since the dawn of crypto.
Now the self-proclaimed DogeFather Elon Musk has spoken out to reveal his own theory about the person behind Bitcoin.
Speaking with the podcaster Lex Fridman, Elon said: “Obviously I don’t know who created Bitcoin, but it seems like Nick Szabo is probably more than anyone else responsible for the evolution of those ideas.
“He claims not to be Nakamoto but I'm not sure, that's neither here nor there. He seems to be the one more responsible for the ideas behind it than anyone else."
Nick Szabo is a computer scientist, legal scholar and cryptographer who is world-famous for his research in digital contracts and digital currencies.
Elon was also asked if he was actually Satoshi.
“Would you tell us if you were?” Lex asked.
“Yeah,” Elon replied.
Seismic Events
Bitcoin faced an “earthquake” on New Year’s Eve as 129,800 options contracts worth more than $6 billion expired.
Options are instruments that grant the purchaser the right to buy an asset at a given time, although they are not obliged to make the purchase.
Market volatility tends to occur before the date when options expire, followed by a sharp “directional move” which will decide whether the year begins with a bang or a soggy whimper.
"Whilst bitcoin’s overall trading volumes were consistent, a total of 129,800 options contracts (with a value of just over $6 billion) are set to expire on the 31st December which is believed to be fuelling overall wary sentiment for the short term," Adrian Kenny, senior sales trader at the U.K.-based digital asset broker GlobalBlock, wrote in a research note.
The 2022 Flippening
In a 2022 forecast report called Just Crypto, the trading firm QCP Capital said a “flippening” in January would see institutional investors take up a larger share of the total crypto ownership.
“In 2022, the first thing we expect to see is a major flippening of crypto ownership from primarily retail to institutional players, with institutions having a much larger participation,” it wrote.
The company also compared the current situation to two historical situations: the bullish Roaring Twenties and the bearish 1970s era of stagflation.
Sadly, it said the markets were looking more like the 1970s than the 1920s due to high levels of inflation.
“The Fed has woken up to this inflation risk and this will compel it and other global central banks to tighten faster, harder, and with resolve. Since the advent of fiat and the debasement of money, normal business cycles have been replaced by central bank liquidity cycles.
“The major difference this round is that liquidity tightening comes on the back of high inflation. And if this leads to a real GDP decline similar to the 1970s, all asset prices will be impacted.”
This is bad news for crypto, if true. Let’s hope the twenties start to roar soon!
