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6 Reasons to Invest in Cryptocurrency in 2022
2021 was a hallmark year for the decentralized finance (DeFI) ecosystem. Cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) hit all-time highs in November, with BTC selling for roughly $69,000 and ETH selling for more than $4,800.
The non-fungible token (NFT) marketplace also reached staggering heights, ending the year with a market valuation that surpassed $40 billion. In total, cryptocurrencies soared to a historic market cap in 2021 that exceeded $3 trillion.
While Bitcoin (a key indicator of the overall health of the crypto market) is off to a rocky start in 2022, some experts believe BTC will reach $100,000 in the next few years—and the NFT market cap is predicted to reach over $80 billion by 2025.
With so much recent market momentum and grandiose predictions for the future, it’s no wonder cryptocurrencies and NFTs are catching the eyes of savvy investors.
If investing in crypto and other crypto-related assets has recently piqued your interest, here are six reasons why you should add digital currencies to your portfolio in 2022.
1. Crypto Has More Real-World Applications Than Ever Before
Cryptocurrencies are continuing to transcend the digital space and move into the real world. Today, several well-known companies like Microsoft, AT&T, and AMC are enabling customers to pay for physical goods or services using crypto—and it appears corporations like Amazon and Walmart are also jumping aboard the cryptocurrency train.
In a country-wide first, Colorado will also soon accept crypto for tax payments and other fees related to driver’s licenses and hunting licenses. As more real-world businesses accept crypto as a form of payment, investors will have more tangible use cases for these digital currencies.
2. Established Cryptocurrencies Are Becoming Stronger and More User-Friendly
There are thousands of cryptocurrencies available in the DeFi ecosystem, but more long-standing currencies such as BTC or ETH are becoming stronger and more user-friendly each day. For example, Ethereum is in the process of shifting to Ethereum 2.0, which is expect to address several issues the blockchain has experienced in the past. This includes:
- Reducing the amount of energy the blockchain requires by shifting from a “proof-of-work model” to a “proof-of-stake” model
- Lowering gas fees related to transactions
- Increasing transaction speeds
- Enhancing security
As blockchain technology advances and gas fees are reduced, crypto investors will have fewer barriers to entry—especially when it comes to scaling their investments.
3. Crypto Can Shield Investors From Inflation
The buying power of fiat currencies (e.g., the U.S. dollar or the euro) can fluctuate based on the health of the economy, the amount of money in circulation, and national inflation rates. On the other hand, cryptocurrencies are decentralized, which means they aren’t influenced by governments or central banks.
The value of cryptocurrencies directly reflects demand for them, and the number of coins that can mined is typically capped. For example, the maximum amount of BTC that can be mined is 21 million. These caps work to help investors avoid inflation. Some investors have likened cryptocurrencies to gold. Recently, Apple co-founder Steve Wozniak called Bitcoin “pure-gold mathematics.”
4. The Primary Currency in the Metaverse is Crypto
As the metaverse grows, cryptocurrencies and NFTs will continue to play major roles in how this digital universe operates. While still in its infancy, the metaverse is predict to become a full-scale virtual economy that enables users to make purchases using cryptocurrencies or exchange digital assets with other users.
Today, Decentraland is a major metaverse project that enables users to buy, sell, and trade digital assets with support from the platform’s proprietary crypto token, MANA. The value of the metaverse is already in the billions, and that number is project to increase in the near future. Those who invest in the best metaverse crypto today could profit tomorrow.
5. Investing in Crypto Is Becoming More Accessible
In October 2021, the New York Stock Exchange (NYSE) introduced an exchange traded fund (ETF) directly linked to Bitcoin. Offered by ProShares, the Bitcoin Strategy ETF (BITO) became the second-highest traded fund on record—and for good reason. The BITO ETF made it easier for investors to add cryptocurrencies to their portfolio in a more conventional way.
For example, if an investor already worked with a traditional investment brokerage, they could easily add the BITO ETF to their portfolio without setting up a digital wallet and buying BTC via a crypto exchange. While the BITO ETF trades on BTC futures rather than directly holding the coin, future crypto ETFs could hold digital currencies directly.
As cryptocurrencies become more accessible in traditional investment vehicles, investors will have an easier time breaking into the crypto market.
6. The Popularity of NFTs Could Continue to Skyrocket Well into the Future
Last year laid the groundwork for the future of NFTs—and that future is looking bright. For starters, the NFT market’s $41 billion valuation in 2021 inched closer to the value of the traditional fine art market, with the global sale of physical art and antiques reaching $50.1 billion. One of the most iconic NFTs to sell was artist Beeple’s “Everydays: The First 5000 Days” NFT, which sold for $69,346,250 (38,525 ETH). Major players also got into the NFT mix, including:
- Visa: Purchased a CryptoPunk NFT to commemorate NFT’s as a historical form of commerce.
- Coca-Cola: Released an NFT collection for the metaverse that featured digital collectibles based on iconic brand assets.
- Massachusetts Institute of Technology (MIT): Enabled students to receive an NFT version of their diplomas in addition to their physical diplomas.
With a predict market cap of $80 billion only 3 years away, NFTs are forecaste to become a staple of everyday life in the near future—providing more real-world utility in many of the apps, games, and experiences people are already accustomed to. Some of today’s most popular NFTs have huge upside potential, which can make them strong candidates for investment portfolios.
You can head over to FTX to learn more about the future of the crypto world. Cryptocurrencies and NFTs are continuing to grow in popularity, which could make 2022 the perfect year to invest in some of these digital assets.
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