Even when you know what will happen, making predictions is difficult. Will the genesis stage of bitcoin end in 2022?
It’s a coincidence if things turn out the way you predicted. But, when you’re wrong, people point it out to you.
It’s a lose-lose situation, but in this article I’ll try making my predictions.
Most crypto projects will be dead, dying, or on the verge of collapse by the end of 2022. While developers’ ideas and innovations will be carried forward, the tokens themselves will not.
The vast majority of altcoins will be wiped out in a major bear market. As a result, the cryptocurrency’s experimental stage, known as the genesis stage, will come to an end.
Will Bitcoin Continue To Increase In Price Indefinately?
Few people realize that the price of bitcoin rose at a parabolic rate from December 2018 to November 2021.
That parabola collapsed in December 2021. This graph demonstrates it.
Whether the price rises to a new all-time high before another, larger crash or continues to trend sideways and downward from here, I expect a bear market to last through 2022.
The price increased at a rapid rate for three years. Finally, it’s time for the stock market to take a break.
That isn’t to say that innovation and adoption won’t continue. I am optimistic about the future of bitcoin. Just not “price increase.”
Get Ready For The Great Altcoin Exchange
What about Ethereum and the thousands of other non-Bitcoin cryptocurrencies?
Almost every altcoin fell more than 90% from its peak during the last bear market, which occurred in 2018. Some were down 99 percent, and a few were down to $0.
While the best altcoins do more than just “go up,” every altcoin, even the biggest ones, has issues.
Ethereum is unable to scale and is prohibitively expensive for small users. In addition, new tokenomics mess up some DeFi protocols, and behind-the-scenes conflicts breed a lot of drama that its developers may never resolve. As a result, ETH 2.0 is constantly delayed; no one knows if it works as expected; new tokenomics mess up some DeFi protocols, and behind-the-scenes conflicts breed a lot of drama that its developers may never resolve.
I can assure you that most tokens are schemes for founders and insiders to swindle fast money from overzealous speculators, based on my research into dozens of altcoins for my “Altcoin Insights” research service. Many legitimate projects are hard forks or copies of other projects with little (if any) improvements. However, their tokens may rise in value because they’re new and exciting.
You can’t expect any of them to hold up in a bear market as an early-stage, experimental technology with uncertain product-market fits and novel structures. But at the contrary, at the very least, bitcoin has real users, tested technology, and a large number of people invested in its success. Most altcoins don’t have any of these features.
Altcoin prices will plummet once the bitcoin bear market begins. Many will experience a drop of 99 percent from their peak. Most people will never recover. How far will they climb before collapsing?
Filth Should be Washed Away
If cryptocurrency is still associated with the Wild West of finance, the bear market of 2022 will obliterate that image.
Stablecoins, privately issued cryptocurrencies pegged to the US dollar and other major currencies, are already being investigated by global financial regulators. They compare stablecoins to digital versions of the old West’s wildcat banks, in which customers believe they can redeem their “dollars” at any time, but the banks lack the necessary reserves to do so.
It’s a good analogy, but it doesn’t make sense when you look at stablecoins. Customers must trust a private company to back their dollars rather than the US government’s full faith and credit. Private companies can tax, spend, and print more money to make up shortfalls. When one of them fails, the likelihood of financial panic increases.
At least one stablecoin is unlikely to have enough funds to pay out to everyone who requests to redeem their tokens to look. However, its name rhymes with “feather,” so you may have heard of it.
Will they all come up short?
We’ll find out who’s swimming naked when the bear market arrives. Some will face prison time, while others will face hefty fines, and the stain will persuade even crypto aficionados to allow governments to regulate who can create and distribute digital currency.
Let’s not even discuss pre-mines, pre-sales, ICOs, or IDOs.
Everything Should be Regulated
While countries may want tokens to create crypto-specific legal and regulatory frameworks, I’m betting they’ll save themselves the trouble and just hand it over to Wall Street and big banks.
Regulators in the United States have already begun soliciting feedback on a regulatory framework for banks that want to hold bitcoin in their reserves and businesses developing crypto-based financial products. Other countries have gone even further than the United States.
They’ve also attempted to persuade speculators to invest in derivatives and other financial instruments. Wall Street was happy to oblige.
With so many paper-traded bitcoin products now available, you don’t even need a bitcoin wallet or custody platform if all you want to do is bet on the price of bitcoin. ETFs, options, and futures contracts are all available for purchase.
Speculators will never have to deal with the spot market, and institutions will be able to keep bitcoin off their balance sheets.
Bitcoin will have to earn its price as more money flows to paper-traded investment products rather than the spot markets. It can’t rely on “institutions” because they’ll buy a fund rather than actual bitcoin.
Some believe retail interest will pick up the slack during a bear market, but this is not the case. People will become bored, just as they did during each of bitcoin’s previous three bear markets. However, unlike the previous three bear markets, people will have plenty of ways to get exposure to bitcoin without buying it.
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Laying Groundwork For Actual Adoption
There will still be plenty of people buying bitcoin, but the crypto’s 13-year speculative phase will come to an end. Then, for better or worse, a new phase will begin.
What will that stage entail?
Builders will continue to construct. Developers will continue to innovate. Some platforms will evolve, but most altcoins will become obsolete due to Lightning, RSK, Sovryn, and other bitcoin projects.
As in the three previous bear markets, technology will advance while the price bleeds for months. Speculators will leave or switch to derivatives exclusively. People who want bitcoin, not people who want to use bitcoin to get more of their government’s money, will have to drive demand.
To be honest, that might be the best option. Terrible altcoins will perish, and bitcoin will finally be able to demonstrate that it has value beyond “its price rises.”
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