Cryptocurrency is still a fledgling industry that has matured over the past few years. The market is now ripe for disruption as progress continues with blockchain technology, and new innovations are made every day.
The cryptocurrency market is volatile in nature, but it is still quite young and cannot be compared to most mature markets. The bitcoin price has seen a significant growth streak over the past few years, but there have been notable declines as well. It’s safe to assume that volatility will continue in the near future as well. This volatility makes it difficult to operate within the cryptocurrency market at this stage, as businesses are unable to predict potential long-term changes in their sales and earnings.
If the market continues to grow at the current pace, it’s possible that volatility will decrease because of increased institutional interest. Institutions are going to play a larger role in the cryptocurrency industry, which will lead to more stability and fewer drastic price movements. Increased volatility will also affect more investors and businesses as the cryptocurrency industry itself continues to grow.
What’s driving the cryptocurrency market volatility?
Volatility is driven by two major factors: demand changes and price discovery. Demand changes are related to an exogenous event that causes an increase or decrease in demand, while price discovery relates to an internal factor like new information or regulations. An exogenous event can cause a demand change because it changes the usage of cryptocurrency as a whole. For instance, new regulations on cryptocurrency can cause an increase in demand that causes prices to rise. Price discovery is mainly due to the lack of information and knowledge about cryptocurrencies. When investors are unable to form a solid ground-level understanding of cryptocurrencies, they tend to react irrationally due to their lack of knowledge. Bitcoin Prime is one of the oldest and most reputable bitcoin trading software in the market. They have been offering automated BTC trading services since 2016. Their system automates the entire process, making it easy for all to trade with them without any previous knowledge or experience necessary.
Analysts give their top predictions for crypto in 2022
Crypto is a huge topic that has been setting the world on fire. Cryptocurrencies have been an important asset class for some time now, and this seems to be only the beginning of what blockchain technology can do. As cryptocurrency has taken off, analysts around the globe have taken notice. Many experts are providing predictions for how blockchain may play out in 2022. These predictions offer insight into cryptocurrency prices, regulations, and more.
What are analysts predicting will happen to cryptocurrency prices in 2022?
1. Chinese Crypto Markets Will Be the Key to Crypto’s Future
Chinese cryptocurrency markets notably drove bitcoin prices up to all-time highs in 2017. China is home to a large number of miners, traders, and retail investors that have driven up the demand for crypto. However, the future of that demand is uncertain as regulators continue to look for ways to slow down blockchain technology’s growth.
China’s central bank issued a ban on ICOs in 2017, and the country has followed up by implementing numerous regulations that have slowed down cryptocurrency trading. As cryptocurrency exchanges and wallets are being shut down, Chinese traders are being forced to leave the country to find digital currency exchanges.
Analysts believe this is just the beginning of what will be a very important trend for cryptocurrencies. Many analysts predict that Chinese cryptocurrency markets will continue to be a driving force for bitcoin prices and cryptocurrency as a whole.
2. Regulation is Likely to Improve
Regulation may be heading in the right direction. China’s crackdown on blockchain technology and cryptocurrency exchanges has been harsh, but regulatory efforts have undeniably resulted in a decrease in cryptocurrencies’ volatility. Several countries around the world have issued statements saying that cryptocurrencies are not a currency, and governments are looking for ways to regulate them.
Many experts believe this is the best way forward for cryptocurrency regulation. Less regulation means that companies can create blockchain services with more innovation, which subsequently spurs growth in crypto prices. However, regulation is necessary to ensure that cryptocurrencies aren’t used for illegal activities. With cryptocurrency regulations in place, the industry will have a more stable foundation from which to build on.
3. Blockchain Will Be Used for More Than Cryptocurrency
Blockchain technology is the backbone of all cryptocurrencies, and its potential is only beginning to be tapped. The blockchain is an innovative technology that can be applied to anything from smart contracts to voting systems. Financial institutions, technology companies, and government agencies have been investing in blockchain for some time now. It’s likely that we will see more innovation from these groups in the future.
These innovative partnerships could create a virtuous cycle that drives up the demand for cryptocurrencies like bitcoin and ether. As companies and institutions continue to invest in blockchain technology, they will need to purchase more digital currency as they look to integrate this decentralised technology into their businesses.