Indeed, the failure of crypto prices to implode as they consistently have in the past following epic bull runs like 2021 are a sign, in our view, of how much crypto markets have matured since the last great blow-off top year-end finish in 2017. Some may fear a loss of momentum as we enter a new year.Ī counterweight to these concerns is the lack of a singular, frenzied “blow-off top” moment in 2021 and the resiliency crypto prices have shown following multiple setbacks last year. The all-mighty long dated US treasury bond market also suffered, down an even greater 6% on the year.ĭecember did see market conditions soften in crypto, with declines for Bitcoin (BTC) down 19% and Ethereum (ETH) down 20%. Traditional markets were mixed on the year: stocks were up +27% for 2021 while gold suffered a historic setback as a store of value, dropping 4% in a year with the highest inflation in 40 years.
In short, continued crypto turbulence should be expected.īut the bottom line as we begin a new year is that we have never been more optimistic and confident about the future of crypto. Regulatory developments will continue to play an important role in how crypto markets evolve.The ambitious development roadmap and associated technical and execution risks that many crypto players face in 2022 may not be priced-in.As crypto investors become more discerning we see a growing chance of a shakeout amongst the many (too many, in our view) competing “Ethereum killer” smart contract platforms.Now, to be clear, we are not expecting it to be all roses this year:
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Numerous fundamental technical improvements expected in 2022 including the Ethereum 2.0 proof-of-stake protocol upgrade and improvements to layer 2 scaling solutions. This is “the opposite of what happens to most stocks”, Miller added, lending support to the thesis that more institutions (which are underexposed to crypto and arguably overexposed to stocks) will allocate more capital into crypto in 2022 As legendary investor Bill Miller stated, bitcoin “gets less risky the higher it goes”. Bitcoin is still valued at a small fraction of the total market value of gold and yet is increasingly recognized as the future of “store of value”. A record-setting wall of crypto VC money raised in 2021 that is being deployed ($25b vs. This was not the case after any of the prior bull runs, including the most recent 2017 initial coin offering fueled boom.įurther, with rapidly growing interest in new categories like crypto art, blockchain-powered gaming, stablecoin payments, and other massive economic sectors, the present multi-trillion dollar total market value of all cryptoassets is defensible in our view.Ī few factors that are likely to drive crypto higher in 2022 include: Historically, in the years that followed the prior big bull runs we’ve seen a struggle to hold gains (to put it politely).Īnd with one of the general lessons of economic history being the frequent temptation to incorrectly believe “this time is different” it may seem reasonable to expect a crypto market crash in 2022.īut we see multiple reasons to be optimistic that crypto prices could break with the historical pattern and finish 2022 even higher than where they ended in 2021.įor one, there is a now near universal recognition that crypto is not going away. 2021 witnessed a fourth major bull cycle for bitcoin and crypto.
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