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Bitcoin and other cryptocurrencies may be a little less volatile in 2022

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One bitcoin it is currently trading at just under $ 49,000, an impressive 66% increase from January levels. But top cryptography has also dropped by almost 30% compared to yours maximum record of nearly $ 69,000 in November.

There is no denying that cryptography has become widespread. The total value of all cryptocurrencies in circulation stands at more than $ 2.2 trillion, and bitcoin accounts for about $ 920 billion of that total.

Ethereum, or ether, is also starting to close the gap. Ethereum, which is a popular cryptography for smart contracts and non-expendable tokens (NFT), which has taken the art world and collectibles by storm, has a market value of $ 475 billion.

Ether prices have quintupled this year, from about $ 730 per coin to nearly $ 4,000.

Now there are several funds traded on bitcoin exchange (ETF) for individual investors to choose from. ETFs that invest in other major cryptocurrencies could also be on the cards.

“The next possible step is to launch additional ETFs for other currencies. There will likely be an Ether ETF in early 2022,” said Nick Elward, senior vice president and head of institutional product and ETF at Natixis Investment Managers. “There will probably be an Ether ETF in early 2022.”

Major professional and institutional investors, including major ones fund managers George Soros and Stanley Druckenmiller, have been investing in crypto. Still, the latest setback is a clear reminder of how notoriously volatile the prices of bitcoins and other cryptocurrencies can be.

Less severe winter winters ahead?

Many investors rushed to bitcoin in 2017 and saw prices rise from about $ 1,000 per coin to just below $ 20,000 in December of that year.

Then came the fall, with bitcoin falling to $ 3,500 by the end of 2018. Obviously, those prices have recovered, and then some, but it was not until December 2020 before the currency returned to the 20,000 mark. dollars.

Probably, these dizzying changes in the prices of cryptocurrencies have come to stay. The key, experts said, is for investors to learn to bear them and overcome the inevitable ups and downs.

“More than once we’ve seen a correction in the market,” Anton Chashchin, managing partner of Bitfrost, a digital asset service provider, said in an email to CNN Business. “If institutional investors start making profits, it can have a knock-on effect.”

But he added that these large companies will likely continue to turn to bitcoin as a potential hedge against inflation and rising interest rates, which could hurt traditional government-backed currencies.

“Even if the source of interest for institutional investors is the Fear of Missing Out (FOMO), all institutional decisions have been made after careful consideration. These companies have reached the potential benefits of cryptocurrencies.” , said Chashchin.

Increased adoption and legitimacy of cryptocurrencies will also help mitigate some of the volatility. Prices may still move sharply, but changes may not be as violent as in recent years.

“Having larger institutions with deeper pockets and firmer hands buying crypto will help,” said John Wu, president of Ava Labs, an ethereum-compatible blockchain company. “They can withstand volatility.”

Beyond bitcoin

Natixis Investment’s Elward also believes that more fund managers will look closely at cryptocurrencies and are likely to extend beyond bitcoin ETFs that only reflect the direction of bitcoin futures.

“Active is a logical fit for cryptocurrency investors. I hope there are more managers looking at which ones are best suited to buy,” Elward said.

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He added that cryptography is a natural extension of the so-called alternative investment world, a group of assets beyond stocks and bonds that typically includes gold and other precious metals.

Along these lines, some experts believe that the ether and the third most valuable cryptocurrency in the world, binance coin, could continue to gain market share compared to bitcoin.

“You have to look at the usefulness of cryptocurrencies. Ether could be bigger than bitcoin. They are the rails for NFT transactions,” said Alex Lemberg, CEO of the Nimbus platform, a decentralized financial lending company.

Wu, of Ava Labs, also thinks investors will go beyond bitcoin.

“We expect more dispersion in the crypto world. Prices will move more depending on adoption,” he said. “Cryptos will not negotiate so much in tandem.”

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