KEY TAKEAWAYS

• In general, short term predictions are very positive for all large cryptocurrencies. Bitcoin leads the group by far so its price partly determines how the overall market performance is predicted for the next months. Opinions differ notably concerning the Bitcoin price for the near future from a range that goes from US$ 73,000 to US$100,000 in most of the sources.
• Short term predictions for the second most important cryptocurrency, Ethereum, are also very diverse. They range from approximately US$5,000 to US$10,000 by the end of the year. Several opinions state that Ethereum will overtake Bitcoin as the most valuable cryptocurrency sometime in 2022.
• Opinions about how the cryptocurrency market will evolve over the long-term are extremely varied. Some are very optimistic about the mass acceptance and applications of cryptocurrencies whilst others simply state that they will completely disappear in the future. As technology rapidly changes and individuals are more likely to accept a highly digital world, the real destiny of cryptocurrencies is mostly uncertain.
• The increasing acceptance by both individual and institutional investors and the growing use as a feasible payment option are positive drivers that support future growth. It is also expected to have more governments making decisions in this regard and new regulations approved to protect investors over the next months.

INTRODUCTION

CRYPTO MARKET PREDICTIONS

Short-Term

• In general, short term predictions are very positive, expecting strong growth of all large cryptocurrencies. Bitcoin leads the group by far so its price partly determines how the overall market performance is predicted for the next months. Opinions vary notably, as the following paragraphs reveal. On December 4th, the Bitcoin price was US$47,495.
• The Business Research Company estimates that the global cryptocurrency market size will go from US$1.44 billion in 2020 to US$1.63 billion in 2021 at a compound annual growth rate (CAGR) of 12.9%. The demand grew exponentially during the COVID-19 pandemic but the market is going toward more stable growth. Total market capitalization already reached a peak at around US$3 billion in November 2021 but its value has been extremely volatile. On December 4th, it was valued at US$2.34 trillion.
• According to Ian Balina, founder of crypto research and media company TokenMetric, the Bitcoin price will reach US$75,000 by the end of 2021. According to the expert, technical data proves that $100,000 is not out of the question, but he prefers to take a more conservative stance. Bill Noble, the chief technical analyst at TokenMetric, says “it is more likely Bitcoin goes to $75,000 than $25,000.”
• Matthew Hyland, technical analysis and blockchain data analyst, predicts US$250,000 for the Bitcoin price by January 2022 . Hyland says that, inevitably, Bitcoin will cross the US$100,000 threshold and that event will catalyze a euphoric bull run.

• JPMorgan predicts that Bitcoin could achieve a short-term price target of US$73,000 for 2022.
• Even after the recent market crash, Dutch analyst PlanB suggests that Bitcoin could hit US$135,000 by December.
• Crypto hedge fund managers surveyed in the first quarter of 2021, said that the Bitcoin price would be around US$59,000 on 31 December 2021.
• Ethereum is second behind Bitcoin when compared in terms of market capitalization. Its gains have been outpacing Bitcoin’s. Several opinions state that Ethereum will overtake Bitcoin as the most valuable cryptocurrency sometime in 2022. It has been supported by a recent surge of interest in smart contract platforms that are being rapidly co-opted by the nonfungible token (NFT) boom.
• A panel of 50 fintech experts on comparison site Finder predicted that Ethereum would climb to $5,114 by the end of 2021.
• Joshua Fraser co-founder of Origin Protocol forecasts that Ethereum could touch $10,000 at the end of the year.
• High volatility will continue to be a remarkable feature of the cryptocurrency market. It is at present nearly four to five times higher than gold, as Nikolaos Panigirtzoglou from JPMorgan informs.

Long-Term

• Opinions about how cryptocurrencies will evolve over the long term are extremely varied. Some are very optimistic whilst others simply state that cryptocurrencies will completely disappear in the future.
• The Business Research Company estimates that the cryptocurrency will reach $2.73 billion in 2025 at a CAGR of 13.8%. The increasing popularity of stable coins is one of the drivers behind the predicted growth. For example, in March 2021, Techemynt, an India-based financial service provider, introduced stable coins supported by the New Zealand dollar to combine the flexibility of cryptocurrency with the stability of the New Zealand dollar.
• JP Morgan has renewed its long-term price prediction for Bitcoin, doubling it to $146,000. Bloomberg predicts it could hit US$400,000 by 2022.
• Conservative predictions say Bitcoin will reach US$100,000 by 2023. But many experts do not want to predict specific numbers and dates. They prefer to state that its value is foreseen to be increasing over time, driven by organic market movement.
• Author of Cryptocurrency Investing for Dummies Kiana Danial says that Bitcoin will show volatility short-term and growth long-term.
• Intertrust's research found that executives expect to hold an average of 7.2% of their assets in cryptocurrencies in five years. It also showed that all the executives surveyed in North America, Europe, and the UK expect to have at least 1% of their portfolio in crypto. Survey respondents include 100 CFOs of funds that on average manage $7.2 billion in assets. Nevertheless, some hedge funds remain wary. A proof is the opinion of Paul Singer’s Elliott Management in early 2021, warning that cryptocurrencies could become “the greatest financial scam in history”.
• John Iadeluca, founder and CEO of multi-strategy fund Banz Capital, said "if the price of Bitcoin falls past US$50,000 this would indicate negative cyclical attributes for Bitcoin price.”
• A panel of 50 fintech experts on comparison site Finder expected Ethereum price would surge to $15,364 in 2025. By 2030, it would reach $50,788.
• Go Banking Rates says that after the huge proliferation of cryptocurrencies during the past years, it is inevitable that some, if not many, will lose all of their value. Several analysts suggest that, ultimately, the value of Bitcoin will be $0. Lesser cryptocurrencies that are not nearly as useful or accepted would completely crash if Bitcoin price drops significantly.
• High volatility will continue to be a remarkable feature of the cryptocurrency market. It is at present nearly four to five times higher than gold, as Nikolaos Panigirtzoglou from JPMorgan informs. The figure below shows the variations in the Bitcoin price during November 2021.

 

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Trends

• Most analysts expect that cryptocurrency usage, visibility, and value will continue to increase in 2022. The millennial generation is increasingly supporting cryptocurrencies. Bitcoin adoption has been impressive since its appearance in 2019 growing at an annual rate of 113%, as the digital asset management firm CoinShares states. The pandemic strengthened the digitalization trend in which cryptocurrencies are highly favored. For merchants, crypto-transaction fees are typically much lower than fees applied to credit cards.
• Time's Next Advisor highlights that growing interest from diverse large companies in cryptocurrency and blockchain is fueling the market and investor confidence. Some examples are AMC, which recently announced the acceptance of Bitcoin payments by the end of 2021. Fintech companies like PayPal and Square also allow users to use cryptocurrencies on their platforms. Tesla has billions invested in crypto assets. MasterCard is launching the first crypto-linked payments card in the Asia-Pacific region. Facebook plans to issue its stablecoin. And experts predict more and more of this buy-in.
• Institutional investors showed strong acceptance of cryptocurrencies in 2021. A recent survey reveals that 82% of institutional investors and wealth managers will increase their cryptocurrency exposure through 2022 and into 2023.
• Although drivers for the short term growth are evident, opinions on how these drivers will be sustained over the long term are widely diverse. Go Banking Rates says that it is difficult for investors to predict exactly which cryptocurrencies will survive even under the most positive scenarios.
• It is probably to have some kind of regulation applied to the cryptocurrency market shortly but visions about how this will mean are diverse across the world. “Regulation is probably one of the biggest overhangs in the crypto industry globally,” as reported by Jeffrey Wang from a Canada-based crypto finance firm. Gary Gensler, Security and Exchange Commission Chairman, says investors are “likely to get hurt” if stricter regulation is not introduced.
• China announced in September that all cryptocurrency transactions in the country are illegal, but things in the US are less clear. Jerome Powell, who is the US Federal Reserve Chair, said recently that he has “no intention” of banning cryptocurrency. Security and Exchange Commission Chairman Gary Gensler said investors are “likely to get hurt” if stricter regulation is not introduced.
• It is expected to see further involvement of governments in the cryptocurrency world. China was the first nation to adopt its own central bank-issued digital currency. El Salvador, in September 2021, declared the cryptocurrency to be legal tender, allowing it to be used for payments.

TOP CRYPTO BLOCKCHAIN COINS TO INVEST IN

• The 10 best cryptocurrencies to invest in according to hedge funds and investment firms, as published by Insider Monkey on June 2021, are listed below in order of importance. The main reasons behind the expressed preferences and some companies that have already allocated investment in them are also mentioned.
• Bitcoin. It is the leader in terms of market capitalization, user base, and popularity, as well as ease of use since many companies around the world accept Bitcoin as payment for sales. Tesla holds more than US$1 billion in Bitcoin. Ray Dalio, the billionaire founder of Bridgewater Associates, told news publication CoinDesk in 2021 that he owned some Bitcoin.
• Ethereum. It has improved the stability and security options it offers compared to Bitcoin. Bloomberg reported on March 2021 that some hedge funds in Europe such as the UK-based MVPQ Capital and the France-based Blocklabs Capital Management, shifted to Ethereum as a strategy to diversify portfolios, especially when Bitcoin plunged in value. Ethereum is supported by payments companies like PayPal Holdings, Inc.
• Ripple. It uses a lean mechanism for hosting transactions of its network. Ripple Labs, which created the coin, has also developed the Ripple exchange and the Ripple remittance network.
• Polkadot. It is a proof-of-stake crypto network that markets itself as a connector among public blockchain networks. Polkadot offers developers its security system for their new digital currencies, thereby making new currencies more secure. FD7 Ventures, a Dubai-based hedge fund with more than U$1 billion in assets under management, is considering to favor investments in Polkadot.
• Litecoin. It is a Bitcoin spinoff that also offers faster transactions and lower fees compared to Bitcoin on its network. Grayscale bought 80% of all Litecoin mined in February 2021, as Bitcoin and Ethereum fall in value. Grayscale is a leading firm in digital currency investment.
• Bitcoin Cash. It is a version of Bitcoin with improved scalability options, meaning transactions are faster on this network. Brian Kelly, founder of the crypto-focused investment firm BKCM LLC, has called Bitcoin Cash a must-have cryptocurrency.
• Cardano. It was developed as a spin-off of Ethereum, the second most popular cryptocurrency in the world. It is an open-source and decentralized platform and it uses a proof-of-stake method for consensus. In 2021, Dubai-based FD7 Ventures was reportedly exploring the purchase of Cardano
• Tether. It is a blockchain-based cryptocurrency whose value is tied to the US dollar, which provides it with more stability in terms of price when compared to other coins. The importance of stablecoins has been highlighted by experts like TetherTimothy Massad, a former Commodity Futures Trading Commission chief.
• Binance. Since the Binance crypto exchange is one of the largest digital exchanges in the world, the Binance Coin has become popular globally. The exchange offers trading discounts and the coin uses a blockchain-based network built on the proof-of-stake crypto mechanism. In 2021, the Binance exchange formed a partnership with Multicoin Capital, a crypto-focused hedge fund. Multipoint Capital is one of the biggest success stories of crypto that has worked with top venture capital firms like Craft Ventures, Ribbit Capital, Andreessen Horowitz, and Union Square Ventures.
• Stellar. It is a blockchain-based open network that primarily markets itself as a crypto solution for enterprise transactions. Stellar offers low transaction costs, what makes it an excellent option for cross-border crypto transactions and substitution of the traditional financial system. In 2021, Swiss fintech firm 21Shares AG said it would list the Stellar cryptocurrency on the Swiss stock exchange through an exchange-traded product with a low yearly base fee.
• A report published by AIMA, PWC, and Elwood, shows that approximately one out of five hedge funds favored investments in digital assets in 2021. Bitcoin was the most common holding among crypto hedge funds (92%). Behind Bitcoin is Ethereum (67%), Litecoin (34%), Chainlink (30%), Polkadot (28%) and Aave (27%). The report contains the results of a survey conducted in the first quarter of 2021 with 39 hedge funds that accounted for an estimated US$180 billion in Assets Under Management (AuM). The majority of responses correspond to hedge funds with assets of more than US$1 billion.
• CryptoMinati Capital, a blockchain-oriented venture capital firm, provided a list of the best cryptocurrencies to invest in. Reasons behind the selection are mentioned in each case.

•  Bitcoin. There are several reasons to choose Bitcoin. It is safe because it uses a blockchain that relies on cryptography, and it is public, what means that anybody can see it without knowing the people involved. Its increasing acceptance worldwide is a very positive driver for future growth.
•  Ethereum. It has the potential to triple in value with time and use. The value is not just about its use as a means of exchange but because of its potential for applications. Ethereum is also a blockchain, what makes it so attractive to program developers. Additionally, it is more affordable than Bitcoin.
•  Binance. Considering that the exchange is one of the most trusted globally, the coin is reliable. It is possible to trade or exchange it for other cryptocurrencies such as Ethereum or Bitcoin.
•  Cardano (ADA). It was founded by the co-founder of Ethereum so that you may find some confidence in that. Its applications are decentralized and it has the capacity to enable smart contracts.
•  SOL (Solana). This is probably the fastest platform on the market, transacting about 50,000 transactions in a second. Currently, it has more than 350 applications running on the network.

• Investor Place, an independent financial research firm, published a list of seven less popular cryptos to buy that are best-positioned to surge in 2022. They are MarketMove, Feed Every Gorilla, inSure DeFi, Internet of Energy Network, Rari Governance Token, Decentraland, and Strip Finance.
• Forbes provided the list of the top 10 cryptocurrencies according to their market capitalization (approximately figures by August 2021). They are Bitcoin (over US$1.08 trillion), Ethereum (over US$557 billion), Binance Coin (over US$104 billion), Tether (over US$73 billion), Solana (over US$64 billion), Cardano (over US$52 billion), XRP (over US$47 billion), US Dollar Coin (over US$38 billion), Polkadot (over US$37 billion), and Dogecoin (over US$28 billion).

RESEARCH STRATEGY