By Michael Kamerman, Group CEO of Skilling

Cryptocurrency has been one of the hottest topics of 2021, and for good reason. With El Salvador adopting Bitcoin as legal tender, the surging number of retail traders, notable crypto-related influencer tweets and ‘meme coin mania’, crypto has been talked about in abundance. Though many don’t yet fully understand its potential, it seems incredibly likely that crypto will continue to attract more and more interest both amongst investors and across financial services.

Crypto has already influenced the finances of many, and with its prominence being likely to increase, this rise in influence and innovation within the financial sector is something we should expect.

Carving out crypto’s potential

2021 saw major financial players such as Mastercard, Morgan Stanley and BlackRock all taking a dive into the crypto world, and while some central banks such as the Bank of England are trying to find ways to regulate cryptocurrency, one of its most appealing aspects is the fact that it’s decentralised. This means we can likely anticipate more countries and financial institutions to scale up their crypto offerings as demand grows for payment systems facilitating crypto transactions. Several notable blue-chip companies such as Microsoft, Paypal and Starbucks have all started accepting payment in cryptocurrencies, reflecting how adoption is steadily increasing.

With more and more people depositing (staking) Bitcoin, Ethereum and stablecoins in crypto-specific savings accounts to generate passive income, this seems almost certain to be a trend that continues over the coming years. Covid-19 variants have impacted finances across the globe; many predict that the “side-hustle” culture that has been demonstrated in the last two years will increase appetite for utilising digital assets in 2022.

However, the fact that crypto isn’t regulated will likely also prove a challenge. Investors have been at risk of losing capital when dealing with the volatile asset but with clearer legislation and regulations being put in place by financial authorities, those who have either been sceptical or too afraid of the potential risks of crypto may consider joining in. Better risk control will also create a safer environment for crypto firms to innovate further without having to overcome numerous regulatory hurdles.

Benefitting from blockchain technology

It’s almost impossible to discuss crypto without mentioning Non-Fungible Tokens (NFTs). NFTs’ application in digital arts such as CryptoPunks and gaming has meant a recent huge pickup among celebrities and crypto enthusiasts alike. While the prices and values of these digital contracts are subject to much debate, one thing is certain, and that is that people clearly see the value in owning something in the blockchain, and this is unlikely to change anytime soon.

The gaming industry has been huge in modern times and blockchain gaming has impacted mainstream adoption of NFTs while leveling up the playing field for the industry in 2022. Play-to-earn games like Axie Infinity have shown there’s much appetite for blockchain gaming, and as more people become familiar with DeFI and NFTs, innovators will continue to find ways for crypto to grow in popularity and implementation, such as by enabling gamers to own and trade in-game assets.

Bitcoin at the helm

Cryptocurrencies of all kinds have reached incredibly high values over the past two years, but none have come close to Bitcoin. Being the first decentralised cryptocurrency, Bitcoin’s value has reached heights no other crypto has come close to, reaching a value of $60,000 per coin in 2021 alone. By comparison, Ethereum, the second biggest crypto, reached $4,000. Therefore, it seems likely that Bitcoin will remain the top crypto for some time.

While the emergence of newer coins riding social media waves and benefitting from influencer hype slightly hindered Bitcoin’s momentum, Bitcoin has become as popular as gold. Traders are continuing to use the currency as a safe hedging instrument as it hasn’t seen volatility quite as wild as some of the other cryptos available.

Bitcoin is not expected to go anywhere, meaning other cryptocurrencies are unlikely to reach the levels Bitcoin has in 2022. As it stands, Bitcoin remains the main face of cryptocurrencies and, for many novice traders, the start of the journey into the crypto world. With that in mind, it will likely also maintain its popularity with traditional finance companies and blue-chip companies.

Traders who step foot into CFD crypto trading tend to do so with the knowledge that it is a high-risk investment, which hasn’t deterred them from taking part thus far, and is sure to not stop them in the future. Through an ever-greater understanding of the capabilities of crypto, increasing interest from high-status companies and industries, sharper regulations and further innovations, a surge in the popularity of crypto is anticipated; particularly through the influence of trusted, knowledgeable brokers and trading platforms navigating necessary risk management for their customers.

Not investment advice. Past performance does not guarantee or predict future performance. 66% of retail CFD accounts lose money. Trading cryptocurrency is not available for UK retail clients.