Several notable advancements in cryptocurrency occurred in the year 2021. Many people have turned to crypto trading for the first time during the pandemic with so much free time.

Bitcoin has experienced many new all-time high values and greater institutional buy-in from prominent corporations. Ethereum, the second-largest cryptocurrency, has also recently surpassed an all-time high. New bitcoin regulations have caught the interest of government officials in the United States, as well as the Biden administration.

Meanwhile, interest in cryptocurrency has soared this year, making it a popular topic among investors and in popular culture, owing to everyone from long-time investors like Elon Musk to high school students.

As institutional money enters the market, several economists foresee a significant shift in crypto.

Some believe that all cryptocurrency needs is a validated exchange-traded fund (ETF). Although an ETF would make it easier for consumers to invest in Bitcoin, there must still be a demand for cryptocurrency, which may not be generated automatically by a fund.

According to analysts, the global cryptocurrency industry would more than triple in value by 2030, reaching roughly $5 billion. Investors, businesses, and brands can’t ignore the growing wave of crypto for long, whether they want it or not.

Compared to 2018, older customers have started to invest in cryptocurrency at a considerably higher rate. Consumers over 35 years old account for nearly half (47 percent) of those who plan to invest in bitcoin in the next six months in the United States.

We predict cryptocurrencies will gain traction in three areas over the next few years: wider adoption of Bitcoin as a payment method, higher regulatory scrutiny, and increased NFT activity.


Bitcoin’s Future Prospects

There’s more activity in online groups like Twitter and Reddit, where even crypto newbies may share information with seasoned investors for word-of-mouth price predictions and trading methods.

There has been an explosion of new crypto-exchanges — or trading platforms where one can exchange fiat cash for crypto — as well as significant investments in existing exchanges’ technological infrastructure. Institutional investors are becoming more interested in crypto markets due to these infrastructure expenditures.

Crypto enthusiasts are unanimous in their belief that the total market capitalization of cryptocurrencies will skyrocket in the next five years, climbing to $5-10 trillion.

Cryptocurrency Regulation

Expect to hear more about bitcoin legislation in the future. Lawmakers in Washington, D.C., and worldwide are trying to find out how to make cryptocurrency safer for investors and less appealing to hackers by enacting regulations and guidelines.

One of the most significant overhangs in the crypto business is regulation. Researchers have identified a lack of law as a fundamental impediment to crypto adoption in the mainstream. Increased government control, combined with numerous countries’ consideration of digital versions of their national currencies, will certainly result in a surge in regulatory action in 2022.

Recently proposed legislation could make it easier for the IRS to track down crypto tax avoidance examples; however, investors should already keep track of any capital gains or losses on their crypto holdings. However, the new laws may make it easier for investors to disclose cryptocurrency transactions correctly.

In already volatile markets, regulatory news might affect bitcoin prices. Because of market volatility, experts advise keeping cryptocurrency investments to less than 5% of your whole portfolio and never investing money you can’t afford to lose.

Many industry professionals agree that regulation is beneficial. It increases people’s trust in cryptocurrency, but we must take our time and get it right.

Some of the current restrictions of cryptocurrencies, such as the fact that a computer crash can wipe one’s digital fortune or a virtual vault can be looted by a hacker, may be addressed in the future thanks to technological advancements. What will be more challenging to overcome is the underlying paradox that bedevils cryptocurrencies: the more popular they become, the more regulation and government scrutiny they will face, eroding the core assumption for their existence.

A cryptocurrency that wants to join the mainstream financial system may have to meet various requirements. It would have to be mathematically complex (to avoid fraud and hacker attacks) but simple to understand for consumers; decentralized but with adequate consumer safeguards and protection; and maintain user anonymity without serving as a conduit for tax evasion, money laundering, and other criminal activities.

For more information about Cryptocurrency advisory, feel free to contact us.

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