The cryptosphere is yet to initiate its bullish move for the year, which partisans of the fraternity are optimistic to materialize shortly. Folks from the business have been nostalgic of the events from 2021, which are now down the memory lane. However, the current year could possibly follow the footsteps of 2021.
In a surfeit of events, traders are trying to connect dots of 2022. However, we can expect major changes in the industry in the midst of burdening inflation rates, and the strength of the dollar. Which could pave way for necessary amendments, that could be a game changer for the entire industry. Wherefore, traders are also expecting DeFi’s emerging out of the blues.
The Game Play For 2022?
Economies around the world are crumbling gradually in view of growing inflation numbers. Although the crypto industry is regarded as a hedge against inflation, the space has been facing the heat. Wherefore, inflation takes forms either from protocol level of issuance from staking or block rewards like BTC and other PoW coins.
Although BTC and ETH have non-zero daily issuance rate, and tally to the bulk of new supply in terms of dollars. The demand has been on the higher side off-late. Staking and inflation have been inherent in the crypto industry, because of which the imbalance in demand and supply is cyclic. Since the market is dominated by retailers, the imbalance is heavier on the demand front.
With diverse interests sprouting, the previous year has been generous to newer protocols and sectors. Other layer-1 and layer-2 protocols have emerged from the shadows, alongside metaverse, NFTs, and gaming. As a result, we can spectate an increase in cash flow towards other protocols. However, big money would restrict flowing into riskier projects.
Regulatory bodies could follow the asset class, stable coins in particular. As governing authorities from the U.S have been keen on stable coins.
A positive clarity with regulatory norms would further embrace widespread adoptions. However, the norms could be a concern for derivatives trading. Which will be a stimulant for the rise of DeFi sector, with an increase in traffic influx.
Collectively, the brawl of layer-1’s would continue alongside sprouting layer-2 protocols. However, the dominance of layer-1 protocols will be at par against the latter.
Since numerous projects have been eliminating the need for layer-2 projects. Although blunder’s in trading have slowed down Bitcoin’s pace towards $100k. We can expect the star crypto reinitiating its bullish run post the correction phase.