Crypto markets morphed into something quite different in 2021. In the past few years, no one could have predicted how quickly Bitcoin tripled its all-time high (ATH) and pushed the whole market upward.
Decentralized Finance (DeFi) is another huge market we witnessed in 2021 - it grew to unimaginable proportions. In early September 2021, DeFi Pulse reported a high of $97.779 billion for DeFi protocols, but at the time of writing DeFi protocols are locked in at $88.4 billion.
DEXs (Decentralised Exchanges) (which offer decentralized trading) and emerging crypto-lending protocols have contributed to this growth. Due to the rapid growth of DeFi projects, more established cryptos were left behind. Some of these cryptos were unable to regain their 2017-2018 bull run highs, possibly suggesting that investors have lost interest in them.
Likewise, proof-of-stake cryptos seemed to be gaining in popularity over proof-of-work. A particularly relevant example is Tesla's decision to stop accepting Bitcoin as a payment method due to its energy-intensive mining process.
There was also a significant jump in interest in non-fungible tokens (NFTs) as new ecosystems competed with Ethereum.
In light of that, what can we expect from 2022?
I think we can generally expect a lot to happen in 2022, but yet, 2022 might completely defy our expectations - it might utterly blow us away or bore us to death! Here are some of the possible outcomes we could expect in 2022:
- There will likely be an increase in central bank digital currencies (CBDCs).
- A price increase in Bitcoin will likely lead to an increase in the rest of the market.
- Litecoin (LTC), Bitcoin Cash (BCH), and other transactional cryptocurrencies could lose interest as proof-of-stake cryptocurrencies become less appealing.
- Institutional interest and growth are likely to continue at DeFi.
- Regulators may take particular aim at DeFi protocols in 2022 because of how much the market has grown in 2021.
- The popularity of NFTs will increase - more artists may be involved.
In this article, we will examine the top 3 cryptocurrencies due to exploding in 2022, why they will explode, and how much a wise investor should invest in them.
What Three of The Best Cryptocurrencies To Explode in 2022?
Here’s our list!
1. Ethereum (ETH)
A second-most popular cryptocurrency might be able to steal the spotlight from Bitcoin in 2022.
Why Ethereum Might Explode In 2022?
It's probably no secret to you that Ethereum is moving to PoS (proof-of-stake). Many people believed that this had been accomplished by December 2020, but it was just the beginning of the process.
In other words, changing to PoS does not happen as easily as flipping a switch. Thus, despite the fact that the transition was supposed to be complete by 2021, it is likely to be completed by early 2022 (optimistically).
This isn't all. Ethereum has been the cradle of literally thousands of crypto projects, spawning and nurturing them. On Ethereum's network, there are at least 200,000 ERC-20 compatible tokens according to Investopedia as of October 2019.
If you're thinking about investing in Ethereum, you should be aware of the DeFi projects on top of it, many of which are booming and may lift Ethereum demand as well.
Experts believe Ethereum will even surpass Bitcoin in the near future, and they are so bullish about this technology. The CEO of the deVere Group, Nigel Green, told The Telegraph in August 2021 that he believes Ethereum will outperform Bitcoin in the remainder of 2021, and that its value will surpass BTC in five years (2026). He added:
“First, Ether has a higher level of real-use potential as Ethereum — the platform on which it is the native cryptocurrency — is the most in-demand development platform for smart contracts, thereby highlighting that network’s value not only as a platform for developers but as a worldwide financial utility”.
Also, Connor Brooke of Economy Watch has projected that by the start of 2022, Ethereum will be worth around $5,000 per coin, saying:
“The momentum the crypto has, plus the incredible technology, mean this level is certainly likely in the near future”.
What is the best investment for Ethereum in 2022?
A Forbes article says that billionaire investor Mark Cuban owns 30% of his crypto investments in ETH (half what he owns in BTC). Experienced investors may be open to investing in Ethereum a larger amount than they would with other cryptocurrencies, which is insightful.
Cuban follows a similar trend by investing 30% of his cryptocurrencies in Ethereum too - if their comfort level allows them to do so.
Ethereum does not have a maximum supply, meaning more ETH can simply be created, which also means it is harder to predict how much Ethereum investors will need to earn high returns. Many other cryptos are characterized by scarcity, but this one does not.
Tom Holland of Coinmonks claims that you could become an ‘Ethereum millionaire’ if you invested $250,000 or if you invested $25,000 when Eth reaches $10k per coin.
However, for most investors, this is a large amount of money - and although you could apply the same logic to investing $2,500, achieving millionaire status will likely take longer.
Several Reddit posts claim the average Ether investor owns a few tokens at most, probably between one and four (and that might be considered doing quite well).
2. Bitcoin (BTC)
It's often called the only real crypto investment, as it's must-have crypto. In the words of Kevin O'Leary from Shark Tank: "[SIC] The institutional are interested in Bitcoin.". It's considered to be the gold standard of digital currencies. There are many reasons as to why this is so. It simply cannot be replaced by anything else". To sum it up, it's digital gold.
Why Bitcoin Might Explode In 2022?
It's true, institutions continue to invest in Bitcoin and create new investment products that allow investors to gain exposure to Bitcoin without actually owning it. Therefore, this will only ever boost the price of bitcoin since there will be a much larger demand for it.
Due to its popularity and institutional investment, bitcoin is also the least risky investment on this list. In an FCA survey, 82% of UK respondents knew of Bitcoin in 2021, making it the most recognizable cryptocurrency in the UK.
If Crypto.com's report is accurate, 46 million Americans own BTC (almost half of all cryptocurrency users), and there are expected to be 106 million cryptocurrency users worldwide by January 2021.
As a result, Bitcoin is less susceptible to the movements of big investors (whales), which makes smaller cap cryptocurrencies more volatile. Moreover, due to its high liquidity, it offers the most potential for profit.
In addition, a cryptocurrency's adoption is often cited as a major factor that boosts its price, and BTC is being adopted at an accelerating rate.
A final bullish push would have to occur towards the end of 2021 for BTC to breach its current ATH of $64,863.10 by 2022, as predicted by Connor Brooke of Economy Watch. A cryptocurrency research group from Standard Chartered predicted that BTC could be worth $100,000 in early 2022 and "as much as $175,000 in the longer run", according to Reuters.
Tim Draper, an influential venture capitalist who is worth $2 billion, predicts that Bitcoin will be worth $250,000. Draper has generally been accurate with his predictions in the past. A year earlier, he predicted that bitcoin would trade at $10k per coin, a prediction that came true (albeit briefly) in 2017.
What are the best investments for Bitcoin in 2022?
Mark Cuban owns double the number of bitcoins he owns than he does in ethereum, according to the Forbes article linked above. Since Bitcoin is the rock that shakes the crypto market when it moves, this is a very wise decision.
Perhaps half of cryptocurrency investors' funds should be set aside for BTC following Cuban's example. However, investors should only feel comfortable with that if they want it.
3. Uniswap (UNI)
The top DEX to watch in 2022 is UniSwap. Not only could it substantially damage centralized exchanges, such as Binance, but it could also have a major impact upon market makers, particularly those who profit from fulfilling trades.
Why Uniswap Might Explode In 2022?
According to CoinMarketCap, UniSwap is the second-largest DEX project in terms of market cap, and according to DeFi Pulse, it is the second-largest DEX project when it comes to total value locked. Uniswap currently ranks 12th by market cap in 2021, making it into the top 10 cryptos for the first time.
There are several exchanges that offer similar features, but Uniswap is expanding into tokenization of assets, such as stocks or almost anything else. They even created 'Token Lists' to enable them to filter out the different assets, due to how many assets have been tokenized on Uniswap.
Furthermore, Uniswap operates liquidity pools in which investors pool their assets and earn transaction fees through smart contracts on the Ethereum blockchain. This all appeals to investors, especially because the DeFi market is growing exponentially.
It is, however, the emergence of big-name investors that will lead to Uniswap exploding in 2022. Recent reports from Arijit Sarkar of Cointelegraph indicate that Grayscale Investments recently added UNI to its 'Digital Large Cap Fund' portfolio as of October 2021, reducing its holdings in LTC and BCH.
Lastly, Jonathan Scott from Blockster explains:
“With the regulatory woes facing centralized exchanges, the demand for DEXs is expected to increase, which could trigger Uniswap’s growth in 2022”.
This is, in fact, true. Among the world's largest crypto exchanges, Binance has had trouble with regulators in the 21st century. Uniswap is one DEX that may be able to attract more crypto traders.
How Much to Invest Uniswap In 2022?
Uniswap does not qualify as Ethereum or Bitcoin, so following Mark Cuban's example, investing less than 10% of your portfolio could be wise - any more could be risky.
UNI also fits in with Mark Cuban's crypto portfolio, so investors should consider investing approximately 1% of their portfolios in it as Grayscale did.
Investing roughly 60% in cryptocurrencies, 30% in ether, and 1% in Uniswap, as demonstrated by Mark Cuban and Grayscale, would leave investors with 9% remaining in their portfolios.
Now, investors must think carefully about what other altcoins should fill that void, and if it would be wise to invest in other DeFi projects – specifically DEX – or invest in very different cryptocurrencies to ensure diversification. This may make it a better idea to invest less than 1% of your portfolio in UNI.