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Coinbase expects a "critical" 2022 for the cryptocurrency industry

CryptocurrencyJan 27, 2022 11:28
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© Reuters. - Coinbase (NASDAQ:COIN)'s institutional research team has published a report on the growth of the institutional cryptoeconomy in 2021. The report contains information on Bitcoin, Ethereum and other altcoins, as well as the performance of NFTs, DeFIs, Bitcoin exchange-traded funds, the Metaverse and developments expected in 2022.

  • The cryptoasset market has seen significant growth in 2021, especially in relation to DeFIs, NFTs and the launch of the first Bitcoin futures ETF in the US.
  • 2022 is expected to be another critical year in the development of the cryptoeconomy; including the merger of the Ethereum Mainnet with Beacon Chain

The main findings of the report are as follows:

  • Bitcoin (BTC) reached two important milestones in 2021. In February, it surpassed $1 trillion in market capitalisation. Later, in October, it surpassed $400 billion in realised capitalisation.
  • The US Securities and Exchange Commission's (SEC) approval of the first BTC futures ETF on the New York Stock Exchange helped BTC rise at the start of the fourth quarter of 2021. Trading volume rose $1 billion on its first day, expanding the scale of exposure to the cryptoasset.
  • Ethereum (ETH) made significant gains against BTC in 2021, and the ETH/BTC currency pair reached record highs in early December.
  • Network saturation and high gas rates on Ethereum have driven the rapid development of other Layer 1 (L1) blockchains in 2021 alongside Layer 2 (L2) scaling solutions.
  • The metaverse will take time to consolidate, but the move from Web 2.0 to Web 3.0 presents long-term opportunities for crypto-networks and blockchain technology. Meta's announcement sparked a rally in metaverse cryptocurrencies driven by retail and institutional investors.
  • The total value locked up in DeFi protocols has grown from about $17 billion at the beginning of the year to about $250 billion by the end of the year, according to DeFiLlama.
  • The market capitalisation of the largest stablecoin issuers grew by around 435% in 2021, from $28bn to more than $150bn, according to our Skew database, as the uses of these assets became more evident, especially among crypto natives.

David Duong, head of institutional research at Coinbase, explains: "Cryptocurrencies have come of age among experienced investors. They are now actively using them to deploy advanced trading strategies developed in established sectors.

"We are seeing firms looking to benefit from cross-currency arbitrage opportunities, DeFi-focused return exploitation strategies, and even NFT-specific funds that see the burgeoning market as a scalable trading opportunity," he adds.

Coinbase expects a "critical" 2022 for the cryptocurrency industry

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