Crypto trading has been surfing turbulent waters since the beginning of the conflict in the Ukraine.
Initially, cryptocurrencies tumbled, but then they seemed to be viewed as safe havens by many traders concerned about global economic instability, namely the war in Ukraine. Bitcoin found itself at $43,870 on March 2nd, having reclaimed about 16% of its value in two days. Trading volume in Bitcoin spiked in Russia at this time, as Russians strove to protect their savings, denominated in the embattled rouble, by converting them into digital currency. However, it may be too early to seriously consider cryptos safe havens according to analysts like David Mercer of LMAX Group, who warned, “Certainly, there’s been some buying interest in Bitcoin, but I don’t think it’s significant enough to be moving from S&P to Bitcoin just because of the invasion.”
Indeed, by the first week of March, Bitcoin slumped below $38,000, just as other markets followed when the prices of commodities skyrocketed. Bitcoin was down 4.8% on March 7th; Ether was down 7%; Solana, Cardano and Avalanche also tumbled. Bitcoin was behaving in line with the two big market indices, the S&P 500 and the Nasdaq 100, rather than as a safe haven. Edward Moya of Oanda suggested “Bitcoin’s broadening formation could see selling pressure look to test the $37,000 area.” As the real status of Bitcoin in traders’ minds slowly crystallizes, and as US President Joe Biden develops his approach to the security risks of cryptos, let’s look at what might be on the horizon for crypto trading this year.
Crypto Start-ups
Microsoft helped raise $27 million late last year for the crypto start-up Palm NFT Studio, which allows artists to create their own NFT marketplaces. Joseph Lubin, a co-founder of Palm NFT, was also a co-founder of Ethereum and intends to use the new funds to hire talented staff and improve research. As NFTs may continue their run of popularity into 2022, this platform may be one to keep an eye on.
Immutable, an Australian start-up, raised a hefty $200 million in March of this year, bringing their total value to $2.5 billion. “We’re excited to raise this capital so we can help deploy it aggressively through M&A opportunities”, announced co-founder Robbie Ferguson. The uniqueness of Immutable lies in its power to facilitate NFT games, where rewards can be earned and trading can be done with NFT cards. In February, they joined up with GameStop to set up an NFT marketplace, as well as a fund of $100 million to nurture the creation of NFT content in Web3 and the metaverse. Immutable X is a platform that makes crypto transactions happen even more quickly than Ethereum, according to its owners, and with low environmental impact.
In the second week of March, a new crypto currency called MetaGold Rewards had watched its value grow by an eyebrow-raising 13,119% in the first 15 days of its existence. CEO Michael Bolduc feels his crypto is unique. “Whenever someone buys or sells the coin, MetaGold investors earn money from it”, he explains. Owners of this coin receive daily payments. After being listed on crypto exchange Coin Market Cap, MetaGold took over 11th spot on the exchange’s Top Gainer’s List within a day.
Crypto Trends
In 2021, Axie Infinity were the pioneers in blockchain play-to-earn games, producing impressive graphics to entice users. These kinds of games allow people to earn tokens through playing, which they can then trade in for money at a crypto trading exchange. Their popularity has been growing and may continue to do so in 2022. Also, as the metaverse continues to develop, cryptocurrency is likely to become the accepted way to pay for things in the virtual world, which could open up new doors going forward.
Web3 is a technology with many possibilities which is still being developed and provides a space where people get rewards for, among other things, building communities. 2022 may see new things come out of Web3, so keep an eye on it. Meta-owned messaging app WhatsApp has been working on the possibility of allowing users to send crypto payments the same way as photos, which holds the potential to open up crypto adoption to an even broader customer base on the social media spectrum, but these are still early days.
Peering into 2022
Crypto trading may attract a lot more interest on the part of institutions in 2022, judging from the $30 billion venture capital firms put into the crypto market last year. Official regulations, which are in the process of being clarified right now, might have the effect of strengthening cryptos’ reputation as a class of assets for traders. And after the first Bitcoin futures ETF was born in 2021, crypto enthusiasts are hoping the US Securities and Exchange Commission allows the formation of a spot ETF where traders can buy and sell Bitcoin itself, rather than Bitcoin derivatives. In the meanwhile, the ongoing conflict in Eastern Europe continues to influence traders’ attitudes to all financial instruments, including cryptos. For those who trade cryptos as CFDs, keep an eye on the news in the coming weeks to get a better idea of the volatility that is to come.