The cryptocurrency market has become an exciting space to watch, with experts recording an estimate of more than 9,000 cryptocurrencies in existence today. Even so, the involvement of technology and industrialization has made some digital currencies, like Bitcoin, gain the upper hand over others.
Currently, the cryptocurrency market holds a market cap of $117 trillion and about 320 million global crypto users. Let’s look at the top trends driving cryptocurrency and those that will most likely continue through the coming years.
Rise in Bitcoin Prices
Even though investors had started losing faith in crypto markets due to the collapse of FTX and a string of crypto-related bankruptcies, there is a second wind in bitcoin prices. Several traditional financial firms, including Fidelity Investments, Blackrock, and Invesco, have been increasing their applications for spot bitcoin exchange-traded funds (ETFs).
Thanks to its multi-year bull run, Bitcoin is set to achieve a new all-time high north of about $120,000. The primary contributing factors to this crypto asset’s bull market are a troubled bond market and consistently high inflation levels. In addition, more investors prefer to stick with Bitcoin instead of having a different set of crypto assets. Take advantage of this to benefit from the enticing BTC to USD exchange rates.
Regulatory Developments
The U.S. Securities and Exchange Commission (SEC) is not dropping its guard concerning cryptocurrency operations. In fact, the body continues to crack down on numerous popular cryptocurrency firms, like Binance. The contention is that the SEC regards non-bitcoin cryptocurrency assets as securities. Therefore, the body proceeds to act against crypto platforms by accusing them of selling unregistered securities.
Generally, the global cryptocurrency industry will continue to face precise regulation. Lawmakers in various U.S. states and beyond are setting up guidelines and rules to secure crypto trade for investors. The move also aims to deter cybercriminals and other theft activities.
Effect of U.S. Recession on Crypto
Any possible U.S. recession can significantly impact the crypto asset prices as well as the demand for high-risk assets. Considering that many view crypto as a decentralized digital safe haven, the recession may appear bullish for crypto if its cause is poor government policy. Even though crypto might have some potential utility in those countries that face heavily depreciating currencies, no conclusive data exists to show if crypto can serve as a helpful hedge against inflation.
The NFT Market Is Set for Continual Growth
Non-fungible tokens (NFTs) continue to increase in popularity due to their easy access to benefits. NTFs allow you to benefit from decentralized financing options, especially for creators and artists. They get financing freedom for their creations. Since NFTs rely on blockchain technology, they provide security to users and enable them to authenticate digital asset ownership. Experts project that the crypto industry will deal with the rise in the NFT market valuation.
More Dynamic Corporate Crypto Use Cases and Features
There is an increasing number of organizations adopting the use of cryptocurrencies. Thanks to dynamic use cases such as metaverse and NFTs, behemoth brands like Google, Microsoft, Apple, and Disney have joined the metaverse space. The initiation of a blockchain-based project, dubbed Virtual Office, will add more dynamism to corporate interaction. Experts look forward to growth in corporate ventures’ interest as it will enable more crypto use cases to get to light.
Surge in Layer 2 Smart Contracts
One of the trends that is steadily gaining traction is layer 2 smart contracts. For instance, Ethereum and Bitcoin are part of Layer 1 cryptocurrencies since they come with their settlement layer. The only problem is that you can not scale Layer 1 blockchain networks. Industry experts have developed Layer 2 smart contracts to attain greater scalability and mainstream cryptocurrency adoption. That’s because they facilitate cryptocurrencies’ indefinite scaling.
Crypto’s Growing Climate Impact
Crypto’s climate and energy change implications is a lesser known, though potentially pressing trend in the industry. A White House news release states that crypto assets production consumes about 120 to 240 billion kW of electricity hours yearly. The figures exceed Australia’s or Argentina’s cumulative yearly electricity usage.
The Cryptocurrency mining process has a step called Proof of Work, which requires high computing power levels for miners to send new blocks to the network. Ethereum developed The Merge, a software upgrade for reducing energy use by substituting proof of work with proof of stake.
According to an analysis report by the Crypto Ratings Institute, Ethereum’s software upgrade would lower its electricity use to 2,600 MV-hours per year. While carbon emissions remain a challenge in crypto mining, blockchain networks are working on using more eco-friendly consensus mechanisms to adopt green energy.
Cryptocurrency is an emerging technology set to undergo an extensive range of changes. Ensure you keep up with all the latest trends, as they will give you valuable insights into the best tradable currency pairs and investment options.