News: Crypto Had a Huge 2021. Will 2022 Bring Even More Good News?
Cryptocurrency has made many waves in the past year, but will it continue its boom in 2022?
Contributing Writer at Tally
January 21, 2022
In 2021, cryptocurrency spent a lot of time in the news. On top of the rollercoaster ride that was Bitcoin’s value, it also became a legal tender in one country and saw a mass influx of investment from venture capitalists.
Will it continue its expansion in 2022? Below, we explore this possibility and round up some of the top cryptocurrency news stories from 2021.
2021 crypto news in review
There was no shortage of news about cryptocurrency in 2021. These are the top stories for the year.
Bitcoin became El Salvador’s legal currency
The Central American country of El Salvador became the first to make a cryptocurrency its legal tender. Bitcoin is now officially a legal tender in the Land of Volcanoes, which could set the wheels in motion for other countries to wade in the crypto pool as a currency alternative. This is especially possible in countries with red-hot inflation issues.
El Salvador citizens haven’t immediately shifted to cryptocurrency. Still, things are taking shape as the country has given every citizen access to a Chivo crypto wallet and $30 in Bitcoin for signing up. Plus, President Nayib Bukele has vowed to fix the country's ongoing internet issues.
While more developed countries see crypto’s instability and lack of regulation as deal-breaking issues, countries with inflation could see the positives outweigh the negatives.
2021 was the year of crypto for venture capitalists
In 2021, venture capitalists (VCs) pumped about $30 billion into backing cryptocurrency ventures. That was more than VCs have put behind crypto in its 10-year history. That’s over four times the amount VCs invested into crypto in its biggest VC-backed year, which was when VCs poured $8 billion into it in 2018.
Financial institutions jump on the cryptocurrency bandwagon
Banks are often wary of change, but with the quick rise of crypto in 2021, financial giants like Mastercard and the Bank of New York Mellon began offering clients crypto-related services. These services range from crypto custody to accepting and facilitating crypto payments.
The fifth-largest commercial financial entity in the U.S., U.S. Bank, also began offering clients fully functional crypto custody services, including storing private Bitcoin, Bitcoin Cash and Litecoin keys.
What 2022 holds for cryptocurrency
2021 was a huge year for cryptocurrency, particularly Bitcoin. Will 2022 continue this trend? Here are some predictions and possibilities.
Wall Street may cozy up to crypto
When hedge funds get into a new investment space, It can signal stability or safety. Cryptocurrency has been a constant source of debate within this space, but with regulations looming and secure crypto storage solutions rolling out, hedge fund managers plan to add crypto to their portfolios soon.
An EY survey indicates about one-third of hedge fund managers plan to bolster their portfolios with crypto soon. These include high-profile hedge funds, such as Brevan Howard Asset Management. In September, this fund announced a new unit solely focused on managing crypto and digital assets.
Cleaning up of regulatory issues holding crypto back
Crypto is held back mostly by the lack of consistent regulation in the U.S. However, things are progressing more smoothly than expected.
When asked about congressional hearings on crypto regulation, Sam Bankman-Fried, founder and chief executive officer of the cryptocurrency exchange FTX, said:
“The questions were better and more informed than I was expecting. I also think that they were more balanced. I was expecting there to be more grandstanding and I was just pleasantly surprised in general. Congress has done a really good job of starting to get up to speed on digital assets. And I think that they showed a lot of eagerness to continue learning.”
This is a sign Congress may iron out some of these details soon — potentially even in 2022.
Only time will tell if a crypto boom is coming in 2022
While 2021 pointed crypto in the right direction and experts can see a continued boom coming in 2022, investors should remain conservative and see how things progress. Much of crypto’s growth hinges on a smoothing of regulations, requiring Congress to agree on many things, which may create a bottleneck.