eToro's 5 Crypto Trends to Watch in 2022

The year 2021 was one of epic growth for crypto assets.

We watched the market mature significantly as concepts like non-fungible tokens (NFTs) and the metaverse gained traction, while authorities grappled with the asset class's expanding position in the global economy.

More fast change is likely in the next year, with the crypto market reaching maturity in the face of a shifting macro environment and skyrocketing inflation rates. Here are five short trends to keep an eye on as we approach 2022.

• NFTs go beyond JPEGs

Non-fungible tokens (NFTs) will enter the mainstream market in 2021. Brands ranging from Adidas to Budweiser and Pepsi to Warner Bros released collections, sports enthusiasts flocked to purchase tokenized cards for their favorite teams on platforms such as Chili, and premium fashion businesses such as Givenchy dropped tokens to increase exclusivity.

All of this revealed the revolutionary potential of the “NFT,” which was named the year's term by Collin's Dictionary.

As we approach 2022, NFTs will be more than simply collectable JPEGs. TikTok has published hot videos as NFTs, and a varied spectrum of enterprises are beginning to utilize the unique tokens to fuel dramatic change in how goods are financed, licensed, and marketed.

• Blockchain games and the metaverse are exploding.

In 2021, a younger, quicker generation of blockchains, such as Solana, emerged, providing the high performance required for complex blockchain-based games.

Meanwhile, the first crypto games have made a tremendous splash. With play-to-earn mechanisms, Axie Infinity attracted nearly 2 million daily users, and investment poured into metaverse projects from all angles: Facebook rebranded to Meta, and tech titans Microsoft and Amazon dipped their toes in, while venture capitalists committed billions to make the metaverse a reality.

This market segment is poised to enter the mainstream by 2022. All we need now is the trigger of a high-quality game or social network that can attract a larger audience than simply crypto aficionados.

• Layer 2s take the show.

The popularity of decentralized finance (Defi) and NFTs has resulted in bottlenecks on Ethereum, with network fees reaching all-time highs.

Against this context, Layer 2 scaling solutions such as Polygon (MATIC) have seen explosive growth by providing quicker speeds and reduced costs while maintaining decentralization and security.

This trend is expected to pick more steam in 2022, fueled by new cryptographic breakthroughs such as Optimistic Rollups and Zero-Knowledge Rollups, which are now ready for use after years of research.

• Crypto payments have entered the mainstream.

2021 shown that payment companies regard cryptocurrency as an opportunity rather than a threat: Visa started a crypto advisory service, Mastercard added crypto support, and WhatsApp began testing crypto payments through the Novi wallet.

Governments, too, have seen the promise of cryptocurrency payments. El Salvador claimed to save $400 million per year in Western Union costs by adopting Bitcoin remittances, while Myanmar's alternative government recognized Tether as an official currency.

These occurrences may be the first indications of a worldwide shift in payments and remittances, which is expected to gain traction in 2022 as more firms understand that money can be transmitted rapidly and cheaply – as simply as sending an email.

• Enhanced regulatory oversight

Authorities across the globe are rushing to implement regulatory frameworks, with former blockchain professor Gary Gensler heading the effort at the US Securities and Exchange Commission (SEC).

Regulators in the United States are proposing a “crypto sprint” to fast bring the sector into line, while the European Union's (EU) planned regulatory framework — Markets in Crypto Assets (MiCA) — is close to becoming legislation across the Atlantic.

This activity will almost certainly bring more scrutiny to the digital asset ecosystem than ever before, but if the approval of multiple Bitcoin ETFs around the world and the positive outcome of the recent US congressional crypto hearing are any indication, 2022 could be the year when regulators cautiously embrace crypto assets.

On eToro, you can stay ahead of these trends.