The year 2021 was a great year for crypto, taking over the headlines. Despite a few corrections and a massive meltdown in May, there were lots of gains for investors all across the board, as Bitcoin and many other cryptocurrencies managed to hit fresh all time highs in November. The total crypto market cap peaked at 3 trillion dollars in November and then slipped back towards 2.5 trillion dollars in December as the market experienced another correction.

An attentive observer could notice that there have been particular sectors of the market that have vastly outperformed the sectors as a whole in particular seasons. For example an explosion of the DeFi sector, or a boom in the NFT world. There was even a memecoin season, when tokens without real utilities such as Shiba Inu rocketed 44,540,000% from the start of a year at a time.

One can notice that to secure the highest gains and maximize returns, you had to identify

and exploit the hot-ball-of-money rotations between assets at least a few times. What is more is that the seasons lasted for a few months, which means that you didn’t need to be early, but only to make sure you don’t get caught in greed and exit positions before another rotation. There were plenty of people able to spot a trend, jump in, jump out with decent profits and move on.

This blog covers what trends we anticipate will be a hot topic in the year ahead, so you can more easily predict what sectors will be booming and adjust your exposure accordingly. Are you ready? Let’s get right into it. 

Metaverse projects will continue increasing in value

Prices for metaverse-related cryptocurrencies like Decentraland’s MANA, THETA, ENJ, as well as AXS and SAND, rallied strongly in late November, even as coins including Bitcoin and Ethereum retraced from their highs  and we believe that this strength is about to continue in 2022. Many technology companies and brands, such as Facebook (now known as Meta) embraced metaverse in 2021. 

The metaverse trend could take off once again in 2022, since many companies are going to start implementing the recent ideas in practice and actually delivering numerous use cases to the general public. For example Microsoft is planning a workplace service called Mesh, where people would interact through their digital avatars, which poses a getaway into the metaverse. Additionally virtual reality headsets will allow users to control their avatars and the way they interact in the metaverse, which will create opportunities for brands to expand their advertising since more and more people will be present in these digital worlds.

On top of that many other industries will move into the metaverse as well. Everything from testing different gadgets in the virtual world before actually producing them, to exploring your future house through a digital reality headset, so you can further adapt it according to your needs before proceeding with construction. 

Play-to-earn games are going to be in great demand 

The growth of the metaverse in 2022 is also set to drive growth of in-game metaverses. Gaming cryptocurrencies such as Alien Worlds or Axie Infinity are steadily introducing crypto into the public and increasing access to DeFi and NFT.

According to the findings from a Coinlist poll, the interface between DeFi and gaming will continue to gain momentum in 2022, and game-oriented platforms will become more and more important. Gamers will be able to own in-game assets and exchange them on secondary marketplaces thanks to blockchain technology. As a result, these ecosystems are not only projected to witness significant advancements in the coming year, but also gain more and more users. As the number of players of these games grows, demand for the tokens used for buying, selling and earning increases as well, which will result in appreciation of prices on exchanges.

Web3 to decentralise the Internet

Web3 refers to the next generation of the internet, which will incorporate decentralization based on blockchains. While the first version of the Internet revolutionized information availability, the current, second generation of the World Wide Web transformed digital interactions with the rise of social media platforms, as people could interact with colleagues from the other side of the globe in real time.

Thirty years into mass adoption of the internet and data architectures are still based on the client-server concept, where data is centrally stored and managed on a server, and sent or retrieved by a client. Every time we interact over the Internet, copies of our data get sent to the server of a service provider, who leverages our data for tailored advertising.

Contrarily, Web3 promises to return control of personal data to the individual through the use of decentralised applications that will reward users for their attention with crypto tokens. In addition to that, staking cryptocurrency tokens will give users the right to vote on governance issues and participate in decentralised autonomous organisations (DAOs), which are already taking place. This means that tokens of crypto projects directly involved in decentralization of the internet will probably be sought-after, as investors will start pricing in the fundamentals.

NFTs and tokenisation of real-world assets

Collectible NFTs became a hot topic in 2021, with digital artwork collections such as CryptoPunks skyrocketing on the secondary resale markets. They have become popular among investors looking to profit from future sales, a trend that is expected to continue in 2022.

But it doesn’t stop at the current use case of determining ownership of a digital property, as non-fungible tokens have a potential to be used to tokenize real-world assets, such as real estate or physical artwork, both for sales and purchases, as well as used as collateral for loans. With such groundbreaking progress on the horizon, we could easily witness another NFTs season in 2022.

ETH may outperform BTC

Last, but not least, it should be noted that many analysts predict Ethereum to outperform Bitcoin in 2022, just like it did in 2021, gaining 439% compared to 69% for Bitcoin. While Bitcoin’s focal point is being a store of value, Ethereum is focused on DeFi. Today, the Ethereum blockchain is the most popular in the world and serves as layer 1 for numerous DeFi protocols or NFTs projects.

Moreover, Ethereum kicked off the rapid development in one space where cryptocurrencies are gaining hold (in the metaverse, with NFTs, and with other real-world applications) because its blockchain enables smart contracts. All these sectors, along with Decentralized Autonomous Organizations (DAOs) have been already booming in 2021 and they’re likely to gain steam in 2022 as well. In contrast Bitcoin, despite gaining widespread adoption as investment, hasn’t yet been adopted as a digital currency, since only 1 out of every 10,000 businesses in the world accepts it as a payment option, meaning that there’s a long way to go - and much of that ground could be covered in 2022.