Cryptocurrency is now a $2.5 trillion industry, after surging 233% this past year alone. There are many trends that helped propel the crypto sphere throughout 2021 … now investors are wondering what course crypto will chart in 2022.
Anticipating that course and monitoring the market’s pulse is the passion of analyst Alex Benfield, this week’s interviewee.
Weiss Ratings Financial News Anchor Jessica Borg has more ... you can watch the video segment or continue reading for the full transcript.
Jessica Borg (narration): Yes, crypto has had its ups and downs this year…but that’s what crypto does best — creating unmatched profit potential.
JB: So Alex, as 2021 comes to a close, what is your assessment of the crypto space right now?
Alex Benfield: 2021 was a pretty good year and bull market for almost all cryptocurrencies. We’ve definitely seen a lot more adoption of Bitcoin (BTC) over the last year.
We have seen institutions buy in, so now there’s a lot more hedge fund and venture capital activity going on in the cryptocurrency space.
JB (narration): Analyst Alex Benfield,contributor to Weiss Crypto Portfolio, says there’s one thing that he didn’t see.
AB: We didn’t really get this huge burst of retail volume we saw in the 2017 bull market.
Typically, every crypto bull market ends with a blow-off top, and that’s when a bunch of retailers gets in very quickly and buys up … the price goes up and they sell because the price went up and there we have our blow-off top.
But we haven’t seen that yet.
It’s something that makes me think that perhaps the bull market will spill over into 2022.
JB (narration): Maybe into the second quarter.
JB: So, this is the burning question for many investors — where do you see Bitcoin at the end of this bull market?
AB: I still think six-figure Bitcoin is possible. Anything after that is just like gravy on top.
At some point here in the next six months, we’re probably going to enter a bear market for Bitcoin. But all that means is just some short-term bearishness on Bitcoin before it continues to resume its long-term growth.
JB (narration): Bitcoin reached an all-time high of nearly $68,000 last month but has since fallen.
JB: So, Bitcoin is increasingly viewed as a store of value. With that in mind, is it bound to have a different role in the near future?
AB: It’s very possible that Bitcoin loses its number-one status within the next year.
At the end of the day, Bitcoin is supposed to be a store of value, so does it need to be the biggest gainer in the cryptocurrency landscape? I don’t really think so.
JB (narration): Alex says Ethereum (ETH) will likely take the number-one slot.
AB: Ethereum is leading the market, showing tremendous strength in the face of some weakness from Bitcoin.
JB (narration): It’s holding steady in the $4,000 range.
AB: Right now, the number to hit for Ethereum is somewhere around $7,500, per ETH.
And if it hits that number, it will overtake Bitcoin as the number-one asset by market cap, and we’re really not that far off.
JB (narration): The Ethereum blockchain — known for its security — is the most popular network for smart contracts, which are used for sectors like yield-farming, non-fungible tokens (NFTs) and gaming.
JB: And you believe that smart contract protocols will keep expanding and expanding?
AB: You’re going to see each smart contract protocol value certain things differently. So, Ethereum clearly values security the most … but for gaming, I don’t need my transactions to be extremely secure, I need them to be fast.
Even for virtual reality, you don’t necessarily need superspeed for that, but you need it to be cheap.
JB (narration): Protocols on Ethereum, Polygon (MATIC), Solana (SOL) and others will continue to improve.
AB: These smart contract protocols are going to cater to different applications. It’s just what makes sense. You can’t really have just one smart contract protocol to fulfill the needs and obligations of all these different uses.
JB (narration): So, tailor your investment strategy to that trend.
AB: I think you should invest in a smart contract protocol *sector* of the market.
It’s better to diversify and invest in that smart contract protocol sector, as opposed to banking on one or two protocols being the big winners.
JB (narration): Specific sectors include NFT art or the metaverse, which are becoming more mainstream and leading to investment opportunities.
Facebook just changing its name to Meta Platforms (Nasdaq: FB) caused the native token for the platform Decentraland (MANA) to surge about 400%, hitting an all-time high of more than $4.
It’s possible these apps will at some point interconnect with the same network.
AB: There is the possibility that in the future, other smart contract protocols will anchor themselves to Ethereum. They’ll checkpoint on Ethereum, in order to inherit some of Ethereum’s security.
JB: So, as you explore all the areas where crypto may expand, keep in mind …
AB: The trend is your friend in crypto, so stick with the thing that’s got the most momentum.
JB (narration): Rhyming words of wisdom to ring in the new year.
JB: Crypto asset analyst Alex Benfield, thank you so much for your expertise today. Great speaking with you.
AB: Thank you.
Best wishes,
The Weiss Ratings Team
