The blockchain ecosystem has been experiencing quite a stirrup since the beginning of 2021. The crypto market has reached new all-time highs, only to crash shortly thereafter.
Droves of retail and institutional investors have crowded the market to buy bitcoin and take part in this bullish cycle. With that said, the blockchain space is an ever-changing and evolving ecosystem.
There are multiple updates and upgrades to popular networks that should go live by the end of the year.
This could add even more excitement to the crypto market and could drive prices even higher.
In this article, we provide a thorough overview of the key moments of the market up until now.
More importantly, we will share some of the essential upcoming upgrades to popular networks that could help this bullish cycle reach new heights. Let’s delve in.
A Short Overview of 2021
To understand the upcoming events, we need to have a quick overview of what happened in the markets during the past year.
New All-Time Highs for the Market
The year started with a bang for Bitcoin, with the previous all-time high of $20.000 already broken.
The positive momentum of bitcoin quickly spread to the rest of the market and almost every coin started a parabolic price rally.
In just 4 months, Bitcoin had reached a new high of $60.000, tripling its previous ATH from 2017. Meanwhile, Ethereum was struggling to follow the cryptocurrency king.
This was mainly due to the high transaction fees the Ethereum network was experiencing. It was the result of the increased popularity of DeFi and the larger transaction volumes of ERC-20 tokens nested in the Ethereum blockchain.
However, in April 2021, following a significant upgrade to its protocol, ETH’s price action picked up the pace and reached a new all-time high of $4400.
The market as a whole reached $2.5 trillion, coming from a $700 billion starting point. This equates to an increase of 257%, proving that cryptocurrencies can bring in enormous profits for investors.
The Crypto Crash of May 2021
With that said, these new ATHs were short-lived. At the beginning of May 2021, we seemed to reach a bit of market exhaustion.
Additional fear, uncertainty, and doubt (FUD) were injected into the mainstream media when Tesla decided to stop accepting Bitcoin as a means of payment for their vehicles due to ecological concerns.
Following this, the prices of cryptocurrencies crashed 50% (some altcoins went down by 80%!), and the entire market switched into a bearish trend.
Additional FUD came from China, where the government announced it was banning crypto trading and mining.
This resulted in a mass exodus of miners from China, and the price of Bitcoin and other cryptocurrencies kept dropping.
Bitcoin managed to stabilize at the $30.000 mark, where Ethereum went under the $1800 level, losing more than 60% since the recent ATH.
What’re Next – Crypto Prognoses for 2022
Crypto prices seem to be stabilizing for now and there’s even small hope of a reversal into bullish momentum.
With that said, there are some important upcoming events in the crypto sphere that could help reverse this slump into a full-blown bullish rally.
Ethereum London Upgrade
On August 4, the Ethereum network undergoes an important upgrade that will affect how the fees of the network are calculated. Moreover, a portion of these fees will be destroyed, effectively turning ETH into a deflationary currency.
If we are to believe that the market will behave as per habit when such upgrades are deployed, we could see the price of Ethereum jump more than 200% in the near future.
Bitcoin Taproot Update
By the end of 2021, the Bitcoin protocol should undergo an important upgrade that will add Schnorr signatures to its transactions. This should add more privacy to BTC transactions as complex multisig transactions should be indiscernible from regular ones.
Cardano Finally Implements Smart Contracts
Cardano is one of the most popular proof-of-stake networks available and its native cryptocurrency ADA can be constantly found in the top 5 cryptos by market cap.
By the end of 2021 (or early 2022), the Cardano blockchain should finally be smart-contract capable.
This means that Cardano could become a serious player in the DeFi industry, accelerating growth and competition in this ecosystem.
Ethereum Goes Full Proof-Of-Stake
Finally, one of the most important upgrades to the blockchain space is Ethereum’s switch to a PoS algorithm for validating transactions.
This should reduce the energy consumption by 99%, reduce transaction fees by tenfold and add increased transaction capability for the network.
Because so many projects depend on the smooth functioning of the Ethereum network, this could be a make-or-break moment for the entire market.
Challenges Looking Forward
Apart from positive news in the market we also have several bearish events ahead of us. Not all are certain, but some of them could cause a market drop. Let’s have a look:
Bitcoin ETF
While most people are ecstatic about the approval of a US-based Bitcoin ETF, not many realize that it will allow investors to allocate their funds towards it starting approximately 3 months from now.
Looking at historical events, this means that the ETF will open up for investments exactly when the price reaches the peak of this cycle.
Stablecoin Regulation
There has been a lot of attention from the US government on the risks and dangers associated with (unaudited) stablecoins. For reference, Tether (USDT) was fined due to creating more tokens than the company had USD reserves for.
If stable coin allocation became illegal by law and exchanges removed it, it would cause a massive loss of value for traders and investors alike.
That said, do not discard the importance and effectiveness of stablecoins in a balanced portfolio.
Emotional Control
As we enter into the final stage of the bull market, many traders will increase their expectations, not willing to sell their coins due to greed. When this moment comes, many people will use derivative products and leverage to try and maximize their crypto holdings.
Of course, history shows that this is the wrong way of looking at things. It is always best to maintain an objective viewpoint of the market, set goals, and make sure to cash out your profits in time.
You can always use these funds to reinvest into the market after a “fear” wave drops the whole market downwards.
Wrapping Up
The blockchain space is an exciting ecosystem that is constantly changing to bring us improved versions of existing and popular projects. Hopefully, our article gave you a clear overview of the most important events to look for in the upcoming year.
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