A number of factors are contributing to the downfall of prices in the crypto industry in 2022

Over the past week, there is looming concern over how the crypto industry will take shape in the coming days. 2021 was an incredible year for famous cryptocurrencies like Bitcoin and Ethereum. They reached record highs and occupied a stable place among cryptocurrency investors. But things have changed since we entered 2022. The current year doesn't seem to be very fortunate for cryptocurrency investment. While unexpected price hits have resulted in people pulling back from the cryptocurrency in 2022, other social and economic shifts have also taken a toll on the industry.

Bitcoin and Ethereum hit a record high of US$68,500 and US$4,800 respectively in 2022. However, since BTC made history in October, the crypto industry has been tumbling on unexpected incidents. Despite its extreme volatility, a number of reasons are also contributing to the falling cryptocurrency market capitalization. Kazakhstan has evolved to become a major cryptocurrency mining hub in 2021. However, the network blackout in the country has plagued the crypto mining princess. On the other hand, we saw Federal officials discussing taking aggressive actions to stop people from investing in riskier assets. A multi-million dollar Bitcoin scam that is under investigation in Pakistan has also resulted in some investors losing interest in the crypto industry.

While these incidents have contributed to a fall in cryptocurrency prices, the surging number of Omicron cases is also taking a toll. The market capitalization of the broader crypto market has come down to US$2.27 trillion from its previous record high of US$3 trillion. In this article, we explore how the crypto industry could move forward in 2022.

The Two Sides of Bitcoin

Since its inception in 2009, Bitcoin has been a very volatile investment. However, its instability has been ignored over the years as far more volatile cryptocurrencies have emerged from the sphere. Remarkably, Bitcoin has been synonymous with the cryptocurrency market as a whole. Therefore, BTC's price swings and sudden plummets directly affect other digital tokens.

This scenario is unfolding in 2022. After hitting a record high of US$68,500 in October 2021, Bitcoin's price has touched the US$43,000 resistance level in the past week. The price fall is eventually affecting other subsiding cryptocurrencies in the market. While some experts say Bitcoin will tank to as low as US$10,000, others say it has the potential to breach the US$100k resistance level in 2022.

The Shift Towards Altcoins

As major cryptocurrencies like Bitcoin and Ethereum are recording drastic falls, investors might opt for altcoins that are profitable in 2022. The millennial population is also getting a hold on the cryptocurrency market, which is expected to drive the popularity of altcoins. More investors will choose the top 10 to top 25 cryptocurrencies as their investment choice. Therefore, digital tokens like Cardano, Solana, Polygon, Avalanche, and Polkadot will gain prominence in 2022.

On the other hand, Memecoins might lose their market stance and value. However, popular names like Elon Musk and Mark Cuban might still try to influence investors with their interest in Dogecoin and Shiba Inu.

Taxation and Regulations Ahead

The only way to stabilize cryptocurrency's value is by imposing strict regulations and recognizing it as a legitimate tradable asset under SEBI's oversight. Since institutional investors are also crowing the decentralized network, it will become even more critical for central authorities to impose regulations. If the government starts treating cryptocurrencies as assets, it will give investors greater diversity in their portfolios.

Besides, an impressive number of private cryptocurrencies are expected to be registered for trading under government guidelines in the future. This will pave the way for central bank digital currencies (CDBCs) to co-exist with private currencies. Since many cryptocurrencies with extraordinary features are expected to house the cryptocurrency market, it will bring more stability to the existing ones.