CoinShares’ digital assets report for 2022 finds the firm predicting that 2022 will likely see several further inclusions of bitcoin as legal tender among sovereign nations.
The firm writes that it expects Lightning to continue gradual and organic growth as well as introduce applications that expand bitcoin’s usability. In terms of bitcoin, the firm writes that it is likely to behave in a similar way to gold and other real assets during this interest rate hiking cycle. “We have already seen in December 2021 and January so far this year that bitcoin is extremely sensitive to the threat of interest rate hikes,” the report says.
The firm comments that on the one hand the US Federal Reserve (FED) has a mandate to control inflation, but it also has a mandate of stable prices. It is very challenging to see how the FED can control both at present, the firm says.
“Consequently, we see there being a high risk of a FED policy error (waiting too long and then raising interest rates too aggressively), with the USD then selling off, both of which are likely to be supportive of bitcoin and other real assets.”
CoinShares writes that while the US regulators continue their turf wars, and the Chinese regulators continue their approach of banning crypto; the EU regulatory framework will be the largest consumer marketplace where it is possible to provide regulated crypto products and services.
“We expect users to continue demanding faster and cheaper interactions with crypto native applications, as well as developers to expand cross-chain application development. We believe bridges will grow in their importance as infrastructure to support the broader layer-one ecosystem, and as a result, increase the reliance upon and value held in the programs by which they operate.”
The report concludes: “North American miners have had a good year in 2021 and the best run operations are set to continue to be successful in 2022, but we would not expect the same pace of rapid growth as we saw throughout the past year.”