Cryptocurrency is the new emerging technology but The Future of Cryptocurrency: 5 Experts’ Predictions you asked? Over the last year, we’ve seen Bitcoin achieve many new all-time highs, followed by significant losses and more institutional buy-in from large corporations. Ethereum, the second-largest cryptocurrency, too reached a fresh all-time high late last year. Officials in the United States, including the Biden administration, have increased interest in new cryptocurrency rules.
The Future of Cryptocurrency: 5 Experts’ Predictions
Expect further discussions on cryptocurrency regulation. The regulation of stablecoins has piqued the curiosity of U.S. policymakers.
Lawmakers in Washington, D.C. and across the globe are debating how to create regulations and norms to make cryptocurrencies safer for investors and less enticing to hackers.
“Regulation is certainly one of the largest overhangs in the crypto market internationally,” says Jeffrey Wang, America’s head of Amber Group, a crypto finance company located in Canada. “We would like unambiguous regulation.” ( The Future of Cryptocurrency: 5 Experts’ Predictions )
Federal Reserve Chair Jerome Powell recently stated that he has “no intention” of outlawing cryptocurrency in the United States. In contrast, Securities and Exchange Commission Chairman Gary Gensler has consistently stated his agency’s and the Commodity Futures Trading Commission’s roles in policing the industry.
What could new regulation mean for investors?
In November, the president signed a $1.2 trillion bipartisan infrastructure plan that contains crypto tax reporting rules that might make it simpler for the IRS to detect crypto activity among Americans. That is why, even before the new regulation, experts advise investors to maintain track of any financial gains or losses on their crypto assets. The new rules may also make it simpler for investors to disclose cryptocurrency transactions.
“Exchanges will be required to submit 1099-B tax forms to investors with cost basis information,” Shehan Chandrasekera, CPA, head of the tax strategy at CoinTracker.io, a crypto tax software startup, recently told NextAdvisor. “This will considerably minimize the burden of crypto tax reporting.”
In already unpredictable markets, regulatory news may impact the price of cryptocurrencies. Because of market volatility, investing professionals advise restricting cryptocurrency investments to less than 5% of your whole portfolio and never investing anything you are unwilling to lose. ( The Future of Cryptocurrency: 5 Experts’ Predictions )
Finally, many experts feel that regulation is beneficial to the sector. “Sensible regulation benefits everyone,” argues Ben Weiss, CEO and creator of CoinFlip, a cryptocurrency purchasing platform and cryptocurrency ATM network. “It gives people greater trust in cryptocurrency, but I believe it’s something we need to take our time with and get right.”
Crypto ETF Approval
There has already been a significant breakthrough on this front, with the first Bitcoin ETF debuting on the New York Stock Exchange in October. The development provides a new and more traditional method of investing in cryptocurrency. The BITO Bitcoin ETF enables investors to purchase cryptocurrencies directly via standard investing brokerages with whom they may already have accounts, such as Fidelity or Vanguard.
“We do it in the equities market, and we do it in the bond market; people may want it here,” Gensler said last summer at the Aspen Security Forum. ( The Future of Cryptocurrency: 5 Experts’ Predictions )
However, others argue that the BITO ETF is insufficient since, although it is tied to Bitcoin, it does not directly own the cryptocurrency. Instead, the fund invests in Bitcoin futures contracts. While Bitcoin futures follow the overall patterns of the actual cryptocurrency, analysts believe they may not accurately mirror the price of Bitcoin. For the time being, investors must continue to wait for an ETF that owns Bitcoin directly.
The SEC has considered ETF clearance many times, but BITO is the first to get permission.
What a crypto ETF means for investors ( The Future of Cryptocurrency: 5 Experts’ Predictions )
It’s too early to know how many investors will flock to BITO, but the fund saw a lot of trading activity in its first few weeks. In general, the more readily available bitcoin assets are inside conventional financial products, the more Americans will participate in and influence the cryptocurrency market. Instead of learning how to use a cryptocurrency exchange to trade your digital assets, you may add crypto to your portfolio straight from the brokerage where you already have a retirement or other conventional investing account.
However, investing in a crypto ETF, such as BITO involves the same risk as any other cryptocurrency investment. It is still a risky and speculative investment. If you don’t want to risk losing the money you put into crypto by buying it on an exchange, you shouldn’t invest it in a crypto fund either. Consider if you’re willing to face the risk of including cryptocurrencies in your portfolio at all.
Broader Institutional Cryptocurrency Adoption
In 2021, mainstream corporations from various sectors expressed interest in — and, in some instances, invested in — cryptocurrencies and blockchain. AMC, for example, just stated that by the end of this year, it would be able to take Bitcoin payments. PayPal and Square are also banking on cryptocurrency by enabling consumers to purchase it on their platforms. Tesla continues to waver on accepting Bitcoin payments, even though the corporation has billions of dollars in crypto assets. Experts believe that this level of buy-in will continue to rise.
“We’ve seen a significant amount of influx of attention, and that will continue to fuel the industry’s development for quite some time,” adds Abner.
Some analysts believe that worldwide organizations will accelerate adoption even more in the second part of this year. “What we’re seeing is institutions moving into crypto, whether it’s Amazon or the large banks,” Weiss adds. A significant shop, such as Amazon, might “start a chain reaction of others embracing it” and “provide a lot of legitimacy.” ( The Future of Cryptocurrency: 5 Experts’ Predictions )
Indeed, Amazon recently fueled concerns that it is making strides in this direction by publishing a job listing for a “digital currency and blockchain product lead.” Walmart is also looking for a cryptocurrency specialist to supervise its blockchain strategy.
What more institutional adoption means for investors ( The Future of Cryptocurrency: 5 Experts’ Predictions )
While most individuals don’t see the benefit of paying with cryptocurrency right now, more merchants accepting payments may alter the scene in the future. It will likely be much longer before it is a wise financial choice to spend Bitcoin on products or services. Still, increased institutional acceptance might lead to new use-cases for ordinary people, influencing crypto pricing. Nothing is sure, but if you purchase cryptocurrencies as a long-term store of value, the more “real world” applications it has, the higher the likelihood that demand and value will rise.