As our last issue of the year wraps up, we wanted to spend some time sharing some predictions for 2022. Whether this is your first time reading us, or your 50th one, THANK YOU. We look forward to seeing how our predictions play out with you throughout the next year!
The first-ever bitcoin-bond issuance by a Sovereign state will occur in 2022, when El Salvador’s Bitcoin City bond offering hits the market. There is a very good chance that the bond auction will be successful - although it may not be fully subscribed.
A Bitcoin spot ETF will be approved in 2022. It will likely be the Greyscale Bitcoin Trust. While it may not happen in February 2022, we may see an approval towards the fall or winter of 2022.
While sovereign bonds offered outside the traditional rails of financial institutions will have limited appetite, that is not the case for U.S. corporate debt related to bitcoin. More corporations will announce bond issuances to purchase bitcoin, similar to Microstrategy’s. We may also see successful bond offerings from large U.S. based mining companies. This, along with a welcoming regulatory environment and competitive energy costs, will help North America become the epicentre of the bitcoin mining industry.
Bitcoin financial services like loans, savings and bitcoin mortgages will continue to grow in popularity globally as individuals realize that it can give them access to better rates and service than their legacy financial service providers.
Institutions will continue pouring into bitcoin - with insurance companies, endowments and pension funds announcing balance sheet positions throughout 2022. Many of them are critically underfunded, and are looking for sensible ways of increasing their potential upside.
The pressure for upside will continue fueling “the great migration from gold to bitcoin”. This is a trend that has been true for 2021 - a year when inflation ran rampant gold has had a year-to-date performance of -4%, when bitcoin is up +84% in the same time frame.
On-ramps and off-ramps for bitcoin in markets outside of the U.S. will continue to develop to catch up with the variety and quality of consumer choices for financial services that exist in the U.S. This is an area of focus for us at Ledn, and a trend can continue empowering millions around the world to join the new digital economy.
Outside of Bitcoin…
The market capitalization of stablecoins will surpass $500 Billion in 2022. For context, the entire supply of stablecoins was ~$30 Billion at the start of 2021, and it is on pace to finish the year above $150 Billion - that’s a 5X increase. Stablecoins have not grown faster because of regulatory uncertainty - however, this may change in 2022 as some stablecoin issuers obtain banking licenses and/or partner with banks for their offerings. This will keep stablecoins growing and could even accelerate the speed of growth into 2022.
An Ethereum Futures-based ETF will be authorized in the United States next year. Given the recent trajectory of institutional demand for Ethereum, and the newly approved Ethereum futures and micro-futures on the CME, it is only natural for an ETF to be the next step. The SEC still looks like it needs more time to get comfortable with a spot-based ETF.
Meta (previously known as Facebook), will get into the NFT space in some way. It could be a marketplace, or enabling artists and creators to mint and sell NFTs for its metaverse. Regardless of the form it takes, it will bring a lot of big name brands along with it - all hoping to create a new ecosystem to capitalize on. Service providers will likely try to create big events such as concerts and conferences to draw people to the experience.
A big video game studio like ActivisionBlizzard or Electronic Arts will incorporate NFTs into some of their video games. Over time, design standards should emerge to make a certain type of NFT interoperable between similar video games.
It's a relatively quiet holiday week coming up, and as always, we'll keep you posted on any relevant news throughout the week right here and from our Twitter account.
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