Digital Assets Outlook Winter 2021-2022

November 30, 2021

Financial experts agree that digital asset usage will continue to rise in 2022, though the road ahead is predicted to be bumpy. 

Digital assets have generated significant interest over the past year, with their usage set to seep into the mainstream financial markets. Traditional institutions including banks, insurers and fund managers, such as JPMorgan, have begun recognising digital assets as viable investment tools. According to financial experts, digital assets are expected to gain traction in 2022.

Digital Asset usage is set to become more profitable, with a predicted 11% return in 2022

Strategists at JPMorgan Chase & Co. predict that digital assets “will continue to outperform into 2022”, though users are advised to hold their cash in hedge funds and real estate, rather than alternative assets. According to strategist Nikolaos Panigirtzoglou, the “ride is likely to be too bumpy to be recommended as a core holding” and therefore he believes that traditional assets are a “better investment”. 

Though JPMorgan refuses to recommend digital assets, the market cap has increased by 2,211% equating to more than 270% from the beginning of 2020 to November start

47% of finance leaders intend to assess digital assets for business in 2022. 

Gartner’s 2021 survey has revealed that out of 251 CFOs, 47% are set to assess digital assets for their business in 2022. According to Alexander Bant, Gartner’s Chief of Research, “digital currencies are beginning to make finance leaders sit up and notice.” Despite sentiment towards digital currencies improving, Bant has assured users that “interest remains tentative at this stage, with only a few per cent of CFOs expecting to take full leadership of digital currency initiatives.” From Gartner’s February polling data, the most notable risk was the “volatility of digital currency”. According to the report, this is likely to remain the primary concern amongst finance executives in the coming year. 

Adoption of digital assets is set to increase due to its potential as an investment tool and inflation hedge

According to experts, 2022 will see the increased adoption of digital assets by businesses and users. However, there are some significant setbacks to overcome. Government rejection of digital assets is set to increase, with China, Turkey and Egypt banning their use in 2021, and other countries likely to follow suit in 2022. 

Despite some countries being wary of digital assets, analysts are predicting even more institutional adoption of BTC and other digital assets in 2022. OKEx’s Director Lennix Lai believes this is due to the launch of the ProShares Bitcoin Strategy ETF (BITO), which “will attract higher adoption across the spectrum.” According to Lai, the reason for this is that “traditional retirement plans, pension funds, and brokerage accounts will not accept crypto investments, which is where the ETF comes into place.” 

Whilst Lai does not expect formal adoption to take place in 2022, there is the suggestion that “countries will begin signalling their interest” in digital asset adoption next year, and implement government financial policies such as CBDCs. 

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