Celebrities like Elon Musk, Paris Hilton, and Matt Damon rave about it. Savvy entrepreneurs like Mr. Wonderful (Kevin O’Leary) and Mark Cuban stock their portfolios with it. Colorado is set to become the first state in the country to accept it as a form of tax payment. That “it” we’re referring to cryptocurrency —and there’s a high chance you’ve heard about it by now.
As we make our way into 2022, cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) are becoming household names—but not just because the rich and famous tout them on Twitter. Long-standing digital currencies are growing stronger and offering more real-world applications than ever before, all while the barrier to entry to invest in them is growing smaller.
For example, both BTC and ETH hit all-time highs towards the end of 2021, and they’re expected to grow to astronomical levels in the not-so-distant future. What’s more, traditional investment brokerages are beginning to jump aboard the crypto train, as the first exchange traded funds (ETF) that trade on cryptocurrency futures were announced late last year.
Suffice it to say, there’s been a lot of movement in the cryptocurrency space over the last year—and the virtual coins the world has come to know are still in their infancy and constantly evolving. This means keeping up with crypto can feel overwhelming to some, especially those who are wanting to break into crypto investing for the first time.
If you’ve got crypto on your mind but you’re unsure what’s changed in 2022 or what’s on the horizon, here are a few things you need to understand.
The Federal Government Is Officially Exploring Crypto
President Joe Biden signed an Executive Order on March 9, 2022, that details the first government foray into the world of digital assets, which includes cryptocurrencies and the blockchain technology that secures them. Within the order, there are six focus areas that cover:
- Consumer and investor protection
- Financial stability
- Illicit finance
- U.S. leadership in the global financial system and economic competitiveness
- Financial inclusion
- Responsible innovation
Some crypto thought leaders take a hardline stance against government oversight or regulation, especially within a financial system that’s rooted in decentralization. However, others feel that a certain level of regulatory guidance is necessary to help substantiate, safeguard, and grow the crypto sector.
While the future of government oversight in crypto is unknown, it’s important for investors to stay up to date with government-related initiatives within the digital currency space. Not only could these initiatives influence how crypto is purchased or exchanged, but regulatory announcements can affect already volatile crypto markets.
Crypto Investment Strategies Are Evolving
“HODL” (hold on for dear life) is a well-known crypto investment strategy for many newer investors. However, there are other more complex, trade-focused strategies that are beginning to take shape in the decentralized finance (DeFi) space. One example that’s growing in popularity is crypto yield farming, which is also known as liquidity farming or liquidity mining.
More and more people are asking ‘what is yield farming and should I do it?’ Yield farming isn’t for all investors. Using the yield farming strategy, crypto investors lend out their coins to borrowers in exchange for interest, fees, rewards, or more crypto coins. Yield farming is still relatively new in the DeFi space, and will likely evolve as the space grows. Understanding the types of crypto investment strategies out there can help dedicated investors earn serious returns. You can learn more about the various ways to invest your crypto at FTX, one of the leading platforms for trading and learning about crypto.
Crypto Is Going Conventional
ProShares created and launched its Bitcoin Strategy ETF (BITO) on the New York Stock Exchange (NYSE) in October 2021. This was a watershed moment for crypto, as it marked the first time a Bitcoin-linked ETF was offered to investors via more conventional investment avenues.
BITO provides convenient access to crypto investing through brokerage accounts. It also enables investors to buy and sell a crypto-backed ETF as they would a traditional stock, all without requiring a crypto wallet or an account on a crypto exchange. While the BITO ETF doesn’t currently hold BTC directly (it trades on BTC futures), the crypto ETFs of the future could hold actual coins.
Cryptocurrencies are also being adopted by large-scale companies across several industries. For example, Whole Foods now enables customers to use Flexa (a digital payments network) to pay for their groceries using crypto. Amazon is also expected to make a big splash in the crypto world soon. Recent speculations indicate that Amazon will start directly accepting crypto as a form of payment, as well as launch its own proprietary token.
Understanding crypto in 2022 means understanding that the crypto industry is constantly evolving. If you’re contemplating adding crypto to your investment portfolio this year, it’s best to visit FTX to stay up to date with the changing tides.