Crypto predictions for 2022 are causing much debate. This is the reason …

Sean Stein Smith at Forbes says that 2021 will be remembered as the year that blockchains and crypto assets left the fringes and became part of the “mainstream financial markets conversation.” In the year ahead, Smith sees more growth, for the field as a whole, and for Bitcoin’s value in particular, as a consequence of its new mainstream status.

A bearish counterpoint comes from Ryan Browne of CNBC, with very different crypto predictions. He says that “heightened regulatory scrutiny and intense price fluctuations” have taken the bloom off the crypto rose, and “the market could be heading toward a downturn” in 2022. So there is room for disagreement.

Here are four reasonable crypto predictions. We start with the matriarch of the field.

1. Bitcoin (BTC)

Bitcoin’s value rose steadily through the first quarter of 2021. It plateaued early in the second quarter, then took a nasty fall from that plateau beginning May 10. It has since more than recovered, though, and is ending the year with solid gains.

Bitcoin benefits from the understanding that its algorithms limit the total quantity that can ever be mined, alleviating concerns about inflation. In a time of increasing concern about inflation biting into the value of the U.S. dollar, expect the former to continue to rise in value against the latter, dramatic zigzags notwithstanding.

Of course, the Federal Reserve could respond to inflation worries with a policy that would “taper” its asset purchases in 2022, thus slowing money creation. But analysts think that no likely response by the Fed will be sufficiently decisive to dent Bitcoin’s growth as a safe harbor. 

2. Ethereum/Ether (ETH)

The dollar value of Ether, the cryptocurrency generated by the Ethereum protocol, has increased by more than 500% this year. ETH began 2021 only a little above $600.

Next year is unlikely to see growth with the same magnitude. Yes, there is an ongoing transformation from the old proof-of-work system to a new proof-of-stake system, which should be complete at some point in the coming year. But benefits from that change are already priced in. 

On the other hand, the fruits of Microsoft’s embrace of Ether may not yet be fully priced in. Look for ETH to rise in value over 2022, although perhaps not spectacularly.

3. Cardano/Ada (ADA) 

Ada is the currency for Cardano, a decentralized proof-of-stake blockchain founded on academic research, using an open source, peer-reviewed code. The platform is distinctive in that it has two layers: one for the conduct of transactions and the other for smart contracts. 

The name “Ada” for the currency on this blockchain is a tribute to Ada Lovelace, a 19th century mathematician and one of the pioneers of computer science.

ADA began 2021 with a value of $0.17. In the late summer it was trading between $2.70 and $2.96. It fell from there, but found a floor in mid-December around $1.24, and has since picked itself up from that floor.

Coinpedia holds that Cardano – which was created largely with the aim of bringing banking services to the world’s unbanked – could soon resume former bullish ways. Ada could then get to the highs of the late summer and push right through them, to as high as $15.17.  

4. Dogecoin (DOGE)

DOGE has always been an anomaly. It is a cryptocurrency that lacks the one feature that most obviously makes the asset class attractive: there is no limit to how many can be made, and so no check on rampant inflation.  

It is an anomaly in another sense, as well. It began in 2013 as a self-conscious joke. Designers Billy Markus and Jackson Palmer found the rapid multiplication of altcoins amusing, and wanted to add one of their own to the number. They gave it a name that sounds like a mispronunciation of “dog” and they used a face of a Shiba Inu as logo and namesake.  

Despite these anomalous features, DOGE had some bobsled momentum. The word “bobsled” there is not a metaphor. Some of its momentum dates from an incident in 2014, when the Jamaican bobsled team qualified for the Olympics but could not afford to spend the money necessary to participate. Jackson Palmer, on Reddit, raised Dogecoin donations for them worth $25,000. The Jamaicans got to Sochi, in Russia, as a consequence.

Momentum is often an inadequate reason for buying stock. Consider a gambler in a casino at a roulette table. Half the time the ball stops on red, half on black. But red has just won nine times in a row. Should our gambler bet black?

The Doge joke and the bobsled-created fuzzies may have faded.

This returns us to the crypto predictions’ Macro issue. What can we say about the asset class in general? This: its attraction is as an inflation hedge, and the currencies that play that card best will thrive.