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Bitcoin, Ethereum, and Solana Are Crashing. In which one to invest for 2022?

The last few weeks of 2021 turned out to be bad for many crypto enthusiasts. After a record year, the most famous cryptocurrencies and many popular altcoins have seen their market shares collapse.

2022 is a year that should bring a lot of news to the crypto and blockchain industries. For this reason, there is a lot of speculation about the future of the leading coins on the market.

This article will mention the recent events of Bitcoin, Ethereum and Solana, to try to understand the market trends of 2022. Before going into our analysis, it is essential to specify that the information reported in this article does not in any way represent financial advice. If you want to invest in the crypto market, you should consider researching.

Why are cryptocurrencies dropping?

The last few weeks of 2021 have certainly tested the patience of crypto traders. Whenever the market enters a bearish phase, investors try to understand why. Trying to avoid falling into the common mistake of narrative fallacy, the drop in crypto market quotes probably depends on:

Growing fear at Wall Street

The latest concerns about a new variant of the Covid-19 virus have led many to think of a recent global lockdown. While only time will tell how justified these fears are, Wall Street has reacted with a bearish correction.

Several studies indicate a direct correlation between cryptocurrencies and stock markets only in periods of falling prices. From this point of view, therefore, the behaviour of the crypto industry does not differ from the past.

The typical end-of-year price movement

For purely fiscal reasons, many traders in the world (the U.S. included) may find it convenient to close financial positions at a loss in December. However, without unnecessary overcomplications, consider that this is done to deduct part of the losses on the financial markets from taxes.

At the same time, however, the last week of December often sees a rise in the prices of many listed assets. In this context, the market typically speaks of “Santa Claus Rally”, a phenomenon often attributed to large institutional investors.

Looking at the bigger picture

While it’s easy to think that the recent cryptocurrency crash was severe, the price growth in the industry in 2021 needs to be considered.

By looking at the bigger picture, we see that, for example, Solana (SOL) was worth less than $ 2 back in January 2021. Its late-year price collapse from $260 to $150 was undoubtedly massive, but one must also consider the long-term trend.

What to expect from 2022

Crypto and blockchain pundits believe that 2022 will bring a new wave of innovation to the market. If we do not overemphasize the last weeks of trading, 2021 pushed many cryptocurrencies to reach new historical high quotes. Among the hottest trend of the industry, we can mention the following ones:

Towards a green blockchain

The market eagerly awaits initiatives such as ETH 2.0. For those who are not familiar with the process, Ethereum aims to become a faster and more eco-friendly blockchain thanks to a massive system upgrade.

Although there is no news on the Bitcoin side (even after Tesla famously ditched it due to environmental worries), Ethereum is not alone. Solana, for example, uses cutting-edge technology with more minor energy-intensive transactions on its network.

Discovering the Metaverse

Solana is often included among the so-called “Ethereum killers” on the market. Its eco-friendly system and the impressive amount of transactions per second the market network can handle are a challenge for older players on the market.

The next cryptocurrency battleground could be the Metaverse. With several projects constantly growing in virtual reality, developers will have to choose the technology to create liquidity.

Many tokens use the ERC-20 technology designed by Ethereum, but some altcoins are starting to look at Solana with interest.

Will new countries follow the path of El Salvador?

If you follow the news from the crypto universe, you are probably already aware that El Salvador considers Bitcoin as its official digital currency. Many media have highlighted this news during 2021, trying to understand which countries could follow the example of El Salvador.

While many governments are waging their battle against cryptocurrencies, some countries appear more crypto-friendly. So in 2022, we will keep an eye open to understand which other policymakers will decide to join the trend.

Final thoughts

2021 was a record year for the cryptocurrency sector, and several trends born during the year promise to gain importance in 2022. From many points of view, improving cryptocurrencies is part of the natural, technological evolution.

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A correction in cryptocurrency prices at the end of the year can be considered physiological after an incredible year. In 2022, the cryptocurrency that will be able to differentiate itself from the competition will be the one that will best seize the opportunities dictated by a rapidly changing market.

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