Bitcoin and cryptocurrencies had a huge boom in 2021 with the combined crypto market exploding from under $1 trillion to around $3 trillion—with some predicting the market could grow much further.
The bitcoin price soared to almost $70,000 per bitcoin late last year before crashing back to just over $30,000. Ethereum and other major cryptocurrencies, including Binance’s BNB, solana, cardano and XRP, saw similar volatility. Crypto prices have rebounded over the last week but remain highly volatile.
Now, banking giant Wells Fargo has predicted global crypto adoption could “soon hit a hyper-inflection point”—adding “it is still early in the cryptocurrency investment evolution.”
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“For today’s investor trying to figure out if we are early or late to cryptocurrency investing, looking at technology investing in the mid-to-late 1990s seems reasonable,” Wells Fargo’s global investment strategy team wrote in a report this week. “At that time, the internet hit a hyper-adoption phase and never looked back. Cryptocurrencies appear to be at a similar stage today.”
The analysts pointed to research from the bitcoin and crypto exchange Crypto.com that found the number of global cryptocurrency users reached 221 million in June 2021, or just under 3% of the world’s population, highlighting that “it took only four months to double the global cryptocurrency population from 100 million to 200 million.”
“If this trend continues, cryptocurrencies could soon exit the early adoption phase and enter an inflection point of hyper-adoption, similar to other technologies. There is a point where adoption rates begin to rise and do not look back […] Precise numbers aside, there is no doubt that global cryptocurrency adoption is rising, and could soon hit a hyper-inflection point.”
However, the team—part of Wells Fargo Investment Institute, the research division of Wells Fargo Wealth and Investment Management—cautioned that “cryptocurrency investment options today are still maturing” and they “advise patience,” adding they “are hopeful that greater regulatory clarity in 2022 brings higher quality investment options.”
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Bitcoin and crypto regulation has been pushed up the agenda of governments around the world after 2021’s huge bull run, with the growth of blockchain-based stablecoins setting off regulator alarm bells.
Last month, it was reported that the Biden administration in the U.S. is preparing an executive order that will outline a comprehensive government strategy on bitcoin and cryptocurrencies and ask federal agencies to determine their risks and opportunities.
Meanwhile, a sudden sell-off that hit bitcoin, ethereum and others late last year was triggered by expectations that the U.S. Federal Reserve will repeatedly hike rates this year, increasing the cost of borrowing and beginning to taper its pandemic-era stimulus measures.
The crypto price crash—hitting all major cryptocurrencies including bitcoin, ethereum, Binance’s BNB, solana, cardano and XRP—has sparked fears that a new so-called crypto winter could be setting in, similar to the 2018 bear market that saw many of the biggest coins lose 90% of their value.
“Even though the current crypto trend looks bearish, we have to take in consideration that the structure of crypto investments is quite different now compared to the previous peaks at the end of 2017,” Andras Ivan, an analyst at international broker comparison site BrokerChooser, said in emailed comments.
“The market cap is significantly higher now and institutional investors joined in the past 1-2 years. That might help the market to avoid such serious drops and disappearing interest that we experienced in the crypto winter of 2018-2019.”