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Description: We look at the future of crypto in 2022 as well as the coins that experts prefer. Investing is all about the trend. Until it isn't. That proved true for digital currencies last year, and it could very well define the outlook for the best cryptocurrencies of 2022. Overall, digital currencies produced a remarkable 2021 that helped solidify an already strong argument for their inclusion in more risk-tolerant investors' portfolios. Collectively, this asset class started 2021 with a combined market capitalization of just over $800 billion; by the time 2022 rolled around, that figure nearly tripled, to $2.25 trillion. 18 Bitcoin ETFs & Cryptocurrency Funds You Need to Know Not bad for an asset type that was founded just 13 years ago. This is certainly better than the S&P 500's 29% growth rate (with dividends) Last year. But cryptocurrencies didn't enter 2022 with a head of steam. Despite a strong performance in 2021, most major cryptocurrencies stalled at year's end. As with stocks, most cryptos are susceptible to cyclical swings in sentiment and changes in market dynamics, especially as inflation became a dominant market driver. To find out if digital coins could regain their momentum, we spoke with crypto experts to get their thoughts on the next year. That includes their opinions on the best cryptocurrencies of 2022 based on business cases and fundamentals. (Spoiler alert, no meme coins made this list. Let's begin by reviewing some of the 2021's crypto highlights. Next, we'll dive into the 2022 outlook on digital coins. How Cryptocurrencies Fared in 2021 Despite bitcoin becoming a major player in 2020, 2021 was the Year of the Altcoin. Bitcoin climbed plenty by year's end, from a little more than $29,000 to around $46,000. This is a 60% return, but it wasn't a straight line. The cryptocurrency rose to $63,000 in April, fell to $30,000 in mid July, and reached $69,000 in November. It then cooled off to the end of the year. But Bitcoin wasn't even close to being one of the best cryptocurrencies in 2021 Why Are Bitcoin Prices So Volatile? In fact, Bitcoin's dominance over the asset class shrank considerably during the year. Of the total market capitalization of the collective crypto market, Bitcoin accounted for 70% on Jan. 1, 2021, and by Dec. 31, that figure had dropped by 40%. Sure, Bitcoin did well ... but its smaller share of the market means "altcoins" (other cryptocurrencies that aren't Bitcoin) performed much, much better. Ethereum is one such cryptocurrency. It is the second-largest cryptocurrency in terms of market capital. The coin's price was less than $740 at its beginning and it ended at more than $3,710 in the end - a quintupling within a year! And that year-end figure represents a pullback from its November all-time highs around $4,891, when the cryptocurrency's market cap eclipsed half a trillion dollars. YCharts Binance Coin, the third largest crypto by market cap, started at less than $40 and rocketed 1,280% higher, to just shy of $530, good for a $90 Billion market capitalization. Another coin, Solana was an amazing 9,600% better to close at just under $55 million in market capitalization. Together, these coins now make up 6% of all crypto market. It is not surprising that cryptocurrency investors have high expectations. These expectations might not be achievable for many coins that are already in circulation, but some pros prefer larger coins. With the backdrop set, let's look ahead to a few experts' thoughts on the best cryptocurrencies for 2022. Coins with fast transaction speed and low costs (Solana Polygon HBAR) Kevin O'Leary, a strategic investment through Immutable Holdings, is a panelist at CNBC's Shark Tank and examines coins using a software investor lens. CRYPTO "[Rather than weigh the pros] and cons of each coin, I dig deeper into the developers, the team behind the blockchain, etc." The 15 Best Stocks for the Rest of 2022 O'Leary is a strong believer in Solana, Polygon, and HBAR. He believes they will "continue to grow and evolve steadily over the next one year based on the things I've witnessed from their development." A quick look at each: Solana is a cryptocurrency that was launched in April 2019. It uses blockchain's permissionless design to provide decentralized finance solutions (DeFi), such as payment processing and smart contracts, stablecoins. Peer-to-peer lending services, and more. This project is designed to facilitate decentralized app creation (DApp). It uses a hybrid method that validates transactions through a combination of proof-of–history (PoH), as well as proof-of–stake (PoS), model. Polygon: This platform looks to address many of the issues facing the Ethereum blockchain while still providing DeFi solutions. It aims to connect Ethereum-compatible Blockchain networks and aggregate scalable solutions on Ethereum. HBAR: Hedera, also known as HBAR, is the most-used enterprise-grade public network that powers the decentralized economy. HBAR's owners represent some of the world's leading organizations, including Alphabet (GOOGL), Deutsche Telekom (DTEGY), LG and TATA Communications. HBAR provides a blockchain that allows developers to create secure applications to meet enterprise needs. O'Leary is looking for distinctive features that distinguish coins from others. In particular, "both Solana and Polygon are exemplary in terms of their transaction speed in the forex market. There are many possibilities for financial transactions. Utility, and not just performance, should be taken into account when looking at cryptocurrencies." The 22 Best ETFs You Should Buy to Have a Prosperous 2022 These three coins could be among the best cryptocurrencies in 2022. O'Leary is positive that the overall crypto market will continue its upward trend in the new year. He says, "I expect the momentum [from 2020] to explode." O'Leary believes there are challenges ahead. One of them is that many governments, including China (and much of the Middle East), have enacted crypto-bans. O'Leary does not see this as solving any problems. He believes that more regulation is required. "Regulation is key for the future growth and security of the market, at the least in the U.S. Some investors will not feel comfortable until there's clearer guidance from the SEC and others on exactly how cryptocurrencies are to be regulated and taxed." NFTs O'Leary adds that "between the popularity of certain coins and the interest in NFTs, we're looking at a potentially groundbreaking 2022." The Wash Sale Rule and Cryptocurrency: A Tax Loophole that May Soon Be Gone Non-fungible tokens, also known as NFTs, are unique and identifiable digital assets (tokens). They exist in the Ethereum blockchain. However, other blockchains now support their own versions. NFTs can represent any digital asset, including music, memes, and sports cards. However, much of the hype surrounding them comes as a digital art. NFTs are treated the same way as fine art. Anyone can buy a Picasso print but only one person can own it. NFTs are growing by leaps and bounds. NFT statistics show a market in full bloom, swelling to more than $20 billion globally in 2021. DAOs, Social Tokens (MakerDAO, AAVE, Curve DAO) Jordan Fried, founder and CEO of Immutable Holdings believes that "2022 will be the year of DAOs and social tokens as well as innovation in NFTs." A DAO, or decentralized autonomous organization, is actually an online community that jointly controls a cryptocurrency wallet, typically with a token based in the Ethereum ecosystem. It works toward some common mission, such as running a business or making investments. Rules are encoded in a computer program that controls how members of organizations interact with one another; these rules, along with transaction records, appear on a Blockchain. Individuals can purchase DAO coins to become members of the community. They are priced and measured in market capitalizations just like other cryptos. They are not usually able to be spent in the same way as Bitcoin, Ethereum, or other cryptos. Fried thinks 2022 will continue to see DAO-based projects thrive because "they fundamentally disrupt the way organizations operate. DAOs allow participants to have a stake in the game and participate in decision-making. He also believes that 2022 will see a surge in "social tokens", which are also issued through DAOs. These tokens allow artists, brands, and other entities monetize themselves. He says, "I believe we're going see an increasing number social clubs, fanbases, artists, and even companies convert to DAOs, which I think will be some of the best projects to be part in the coming years," he said. Digital Gold (Bitcoin). There are many perspectives on cryptocurrency. They range from "Ponzi scheme to "future financial equalizer and payment facilitation." Many believe that Bitcoin may be a digital gold, providing protection against rising inflation. This is a major thesis. How can I spend bitcoins? (And Where?) Wealth services firm Wilmington Trust says in a white paper that Bitcoin serves a role as "digital gold," though it "would not be as a true equivalent, as it has no physical asset of value backing it, but more as a currency hedge against the U.S. dollar losing its coveted status as world reserve currency. " The bank argues that the original crypto has experienced a 237% annualized returns since 2010, but that it has suffered a "standard deviation of four to six times that that of stocks, and three drawdowns or peak-to-trough assets losses of between 53%-83% over the past four years." These outsized returns (and risk) make it a suitable investment in small portfolio allocations, especially for those looking to capture an alternative investment opportunity capable of producing huge returns and also hedging against the threat of rising inflation eroding the spending power of fiat currencies. On the latter point, Wilmington believes "cryptocurrencies could supplant traditional gold as the typical investment store of value, and the past year of comparative returns would suggest this may already be taking place." Wilmington Trust isn’t alone in this belief. A survey from JPMorgan shows 67% of millennials confess to seeing Bitcoin as the new gold as well. Respondents to the survey stated that they would prefer Bitcoin to gold to weather volatile financial markets. The Best Cryptocurrency(ies), 2022 As with all forecasts, you need to be aware that they are inherently flawed. The above thoughts highlight some growing areas of the crypto universe not yet seen by the masses. Will they succeed in becoming market-leading cryptos, further undermining Bitcoin's market dominance. Should You Purchase the ProShares ETF (BITO), Bitcoin Strategy ETF? If current trends remain intact, big names such as Bitcoin and Ethereum could indeed dither while smaller players steal away market share. The crypto space has already seen an influx of smaller altcoins offering greater functionality and utility than digital "blue chips." Many coins were created due to the shortcomings or faults of the major coins that raised awareness about the space. Remember, however, that the cryptocurrency market does not have a zero sum game. Bitcoin and Ethereum are not required to fall in order for smaller altcoins like Ethereum to thrive. Larger coins are less likely to yield large returns because of their sheer size. However, the Law of Large Numbers (the Law of Large Numbers) prevents such growth. This leaves more room for niche opportunities and smaller coins. However, blue-chip coins such as Bitcoin or Ethereum may be the best cryptocurrencies for investors seeking relatively safer investments for the long-term, just given their current market position and built-in network of applications. These cryptocurrencies should not be ignored. Bitcoin remains the single largest store of value within the crypto universe in terms market capitalization and name cachet. It can also be used in many different locations around the world. This includes the most physical locations that can be used through network points such as Bitcoin ATMs, and the largest acceptance of online payments. PayPal (PYPL), one of the largest payment processors, allows its users to transact in digital currency. Fortune 500 companies even accept it as a valid means of payment. Bitcoin's example has opened the way for many other coins. These smaller coins are important to the success of this asset class, which will continue shining well beyond 2022. 30 Best Stocks to Buy Right Now for a Home-Run Swing cryptocurrency Most Popular Planning to Retire in the Next 3-5 Years? What to Consider Today Your Guide to Roth conversions Don't Name Your Estate as Your IRA Beneficiary Recommendation 9 Ways to Cut Crypto Taxes Down to the Bone The DeFi Dictionary: Your Guide to Decentralized Financial Finance What Is Digital Fashion, And Why Is It Important? Crypto in My 401(k)? It makes sense in one way, but it is not a good idea in the other. Customer Service About Us Advertise with Us (PDF). 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