January has been an interesting month in the crypto world, to say the least. The consistent downturn across various digital assets, which has played out since the highs of November, has continued. Bloomberg estimates that $1 trillion in market value has been lost since the last peak.
With regulators around the world (the UK, Singapore, Russia, and Spain) announcing policies that could undermine crypto companies, it was always going to be a difficult start to the year. However, it is not all doom and gloom. There have been many promising coins released at the beginning of the year, and it’s far too early to let a shaky start in the market cloud projections for the year.
Let’s highlight the key talking points from the opening month of 2022.
A Government-Issued Digital Currency in the US?
The US Federal Reserve is strongly considering the possibility of issuing a digital currency, which could send shockwaves through the crypto world. They released a report in January debating the cost benefits of the move but have decided to wait until May 20th to make a final decision.
As we all know, cryptocurrencies can be volatile and swing dramatically in price. The idea being that a central bank digital currency (CBDC) would be more stable. However, whether this new currency would solidify the state of other crypto or lessen their value is still yet to be known. One thing is certain, despite all the talk surrounding the CBDC, it is still a long way off becoming a reality – the Federal Reserve has empirically determined that it will not pass without the support of Congress and the executive branch.
The NFT and Metaverse Bandwagon
Celebrities have been buying NFTs like there’s no tomorrow. Jimmy Fallon, Eminem, and Steph Curry are among the big names who have recently joined the NFT sphere. Of the 10,000 bored ape NFTs, several football players from Paris St Germain have also recently purchased them, including Neymar and Marco Verratti.
The NFT project, Great Apes NFT, also announced the launch of its DeFi and Utility NFT, designed for the Solana ecosystem. They are certainly pushing the boundaries of what we have come to expect from NFTs – it is a unique approach to digital collectibles.
In terms of the Metaverse, Microsoft, the world’s second-largest firm by market capitalization, said earlier in January that it had agreed to buy Activision Blizzard for $95.00 per share in a deal that would close in fiscal 2023. Microsoft will use the gaming behemoth to pivot to the Metaverse’s virtual worlds environment.
(Decentralized Finance) DeFi coins have become more popular as crypto users continue looking for solutions to outdated problems in the financial industry. The technology of DeFi allows users to carry out transactions directly, removing intermediaries and harnessing blockchain technology to complete the transaction. Furthermore, investors can trade these coins on decentralized exchanges.
A lot of DeFi coins have taken a big hit in January. For example, Algorand fell from $1.81 to $0.89. However, a crypto broker, Stephen Ehrlich, argues that 2021 was explosive for DeFi coins and this year “DeFi will have its growing pains, but will establish and prove itself in 2022.”
For more recap blogs, check out our recent post highlighting the key events from 2021.