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Two Winning Crypto Sectors of 2022

Posted December 14, 2021

It’s been over 10 years since Bitcoin first introduced the concept of blockchain. There have been many innovations, and we have seen a lot of money dumped into the sector, but we are still far away from mass acceptance.

That said, 2021 was a good year for crypto assets. The total market cap of the crypto sector increased 300% last year. This growth was also fueled by DeFis and NFTs.

For those who don’t know, an NFT, or non-fungible token, isn’t just a JPEG of an ape wearing a hat that made headlines because it sold for a stupid amount of money. These art/social NFTs have been made popular by the Bored Ape Yacht Club, which is really just an online social thing.

There will be many more NFTs going forward.

DeFi, or decentralized finance, is the concept that financial products will become available on a public, decentralized blockchain network. The premise is that you can trade assets quickly with low fees and avoid middlemen like bankers and brokers.

DeFi has a long way to go, but 2022 will see a huge acceleration in trades, loans, and even futures.

Tech Takes Over

The crypto environment has changed. In 2016, it was all about hiding your money from the government or as a hedge against inflation. These crypto buyers were akin to conspiracy theorists and gold bugs.

But a few years ago, the tech boys took over. The people I talk to now are all savvy systems people who see a unique opportunity to build. The benefit to this is that the organic growth in the crypto space will continue regardless of price because that’s what these people do.

The Race to 1 Billion Users

In the next year, we will see some big moves in the tech adoption cycle, and it will be driven by gamers and NFTs, as well as gambling and DeFi.

For decades now, there have been third-party sellers of things like virtual swords or armor in online games. Say you have money and don’t want to spend hours getting ahead in an online world — you can simply buy more gear.  

The next step, which is happening now, will be games created and owned by the users. These play-to-earn, free-to-win NFT games have already disrupted the traditional gaming model by giving users complete ownership of in-game assets.

New blockchain gaming platforms like Decentraland (MANA), Gala Games (GALA), and The Sandbox (SAND) are setting the stage. In 2022, a host of new games will push the sector forward toward the ultimate outcome of the metaverse. But we're still in the very early days of this technology.

The NFT Market Is Booming

The NFT market on Ethereum increased 16,600% year over year to around $9 billion — and that's with slow trades and high fees.

But that $9 billion is still very low. The total market cap of all cryptocurrency is more than $3 trillion. Right now, there are about 180 million Ethereum addresses. This matters because Ethereum is the backbone, or L1, to most NFTs.

Markets really take off when they get up to around 1 billion users. We’ve seen this with tech adoption across the board, from social media to hardware.

Seeking 1 Billion Users Chart

At current growth rates, it will take another five years to hit 1 billion Ethereum users, but it is coming.

Gambling and Gaming

In 2020, you want to look for high-growth companies that will add value to the sector — primarily those that cut fees, speed processes, and maintain security.

Blockchain gambling will be the big DeFi winner of 2022. Sports betting is ramping up, and leagues like the NBA have been on the cutting edge of selling NFTs of basketball heroes as well as gambling. What if the more you gamble, the more free NFTs you earn?

The second winner will be gaming. People will demand player-owned, in-game assets, and they will get them. Maybe your 12-year-old will start making money from selling online gear. Cheap and fast transactions will advance to make these dynamic large-scale games workable.

All the best,

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Christian DeHaemer

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Since 1995, Christian DeHaemer has specialized in frontier market opportunities. He has traveled extensively and invested in places as varied as Cuba, Mongolia, and Kenya. Chris believes the best way to make money is to get there first with the most. Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor's page.

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