In the first half of 2021, the world witnessed a cryptocurrency breakthrough. However, the industry is still in its infancy. How can traders expect it to evolve in the short term? Here are the most salient predictions for the final quarter of the year. 

1. Cryptocurrency Regulation

On both sides of the Atlantic, lawmakers are working out frameworks for regulation that would make investment safer and keep criminals at bay. While China made all transactions illegal in September 2021, the situation in the US is controversial. 

The Federal Reserve does not intend to prohibit cryptocurrency use. The Securities and Exchange Commission acknowledges they need to protect investors, while the IRS is expected to provide clear guidelines concerning reporting of digital currency transactions. Clear regulation will remove a roadblock, as it will protect market participants and boost confidence. 

2. Crypto ETF

In the near future, investors can expect to see a crypto ETF, an innovative yet conventional tool. They will be able to purchase coins from well-established investment brokerages like Vanguard. Based on the announcements made by SEC Chairman Gensler, such projections are more than speculations. 

The system will let participants benefit from digital coins similarly to how it works in the bond market and the equity market. The agency has already received some filings, but adoption in regions like Canada and the EU has not been approved. Soon, Americans will have more influence on the market. Instead of trading the assets, they will be able to add them through brokerages that provide conventional accounts.

3. Institutional Adoption

Different industries have an interest in crypto, and mainstream companies have begun embracing it. For example, AMC is poised to adopt Bitcoin by 2022. PayPal lets users buy crypto online, while Tesla is still going back and forth. 

More buy-in is expected, and global corporations like Amazon could speed up adoption by the end of the year. This will add credibility to the market, and create new uses for cryptocurrency.

4. Bitcoin’s Volatility

Experts advise against overreliance on cryptocurrency, as its price has been wildly volatile. After peaking at $60,000 in April, it plunged and climbed back to around $50,000. As of this writing, one coin is worth around $47,800. 

Savvy investors limit their Bitcoin assets to just 5% of the portfolio. Nevertheless, some experts note that the series of huge spikes and pullbacks observed since 2011 shows that the market should expect volatility in the short term but growth in the long term. In the coming months, Bitcoin may reach $75,000.

Looking Ahead

Cryptocurrency is still a largely speculative investment, without many historical data to base predictions on. Nothing is certain. Invest in the assets you are prepared to lose and stick to more conventional sources of long-term benefits.

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