After a hawkish turn by the Federal Reserve took some steam out of cryptocurrencies at year-end while largely sparing other risk assets, central bank policy is taking a key role in the debate about the outlook for tokens in 2022.

New Delhi, India: Central bank policy is playing a crucial part in the debate regarding the prospects for tokens in 2022, after a hawkish move by the Federal Reserve knocked some steam out of cryptocurrencies at year's conclusion while largely sparing other risk assets.

To what extent will the Fed under Jerome Powell tighten policy to combat inflation? According to some observers, the answer to that issue will help determine whether Bitcoin will follow up its 60% rise in 2021 with another strong year.

Another school of thought contends that if corporations such as Meta Platforms Inc. (previously Facebook) and Apple Inc. push deeper into the metaverse and consumers continue to invest in non-fungible tokens, crypto will rise regardless of macroeconomic forces. Consider the $69.3 million sale of an NFT painting at Christie's last year, or the loosely organised group of crypto investors that battled billionaire Ken Griffin at an auction for a copy of the United States Constitution. As of 9:52 a.m. in Hong Kong on Tuesday, bitcoin was trading at roughly $46,100, up around 0.2 percent on the day. In this article, four market watchers outline their predictions for the token and the broader crypto ecosystem in 2022:

Bullish Bitcoin Technicals

"Based on our long-term trend-following gauges, we are optimistic Bitcoin long-term," Katie Stockton, founder and managing partner of Fairlead Strategies LLC, said in an email.

"We believe the long-term uptrend will continue, and a more emphatic breakthrough to new highs would result in a measured-move prediction of around $90,000." For the time being, a corrective phase is in effect, however there are signs of short-term downside weariness."

The Fed and the Metaverse

“The No. 1 influencing factor for Bitcoin and cryptocurrencies in 2022 is central bank policy,” Antoni Trenchev, managing partner of crypto lender Nexo, said in an email. “Cheap money is here to stay which has huge implications for crypto,” as “the Fed doesn't have the stomach or backbone to withstand a 10%-20% collapse in the stock market, along with an adverse reaction in the bond market.”

Renchev predicts that Bitcoin will hit $100,000 by the end of June, despite a turbulent 2022. He also expects tokens like Solana and Avalanche to face the same scaling challenges that Ethereum and other older protocols did in 2021, rather than "these upstarts — awash with arrogance, attitude, and funky narratives — to face the same scaling challenges that Ethereum and other older protocols faced."

He wrote, "What I'm actually enthusiastic about in 2022 is the metaverse." "The 'birth' and use of the term'metaverse' is a lovely tangle with a lot of promise. The metaverse, infrastructure creation, and eventually the NFTs that will make up part of the economy there will be some of the underlying themes of next year."