Episode 83 of Season 3 of The Scoop was recorded remotely with The Block’s Frank Chaparro and Larry Cermak, VP of Research at The Block, and Fadi Aboualfa, Head of Research at Copper.
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As 2021 comes to a close, Copper's head of research Fadi Aboualfa joined The Block's VP of Research Larry Cermak and host Frank Chaparro to unpack the trends that shaped the crypto market this year as well as the future dynamics that might be on the horizon for 2022.
Aboualfa highlighted the ascent of so-called meme cryptocurrencies like dogecoin and shiba inu, which surged in value this year. Aboualfa said their rise is tied to strong social and community elements.
"There's a social aspect to that price appreciation," he said. "But we've got to remember that bitcoin also started as a social coin. Bitcoin started by a couple of people who really believed in it and started becoming very vocal about it."
"Crypto markets can be extremely irrational and they can become extremely rational," he added.
Another trend unpacked by Aboualfa was the race to become the next Ethereum killer. Projects like Avalanche and Solana are among the layer-1s that have seen their price surge as investors appear to believe that these blockchains might be superior to Ethereum.
Ultimately, Aboualfa and Cermak both agreed that the crypto markets won't face a prolonged bear market akin to the one that occurred in 2018, but markets will face volatility and short-term setbacks. Cermak outlined two major risks in 2022 that markets face:
"One is that, you know, central banks are now starting to hint at tapering measures, starting to hint at being less aggressive when it comes to just responding to Covid and responding to the situation. That, I think, can have a very negative effect when the market starts pricing in that the central banks are going to be way more conservative."
"Second risk that I think is pretty real, but I think it's now smaller after what I've seen yesterday at the hearing, is the regulatory risk in the US," he added, referring to the recent hearing on crypto hosted by the U.S. House Committee on Financial Services.
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