- The crypto market has been choppy amid thin holiday trading and changing macro tides next year.
- That choppiness is likely to persist into the new year, according to Fundstrat’s Armando Aguilar.
- He shared his 2022 price forecasts for BTC and ETH, plus 16 high-conviction altcoins on his radar.
At this point, it would have to take another display of extreme upward
volatility
for bitcoin to hit $70,000 — a price level that Armando Aguilar had hoped to see the largest cryptocurrency reach after a parabolic year.
With few short-term catalysts on the horizon and a slew of changing macro tides in store for next year, Aguilar has turned more cautious. As the
Federal Reserve
doubled its pace of tapering and planned for three rate hikes in 2022, the market could get a lot choppier especially if higher inflation and the impact of the Omicron variant persist.
Adding to the uncertainty are supply-chain issues that could hamper bitcoin mining facilities as well as the potential risk and volatility associated with the midterm US elections next year.
“From a macro perspective, I think the first quarter and second quarter of next year will be a little choppy with all these things coming into play,” Aguilar, a vice president of digital-asset strategy at Fundstrat Global Advisors, said in an interview.
Bitcoin to reach 6 figures, ethereum to surpass $9k
Nevertheless, he expects the continued institutional adoption of bitcoin amid rising inflation to lift the price of the token to six figures by the first half of 2022. There are enough public US companies exposed to bitcoin now that Valkyrie Funds has launched the Balance Sheet Opportunities ETF to specifically track such firms, he noted.
Meanwhile, he sees ethereum surpassing $9,000, driven by the explosive growth in decentralized finance, the metaverse, and non-fungible tokens.
The total value locked in decentralized finance applications had surged to about $250 billion as of December 22 from over $18 billion at the beginning of the year, according to DeFi Llama. In Aguilar’s view, the institutional demand for DeFi will skyrocket in the year ahead as those investors search for yield in a low-interest-rate world.
“I believe that DeFi will play a major role for institutional capital next year,” he said, adding that more products including structured products,
liquidity
staking, and derivatives could come to market to cater to those clients.
He pointed to the fast-growing metaverse sector as another positive catalyst that could lift ethereum’s price. Since Facebook’s corporate rebrand to “Meta” in October, Wall Street analysts have rushed to dub the metaverse as the next multi-trillion-dollar opportunity while metaverse-linked altcoins and land NFTs surged through the roof.
Despite the rise of rival smart contract platforms this year, ethereum continues to be the dominant network where the majority of the DeFi protocols and metaverse platforms are built. However, the surging amount of activities has also caused network congestion and spiking gas fees, paving the way for other layer-one protocols to grab market share. For Aguilar though, he sees more opportunities in cross-chain activities than blockchain competitions.
“I don’t necessarily think it’s about which one is going to win. There might be some that are ahead of others,” he said. “But I think it’s more about how they are able to integrate across ecosystems and provide value. I think that’s where the layer-ones will have a good performance next year.”
16 high-conviction altcoins on his radar
In September, Aguilar shared with Insider his sector-based approach toward picking altcoins that could notch substantial gains. The two sectors he bet on — metaverse-linked altcoins and layer-one protocols — are among the best-performing baskets of tokens this year.
As 2022 approaches, he continues to bet on the tokens of smart contract platforms including avalanche (AVAX), polkadot (DOT), kadena (KDA), terra (LUNA), cosmos (ATOM), solana (SOL), and algorand (ALGO).
While avalanche, terra, and solana have achieved headline-grabbing gains this year, Aguilar highlights kadena as one to watch next year. The protocol, which boasts low gas fees and high throughput, claims it’s the fastest blockchain platform, with the ability to support 480,000 transactions per second, compared with solana’s ability to handle 50,000 transactions per second. The KDA token has shot up 6,363% this year but receded 37% in the last month, according to CoinGecko pricing.
As ethereum scaling issues persist, layer-two networks like polygon (MATIC), which aim to make ethereum-based transactions cheaper and faster, will also become a bigger deal in the year ahead. The MATIC token soared 14,017% in the past year, CoinGecko data shows.
Tokens including boba network (BOBA), yearn.finance (YFI), aave (AAVE), and 1inch (1INCH) represent Aguilar’s high conviction in the growth and institutional adoption of DeFi.
“As institutional and retail demand drove DeFi into new heights, the trends will continue to spill into 2022,” he said, adding that near 25% of all VC funding this year or 428 deals worth about $1.9 billion were concentrated in DeFi.
He also likes infrastructure plays including helium (HNT) and giant protocol (GIC).
Dubbed “the people’s network,” helium draws on a decentralized network of individually owned hot spots to connect low-powered Internet of Things devices to the internet. Miners can earn the HNT token by providing network coverage and relaying data to hot spots. The token surged 2,782% in the past year.
Giant protocol, which recently raised $5 million in a seed funding round led by CoinFund, is the “helium for existing infrastructure,” Aguilar said.
“It is going to provide internet connectivity through existing towers or infrastructure from telecom companies,” he added. “The technology is similar to helium except that here instead of creating a mesh network, they are going to be used in existing infrastructure with telecom providers and having that earning capability through a network.”
One of his top metaverse-related picks for next year is Render (RNDR), which offers decentralized graphics-processing-unit rendering services at “a fraction of the cost and speed of in-house rendering” to users including metaverse projects. The network most recently raised $30 million in a token sale led by Multicoin Capital. The RNDR token has surged 5,246% over the past year, according to CoinGecko.
With the Omicron variant spreading like wildfire and the potential of further shutdown looming, Aguilar is broadly bullish on gaming guild platforms that provide players with the resources to earn tokens from blockchain-based games. For example, the yield guild games (YGG) platform has helped some players in the Philippines make a living by operating a scholarship program for the axie infinity (AXS) game.