New wave of volatility

It is common knowledge that the crypto market is highly volatile. However, this year, volatility may reach new levels. Experts emphasize that dizzying price swings have become a real nightmare for investors. Experienced traders found themselves on the crest of the rising wave of the digital market and managed to benefit from the situation. Meanwhile, those who invested funds in bitcoin, ethereum, and other altcoins in October-November 2021 incurred huge losses. Notably, it is almost impossible to predict a new surge in volatility. That is why such losses are a usual phenomenon.

Increased regulation

State regulation of cryptocurrencies is limited to restrictions. Regulatory authorities of some countries are closely monitoring the crypto world. Central banks and governments have their figures on the pulse, controlling cryptocurrency transactions performed by individuals and legal entities. The concept of the crypto assets contradicts governmental control. However, large regulatory agencies such as the SEC, the CTFC, and US lawmakers are thinking over new methods to control the crypto market. In 2022, regulation of the crypto market could become even tougher. The key goal is to control the global money supply. Governments have no intention to put aside such effective instruments as monetary and fiscal policy.

Government restrictions

Now, the risks of banning digital assets are rising worldwide. In 2021, China prohibited its citizens from crypto trading and mining, thus forcing them to leave the country and settle in other states. In March 2022, the issue became thorny in Russia amid the escalation of the Ukrainian crisis. The fact is that at the beginning of the spring, authorities of some European countries and the US announced their intention to isolate Russia from the leading crypto exchanges. In this case, Russian crypto traders will inevitably face problems. The decision was caused by the military conflict in Ukraine. Experts suppose that this year, some countries may repeatedly ban cryptocurrency usage. However, participants of the crypto market may use safe Internet channels to avoid various government restrictions.

Crypto taxes

Some experts consider cryptocurrencies a financial instrument that allows traders to avoid taxes. However, authorities of some countries are always finding new ways to make money from crypto traders. In fact, taxes have a significant influence on the crypto sphere. Monetary authorities of some states, including the US Internal Revenue Service, are considering measures aimed at the fight against crypto assets. Fiscal policy may either support or destroy the crypto market. Leading politicians and regulators may use taxes as a tool to control the monetary system.