Crypto became ‘normalized’ in 2021. Here’s what to expect for the economy in 2022

Wharton professors predict what's to come in cryptocurrencies, plus real estate and inflation.

Terry and Belinda Kilby of Elevated Element fly a drone inside the Baltimore School for the Arts. The drone's crowd view is projected on the screen behind them.

(Photo by Stephen Babcock)

In 2021, we saw cryptocurrency being used to create generational wealth, companies diversifying their portfolios and cash reserves with Bitcoin, and even universities like Penn begin to accept crypto for tuition payments. We learned about Bitcoin mining and NFTs and watched as folks tried to figure out, “How will blockchain act in space?” The term “metaverse” re-entered the zeitgeist.

Accordingly, and as we enter the final days of 2021, a handful of University of Pennsylvania’s Wharton School professors gathered Wednesday to forecast the trends we’ll see in cryptocurrencies, the real estate sector and the economy overall in 2022.

All three areas have seen massive change in the last few years as technology has become more prevalent in our daily lives and the pandemic has changed the way we live and work, they said. The way we look at the world has also become increasingly globalized in recent years, and all three industries have been impacted.


One of the fastest-growing industries that saw a lot of maturation in 2021 was cryptocurrency, said Kevin Werbach, a professor of legal studies and business ethics. There’s been a massive increase in adoption by retailers, as well as financial institutions such as Square, PayPal and Robinhood, and it’s brought blockchain technology and cryptocurrencies mainstream.

“2021 was really the year that crypto become normalized,” Werbach said, with something like half of all of the cryptocurrency traders in the US only getting into the market in the last year. There are now at least 300 million crypto accounts worldwide.


While it’s quickly gaining more mainstream attention, the prof cautioned CFOs and other financial leaders against obtaining crypto just for the sake of owning it. Blockchain technology and cryptocurrencies have a lot of advantages, especially to those making global transactions. But the landscape will likely experience more regulation in the coming years, as it is normalized on the institutional side, too.

We also have no way of knowing its true sustainability outside of a bubble, Werbach said, amid 80% corrections in Bitcoin and other major cryptocurrencies.

“When you’re in a bubble — and we’re clearly in a bubble right now — it’s impossible to think straight. It’s impossible to recognize that at some point, the bottom will fall out,” he said. “And so I don’t know exactly when that’s going to happen, but that shake out is bound to occur in the crypto markets and then we’ll see what’s real and what’s not.”

Real estate

The real estate market has also had a wild two years, as remote work and stay-at-home orders boosted a desire to move to COVID-friendly homes, said Susan Wachter, a professor of real estate. As home values have risen about 15% nationally, there’s also been a push to produce rental housing as well, she said. Mortgage rates are low, but slowly rising in recent months, and inflation could push 2022 or 2023 rates toward 5%.

And the pandemic has shown us a clear divide in economics between American households. Leading up to the pandemic, people working in non-tele-friendly jobs had, on average, about three weeks of expenses on hand in cash, said Chris Geczy, a professor of finance. When the pandemic hit, those households were the most vulnerable, he said. Meanwhile, the majority of those who can work remotely have been able to save and have extra spending cash.


The pandemic, and the emerging variants of the virus like Delta and Omicron, have undoubtedly affected the market, Geczy said. Inflation expectations might still be transitory, though we may feel the effects for a few years.

The professor noted that supply change challenges are certainly driving inflation. One survey of CFOs and CEOs found that businesses are planning to raise their prices as they themselves are expecting higher pricing for goods. We’ll likely feel the most effects of inflation in the middle of next year, Geczy said.

“The general and massive improvement in the ‘average’ household balance sheet has been widespread,” Geczy said. “That said, one area of concern I continue to have is around increases in subsistence good prices.”

Some prime examples of how these shocks will be felt: The average wage for non-farm workers has increased to about $31 per hour from $28.50 an hour, while gas prices have been up about 60% in the year. Experts also predict utilities like energy are set to spike this winter; The Philadelphia Inquirer reported that local provider PECO boosted its energy charge by 6.4% on Dec. 1.

Companies: Wharton School
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