The crypto market has gone through a lot of conflict in 2022, even though that’s not the way it started. Troubles like the sudden fall of the Terraform ecosystem’s Terra Luna coin and UST stablecoin, the insolvency of the Three Arrows Capital (2AC), and the most recent collapse of the once-dominant and the former second largest crypto exchange, FTX and its sister firm, Alameda Research — among other turbulence we’ve seen this year has sent a great shock to the crypto market participants.
These events affected numerous investors, both retail and institutional, and caused them to be cautious when allocating their funds in the market, as evidenced by the decline in bitcoin and the overall cryptocurrency market since May.
2023 is another year and people keep speculating about what trends to anticipate, either positive or negative. Although forecasting what to expect in the coming year is an arduous task due to market uncertainties, there are still some important trends we might all look forward to.
This article will provide you with an overview of the crypto trends we can expect in 2023. So, keep reading to find out what’s in store for you in the coming year.
10 Promising Crypto Trends to Watch Out for in 2023
- Comprehensive Cryptocurrency Regulation
Many countries around the world, most especially the USA, have been moving towards the cryptocurrency space in 2022 in a bid to offer more clear regulation to safeguard investors from the risky speculative asset class, especially in the wake of the sequence of crypto-related firms’ collapses we’ve all seen.
In addition to the efforts made by American financial regulators like the SEC, CFTC, and others to bring the industry under their control, there are numerous other international financial regulators working to provide a more thorough framework of regulation to oversee the sector.
As recently reported by the Financial Times, the outgoing secretary-general of the Financial Stability Board (FSB), the world’s most powerful financial watchdog, will release firm steps to regulate the cryptocurrency industry in early 2023 and enact them speedily.
This was due to the criticism leveled at several policymakers following the abrupt collapse of the once-dominant Sam Bankman-Fried-led crypto empire, which spanned territories and achieved massive scale with little oversight before its multibillion-dollar demise. Financial regulators at the global and national levels are continuing to work hard to prevent similar incidents in the future.
2. Many Memecoins Might Disappear
It appears that the days of blindly investing in random cryptocurrencies are long gone, as most crypto investors are now concentrating their funds on cryptocurrency projects that provide valuable and realistic utilities.
Although the majority of the existing leading meme cryptocurrencies are now being used for practical operations and some meme coin projects are already releasing new products that provide real uses for their ecosystems, for instance, Shiba Inu (SHIB), the second-largest memecoin, is in the process of launching its decentralized stablecoin alongside several other projects. Additionally, there is a rumor that Twitter will soon support Dogecoin (DOGE) for tipping content creators.
While some of these memecoins are developing from being merely joke currencies to tokens with useful functions, the vast majority of them still don’t have much of one.
3. More Investment in Transparent Stablecoins
The idea of stablecoins is still gaining ground despite the fact that the most well-known stablecoin, Tether, is dealing with its own legal and media issues. Stablecoins are an unavoidable part of the cryptocurrency market because they make it simple to exchange value and convert crypto assets to our local currencies.
Additionally, stablecoins are used in DEFI applications due to their comparatively stable prices. If someone needs to engage in a decentralized transaction, they don’t want the short-term fluctuation of other crypto assets to cause their capital value to diminish.
But in order to avoid losing their money, as happened to Terra’s UST stablecoin in May 2022, users will be more likely to use stablecoins that offer open source code, proof of reserve (PoR), and a guarantee that their funds will always be valued at $1. Some of the top stablecoin issuers have yet to release their proof of reserve, or PoR, to demonstrate to users that their funds are secure, even though many have already begun to do so. Investors will, however, switch to stablecoins that guarantee quality assurance.
4.NFTs and Metaverse to Focus More on Real Utility
Non-fungible tokens (NFTs) and metaverse platforms are still significant market trends, but there is room for improvement in terms of monetization. Mr Mint wants to change that, and its multi-utility NFTs and P2E gaming metaverse, both of which let users mine real bitcoin, might set the tone for 2023.
This is a vast, innovative NFT ecosystem with never-before-seen assets to HODL and to use, instead of just being a collection of works of art that users hold for no other reason than to display.
Users will be able to participate in bitcoin mining in the metaverse using their NFTs without having any prior knowledge of the technical aspects involved. This guarantees them the ability to earn Bitcoin (BTC) as passive income without having to do anything, serving as an exciting way of encouraging players to create residual income through experiences they would enjoy.
The NFTs and metaverse ecosystems need this kind of monetization to develop to their full potential, and people will pour into projects that offer the combination of these rewarding and fun features.
5. Decentralized Finance to Gain More Adoption
With the bankruptcy of FTX crypto exchange, the adoption of decentralized finance have already skyrocketed as many cryptocurrency users have started to lose trust in centralized exchanges. This growth may as well continue through 2023 because many people will now be willing to learn more about how the decentralized system works, due to the negative effects the alleged misappropriation of the former CEO of FTX exchange have caused to the millions of users and the general cryptoverse.
The reason why the adoption rate of decentralized finance, or DEFI, will increase dramatically in 2023 is that it operates on smart contracts–which is a code-based protocol that allows everyone to manage their funds directly from their crypto wallets, hence eliminating the need for a third party to do the same. This is one of the primary purposes of blockchain technology in the first place.
With this, everything is recorded on the blockchain, and developers can always audit their operations and provide information to investors about whether a DEX (decentralized exchange), lending platform, or any other decentralized platform is functioning properly.
6. Increased Adoption of Bitcoin
Since its launch in 2009, Bitcoin adoption has been soaring year after year. By the end of 2022, according to research company Business Insider Intelligence, there will be more than 25 million bitcoin owners, a 16.7% increase from the previous year. This suggests that in 2023, the rate will continue to rise.
Although Bitcoin is expected to end the year at around $17,000, down from around $19,500 in the wake of the FTX conflict, the turmoil appears to be calming now that several bodies have intervened and are in the process of prosecuting some of the “bad apples” involved.
As was previously mentioned, following the FTX crises, people, institutions, governments, and financial regulators are now waking up, becoming cautious in how they allocate their funds in the market, and seeking ways to implement strong regulation to prevent users’ funds from being wiped off.
In 2022, several institutional cryptocurrency investors have raised concerns about poor regulation and high volatility in the crypto industry, thereby discouraging them from venturing largely into the speculative asset class. However, a number of international regulators and governments have recognized the urgent need for more definite and strict regulation of the cryptocurrency market in 2023. This will encourage big investors to add cryptocurrencies, particularly bitcoin, to their portfolios. And the more involved they are, the more the price of BTC rises.
7. Inter-chain Operability to Become Increasingly Important
When discussing blockchain technology, interoperability refers to a blockchain’s ability to freely transfer data with other blockchain networks. This improves the security of DLT designs, boosts flexibility, and fixes performance issues while increasing the usability of blockchain assets.
The full potential of blockchain technology has not been realized because different blockchains cannot efficiently communicate with one another. Many chains operate in solitude, which makes it impossible for people to take advantage of all the benefits of ledger technology.
According to crypto data aggregator Token Terminal, bridge exploits account for about 50% of all DeFi exploits, totaling around $2.5B in lost assets. Even though there have been numerous hacks and exploits on cross-chain bridge platforms in 2022, they are unavoidable and will always be required in the market. The only thing that the developers will need to improve is the security of those bridges by employing a tool like artificial intelligence (AI), as well as experts to monitor smart contracts from time to time.
8. DAOs and Web 3.0 to Enter Mainstream
The shift from conventional corporate structures to decentralized autonomous organizations (DAOs) is gaining momentum as the Web3 movement expands. A DAO is simply any type of organization that is created using the principles contained in a smart contract, a type of computer program that is transparent and directly controlled by every organization’s members without any interference from a centralized authority. People are going to be willing to abandon the current hierarchical organizational structure and embrace one that gives them equal opportunity with every other person involved.
Web3 generates a lot of waves as it provides individuals and organizations a platform to communicate and conduct their businesses without relying on external hosts or websites. This will continue to make people look out for the next iteration of the internet in 2023 and beyond.
Furthermore, Web 3.0 offers a viable option for people who want to finance their websites independently of big businesses that own servers or levy hefty fees, while also allowing participants to have unlimited control over their data and providing more security.
9. Governments to Introduce their CBDCs
The growing popularity of bitcoin, stablecoins and digital currencies has prompted many countries and central banks to explore the creation of their native Central Bank Digital Currencies (CBDCs) to keep up with the ongoing digital trend.
A study by the Reserve Bank of India shows that as of July 2022, there were about 105 countries exploring CBDC, a number that covers 95% of global gross domestic product (GDP). The Bahamian Sand Dollar, introduced in 2020, was the first country to introduce a CBDC, and Jamaica’s JAM-DEX was the most recent.
Similarly, 19 of the G20 countries are exploring a CBDC, with 16 already in the development or pilot stage. This includes South Korea, Japan, India, and Russia. Each has made significant progress over the past six months. As a vast majority of these countries have not yet been able to launch their CBDCs, the growth will continue in 2023.
10. Crypto Assets for Day-to-day Transactions
As the number of cryptocurrency users increases, it makes sense that digital assets would begin to be used for daily transactions. Many cryptocurrency owners currently lend and stake their holdings, while the vast majority of investors simply use it as a tool for investments by keeping it in their wallets.
Over 300 million people worldwide already own cryptocurrencies like Bitcoin and Ethereum as of 2022. However, Binance also released a report in 2021 that demonstrated 21% of users exchange using cryptocurrencies, while 39% of owners keep their coins in wallets.
Now, it should be noted that the rate at which people realize they need to use cryptocurrencies for daily transactions will explode as more users enter the crypto industry.
Let’s see where the new year takes us in terms of all the market speculation.