How will the crypto market shape up in the coming year? Here’s a rundown of the most important things you need to know.
After a turbulent year of market crashes and bankruptcy filings from firms like FTX and BlockFi, things have not been looking great for the crypto market. Many cryptocurrencies crashed hard in the past year. For instance, on December 31, 2021, Bitcoin was worth US$46,224.39, but as of December 20, 2022, it was only trading at US$16,794.
If you intend to invest in crypto in the near future, it is important to go into it armed with an understanding of how the situation will progress over the next year. To help make that process easier for you, we have compiled a list of the top five crypto predictions for 2023.
Bitcoin might sink further
According to the experts at cryptopredicitions.com, the average price of Bitcoin in January 2023 would be around US$17,083. By the end of 2023, it would only be able to reach a maximum price of US$16,900.
Analysts at the banking corporation Standard Chartered also believe that Bitcoin wouldn’t recover from the fall in price it experienced in 2022. In fact, they think it would fall to somewhere around US$5,000. Moreover, the decline in tech company stock prices would speed up the Bitcoin price crash, and the bearish market sentiments could spiral into more crypto company bankruptcies and a further loss in investor confidence in the space.
Crypto auditing would become more widespread
The dissolution of FTX and BlockFi has highlighted the need for regulation in the crypto space. Some effort towards self-regulation is already underway with the introduction of the proof of reserves (PoR) mechanism—which reveals whether a crypto exchange has sufficient funds for each and every customer to successfully cash in on their crypto holdings.
Another step in the direction of crypto auditing is coming from the Financial Accounting Standards Board (FASB) in the United States. FASB is currently working on rules for crypto accounting, and once those are in place, we can probably expect a greater level of transparency from crypto firms.
Ethereum might be on the rise
2022 was the year that Ethereum finally made the switch to proof of stake (PoS) and in doing so made crypto mining less resource intensive than it used to be. Today, US$20 million worth of Ethereum has been staked, and this could get higher as Ethereum undergoes its next Shanghai upgrade next year. The Shanghai update would make it possible to get your staked Ether back. This would encourage more people to stake their Ethereum.
Meme coins will cease to exist
Both in 2021 and 2022 we saw the rise of meme coins. All sorts of meme coins, like Dogecoin, Shiba Inu Coin and Dogelon Mars, soared in value this year, but these would be unable to hold their value as the next year rolls in. We have already seen this happen with some meme coins.
For instance, when the Korean survival drama series Squid Game came out in 2021, a new meme crypto token called SQUID capitalized on the hype and came to the market. This token performed fairly well initially, with its value going from US$0.01 to US$4.42 in only three days. But the token turned out to be a scam and died out.
The same is predicted to happen to other meme cryptos. Experts say that as the crypto market becomes more mature, investors would choose to put their money into quality projects as opposed to investing in meme tokens.
Decentralized finance (DeFi) will reign supreme
Another byproduct of the collapse of centralized financial exchanges like FTX and BlockFi has been the rise of DeFi platforms. Instead of being governed by a central authority, DeFi platforms are maintained via protocols that all those using the platform must follow. Ever since the two companies filed for bankruptcy, DeFi transactions increased by 68%.
Others suggest that DeFi is a part of the larger Web 3.0 trend wherein information is no longer held by central authorities, like Facebook and Google, but instead stored on various computers within the Web 3.0 network. While it might take a long time to actually get Web 3.0 to happen, as the concept becomes more popular, DeFi would probably also continue to stay relevant.
Well, there you have it folks, these are five big predictions for the crypto market for the coming year. While all of these come from experts, it is important to note different analysts think differently about the crypto market. Hence, make sure to take these predictions with a grain of salt and do your research before deciding to invest or disinvest in crypto projects.
This article is meant for informational purposes only, please make investment decisions based on your own discretion.
- Transparency in the Post FTX World: What is Proof of Reserve?
- What Are Decentralized Financing (DeFi)Platforms?
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