As a rough crypto winter rages, crypto investors are wondering “will crypto go up in 2023?” In this post, we discuss six crypto trends in 2023 to lead the industry.
Standing on the verge of entering 2023, when we look back at 2022, the crypto community will agree that it has been a really hard year. With leading cryptocurrencies like BTC and ETH going down by over 60%, the burning question now is, “Will crypto go up in 2023?”
The jury is still out on answering that question with a solid positive or negative. In the meantime, we have compiled a list of the top six crypto trends in 2023 that will lead the industry. Let’s have a look!
Crypto Trends in 2023 to Watch out
Institutional Adoption Of The Crypto Ecosystem
Financial institutions and large corporations have traditionally been skeptical of the cryptocurrency ecosystem. However, there has been a significant shift in the way institutions view digital assets since 2020. The institutionalization of cryptocurrencies will unlock the value potential, thereby benefiting the decentralized ecosystem. Institutional adoption has the potential to accelerate the development of a formal regulatory framework.
As adoption grows, organizations around the world will be compelled to consider how to incorporate digital assets into their business models. For example, BlackRock, the world’s largest asset manager, launched its first crypto ETF in April. The iShares Blockchain and Tech ETF provide investors with exposure to cryptocurrency and blockchain companies. The strong client demand for Bitcoin and other crypto assets has softened Wall Street’s initial skepticism toward crypto. Therefore, we can say that institutional adoption of cryptocurrencies is one of the top crypto trends in 2023.
New rotations will emerge
Coins that perform well in cryptocurrency tend to rotate and replace coins that perform relatively low. Sometimes BTC is dominant, other times altcoins are, and sometimes a single coin, such as ETH, takes the lead. In other words, coins that have high volume and rapid price increases tend to rotate as buyers and sellers shift from coin to coin. In the post-Merge era, the price of ETH has lost its luster, and the asset now reflects the bearish trend that dominates the rest of the market. Back in May and June of 2017, we saw a surge in all cryptos, but especially altcoins, with Ripple and Ethereum reaching all-time highs.
In the meantime, a series of minor rotations have occurred, and we saw attention shift from long-standing coins to new coins like Cardano, Verge, Tron, and so on. First, simple transfer coins like Bitcoin were popular, then privacy coins, then low-cost/high-supply coins, then coins with networks like Ethereum and NEO, and so on. Since the Merge, the price of ETH has dropped 30% from its $2,000 high. It’s likely that much of the speculative capital that backed the bullish Merge narrative has shifted towards stablecoins searching for the next investment opportunity.
So while we can’t answer “will crypto go up in 2023?” with any conviction, new rotations in the market will surely be a crypto trend in 2023 to watch out for.
Cryptocurrency insurance is a growing crypto trend in 2023
As cryptocurrency markets mature, players from other industries are flocking to them. One of them is the insurance industry. Chainalysis reported in its 2022 Crypto Crime Report that “cryptocurrency-based crime reached a new all-time high in 2021, with illicit addresses receiving $14 billion during the course of the year, up from $7.8 billion in 2020.” In addition, as any crypto investor is aware, the market experienced a dramatic downturn in 2022, plunging crypto into a bear market. Some of the most established cryptocurrencies, such as Bitcoin, have lost more than 50% of their value, while others have frozen withdrawals, and some have completely collapsed.
The combination of these events appears to have resulted in a significant shift in the investors’ attitude. Mneahilw, although cautious, the traditional insurance market is gradually becoming more comfortable with digital assets. As the market in this space evolves, it is critical for those who own or work with digital assets to consult with experienced insurance advisors to obtain guidance on the best risk-transfer products available.
DeFi Powers More Use Cases
Decentralized finance (DeFi) has skyrocketed from $112 billion in 2020 to $236 billion in TVL in 2021. Emerging DeFi technology and services are unique to cryptocurrency because some of these products and services would be impossible to create without blockchain technology. Clients will rely on advisors to help them navigate this space, and advisors must be able to steer them in the right direction. For instance, the Compound Finance Protocol is a DeFi application that allows any user to withdraw assets or offer liquidity in one of their liquidity pools as long as they have an Ethereum wallet. This is a recent example of liquidity mining. The users earn rewards in accordance with the basic principles of Compound.
Further, in an effort to assist governments in addressing this issue and defining the regulation of cross-border digital asset markets, the World Economic Forum recently developed a policy toolbox for decentralized finance. The policy document was written with input from legislators involved in the development of the new European Crypto Assets Regulation Markets (MiCA). Therefore, the growth of DeFi use cases will be one of the best crypto trends in 2023.
Stablecoins And CBDCs Alter The Crypto Ecosystem
A stablecoin is a type of digital currency that aims to provide price stability while also providing additional security by being backed by a reserve asset such as a pre-existing currency (e.g., USD) or gold. According to economists, the advantages of stablecoins include lower-cost, safe, real-time, and more competitive payments when compared to what consumers and businesses currently experience. Several major banks, primarily European central banks, are testing CBDCs. Many of these central banks are still in the early stages of testing CBDCs. Menahwile, the Sand Dollar has been in circulation in the Bahamas for more than a year as its local CBDC.
Riksbank in Sweden has created a proof of concept and is investigating the technology and policy implications of CBDC. In China, the digital renminbi [known as e-CNY] is gaining traction, with over a hundred million individual users and billions of yuan in transactions. India joined the race by announcing its own CBDC, the digital rupee. And, just last month, the Federal Reserve released a report in which it stated that “a CBDC could fundamentally change the structure of the United States’ financial system.”
Metaverse and NFTs as the next Internet
If we are talking about the crypto trends in 2023, then Metaverse has to be on the list. It was difficult to move in 2022 without coming across the term “Metaverse.” With the Metaverse concept predicted to add $5 trillion to the global economy’s value by 2030, 2023 might just be a key year in determining the direction the tech will be taking. During the pandemic, businesses shifted to a work-from-home model, and many are now taking a hybrid approach. The next level of this work-from-home opportunity entails assisting people in working and collaborating in a virtual reality environment. Horizon Workrooms, an avatar-based collaborative workspace, is the newest technology enabling this on Facebook.
Another aspect of the decentralized Metaverse is NFTs. These are one-of-a-kind tokens that exist on blockchains, and can be used to represent unique online goods or commodities. For example, Nike, Adidas, and Forever 21 have used this technology to create digital goods that their owners can wear, trade, and display in the Metaverse.
Conclusion
So, will crypto go up in 2023? Experts predict signs of recovery despite the crypto winter. The global economies are going through a rough patch, and persistently high inflation remains an issue in the United States and many other countries. Risk-on assets like cryptocurrencies are incredibly volatile, and even the strongest price trends in crypto are subject to the whims of macro factors. These factors include geopolitics, equities markets, and other relevant events that impact investors’ sentiment. You have to be careful to identify the crypto trends in 2023 and make the most of every opportunity.