After the perfect storm of 2022, will 2023 be the breakthrough year for cryptocurrencies? Once the euphoria (and confidence) is gone, what will happen to the entire ecosystem? Here are the experts’ predictions.
Never before have cryptocurrency analysts and experts been cautious in formulating their predictions for 2023.
2022 was one of the most turbulent years in the history of cryptocurrencies, where the bankruptcy of the crypto exchange FTX represents only the latest act (with a bitter ending) of a irrational euphoria worthy of the most famous speculative bubbles that the financial world has ever witnessed, but also the nemesis of the ruthlessness of bad operators in the sector.
The world of cryptocurrencies has always been characterized by violent and sudden movements, capable of creating and destroying entire assets overnight. But the spring implosion of algorithmic stablecoin Terra Luna and subsequent chain failures (of lending platform Celsius, Voyager, hedge fund Thress Arrows Capital and most recently FTX) laid bare all the criticalities of the entire cryptographic system, dragging down even Bitcoin, the queen of cryptocurrencies.
Many observers wonder if these facts could mark the end of cryptocurrencies or if there are the conditions for a restart after an exceptionally harsh and prolonged period of crisis.
Against this background we analyze the key themes that will drive the cryptocurrency market and the predictions for 2023 from the experts.
Cryptocurrencies: themes and predictions for 2023
After what happened in 2022, making predictions for 2023 is even more difficult. According to analysts, the wave of bankruptcies that has hit the sector will continue in the next few months. Other companies in the crypto world (even the least suspect) could falter because the contagion is too large and too difficult to quantify. For this reason, the forecasts of the experts focus on some major themes to follow in the coming months:
- disaggregation of intermediation activities
- increased regulation
- end of speculation and search for utility
- training on how cryptocurrencies work
1# Breakdown of brokerage activities
Bankruptcies and deleveraging events have culminated in a crisis of confidence that many industry analysts consider not yet over: however, the cause must be sought in human errors and not in faulty technology.
To prevent a new FTX-like scandal from happening, crypto lending platforms will need to unbundle custody, brokerage and lending services, much like they do in traditional finance. This transformation could lead to the consolidation of the most solid and established operators, such as Coinbase, Binance and Uniswap.
2# Increased regulation
Another major theme of 2023 will be that of regulation. At the beginning of the year, the MiCa, the European regulation to protect consumers from the risks associated with investments in cryptocurrencies and stablecoins, will become operational, defining the characteristics and requirements that companies that issue digital assets must comply with.
Greater regulatory clarity could encourage the large-scale adoption of digital currencies by reducing their volatility.
The urgency for more cryptocurrency regulation “will collide in an epic battle with the need to maintain decentralization,” explains Laura Shin, host of the “Unchained” podcast.
3# End of speculation and utility research
The events of 2022 teach that it is limiting to look at cryptocurrencies only as a speculative tool, because there is a lot of diversification in the sector. Giacomo Vella, Researcher for the Blockchain & Distributed Ledger Observatory of the Politecnico di Milano, argues that the value of many cryptocurrencies underpinning complex ecosystems (such as Ethereum, Polygon, Solana) and used to build decentralized finance (DeFi) and NFT applications it is not only based on the market value but above all on the utility of the underlying project.
“Hopefully, the final stage of the cryptocurrency market correction will shift cryptocurrency projects away from speculation towards utility, i.e. towards more meaningful social Web3 platforms and protocols,” predicts Alex Zhang, head of Friends with Benefits DAO.
In 2023 and in the years to follow, the trend will therefore be to identify cryptocurrency and decentralized finance projects with long-term investments and in particular with strong "use cases" or practical applications in the real world.
4# Training on how cryptocurrencies work
To overcome the crisis of confidence and to identify the best crypto projects, investors and financial professionals will have to study more deeply into how the technology actually works. In this way, those who decide to invest in cryptocurrencies will do so not because they believe they will go 100 times their current value, but because they think there really is value, i.e. utility.
Cryptocurrencies, Vitalik Buterin’s predictions
One of the most disruptive characters in the sector is undoubtedly Vitalik Buterin, CEO and founder of Ethereum, the second most capitalized cryptocurrency after Bitcoin. Buterin reviewed the negative events that have hit the sector during 2022, emphasizing what lessons investors need to draw from them for the future. Before investing, it is in fact necessary to understand whether a particular project can be influenced by distortions caused by man.
Buterin recalls that in 2022 there were also success stories capable of supporting the restart of the crypto industry: starting from the involvement in cryptocurrencies by traditional finance companies such as Visa, to projects such as Uniswap, Rai Reflex Index and the stablecoin Dai created by the Maker Platform.
In conclusion, the foundations for a renaissance of the cryptocurrency industry are all there, but it will depend (as always) on the willingness of the actors to build projects or improve existing ones in the name of real utility, implementing those promises evoked by Satoshi Nakamoto in the 2009 white paper.
Original article published on Money.it Italy 2022-12-30 08:10:00. Original title: Criptovalute, le previsioni per il 2023
