Crypto has had a tough time in 2022 and experts believe that things could change for cryptoverse in 2023 There was Bitcoin in the beginning. It was the first cryptocurrency to pass through the first acceptance stage, despite not being the first. 2012 saw the emergence of Litecoin and Namecoin, and 2013 witnessed an influx of cryptocurrencies, most notably Ripple and Doge. The second-ranked cryptocurrency coin, Ethereum, did not debut until 2015.
Although the cryptocurrency was slow and complicated, adoption kept expanding.
Trading is simple today, and there are more than 20,000 cryptocurrencies. The present crypto-winter, according to experts, will eliminate the weaker coins (projects), leaving a more healthy cryptocurrency market.
There are thousands of different cryptocurrencies, ranging from Bitcoin and Ethereum to Dogecoin and Tether, making it difficult to get started when you’re new to the field.
1. Bitcoin (BTC)
Market cap: Over $846 billion
In 2023, bitcoin appears to be stable. However, barely a week has passed.
After the devastation of 2022, cryptocurrencies have snuck into the new year while licking their wounds. Although it has increased 5% to $871 billion since January 1, the total market value of all cryptocurrencies is still down more than 57% from this time last year.
Although it is restricted to a small range between $16,500 and $17,300, the price of bitcoin has increased by 4.3% since the beginning of 2023. The volatility of the largest cryptocurrency in the world over the course of seven days has dropped to levels last seen in October 2018.
“It will be a year for the patient,” predicted Vetle Lunde, senior analyst at Arcane Research, “since we do not expect prices hitting former all-time highs in 2023.”
CryptoCompare statistics shows that cryptocurrency spot trading volumes are still very low despite falling by around 48% in December over the previous month to $544 billion, its lowest level since December 2019.
While decreased trading volumes are typical at the beginning of the year, Arcane Research claims that a “general exodus” of active retail investors has contributed to the crypto market’s lethargy.
However, following the 2022 bitcoin slaughter, muted sounds fairly nice to certain market participants.
Callie Cox, investment analyst at investing platform eToro, said: “I feel encouraged by the floor we’ve seen forming under bitcoin; it suggests there’s a lot of demand around $16,000 and $17,000 levels.”
So what happens now?
THE BULL’S TALE
Bollinger bands, a technical indicator that tracks price and volatility, have been getting closer together on bitcoin charts, according to Marcus Sotiriou, analyst at digital asset trader GlobalBlock.
The bands are the tightest they’ve been since July 2020, and he continued that such tightening typically comes before big swings to the upside for bitcoin.
Lunde of Arcane Research repeated this conceivable possibility.
According to him, “These low volatility periods rarely endure for long, and volatility compression times have historically been followed by rapid swings, even in stagnant markets.”
Furthermore, according to data from Coinglass, funding rates for perpetual bitcoin futures have been positive since Dec. 19, indicating that traders are betting on price growth and are willing to pay to maintain their long holdings.
THE BEAR’S TALE
On the other hand, as concerns swirl over a faltering global economy, cryptocurrencies remain at the mercy of macroeconomic headwinds.
According to Sotiriou of GlobalBlock, “the poorer economic outlook means consumers have less discretionary cash to invest in what they view as risky assets like crypto.”
Because the US dollar tends to be inversely correlated to bitcoin, economic uncertainty may cause investors to flee to its protection.
The macro environment for cryptocurrencies is remains adverse, Mandara added in a note on Thursday.
Corporate cryptocurrency entities are currently dealing with the effects of Sam Bankman-FTX Fried’s exchange’s demise.
In an effort to save expenses, some large companies have begun to lay off workers. Meanwhile, Silvergate Bank reported a $8 billion decline in crypto-related deposits, which caused a roughly 43% reduction in share price.
2. Ethereum (ETH)
Capitalization: above $361 billion
Because of its potential applications, including so-called “smart contracts” that automatically execute when certain conditions are met and non-fungible tokens, Ethereum—which is both a cryptocurrency and a blockchain platform—is a darling among programmers (NFTs).
Ethereum has also grown incredibly fast. Its price increased by more than 27,000% from roughly $11 to over $3,000 between April 2016 and the start of March 2022.
3. Tether (USDT)
Capitalization: above $79 billion
Tether is a stablecoin, which means it is backed by fiat currencies like U.S. dollars and the Euro and theoretically maintains a value equal to one of those denominations, in contrast to some other types of cryptocurrencies. As a result, investors who are cautious of the severe volatility of other coins choose Tether because its value is theoretically expected to be more stable than that of other cryptocurrencies.
4. Binance Coin (BNB)
Capitalization: above $68 billion
You can trade and pay fees on Binance, one of the biggest cryptocurrency exchanges in the world, using the Binance Coin cryptocurrency.
Binance Coin has grown since it was introduced in 2017, and it now does more than just enable transactions on Binance’s exchange platform. Now, it can be utilised for trading, processing payments, or even making trip plans. Additionally, it can be traded or converted into other cryptocurrencies like Ethereum or Bitcoin.
In 2017, BNB cost only $0.10. Its price increased to nearly $413 by the start of March 2022, a gain of roughly 410,000%.
5. XRP (XRP)
Capitalization: above $37 billion
XRP is a cryptocurrency that may be used on that network to facilitate trades of many currency types, including fiat currencies and other significant cryptocurrencies. It was developed by some of the same founders as Ripple, a digital technology and payment processing company.
XRP was worth $0.006 at the start of the year 2017. Its price increased by more than 12,600% to $0.80 as of March 2022.
What might we anticipate from Cryptoverse in 2023?
The contagion effect is far from over
It is true that the fallout from one of the worst years in cryptocurrency history has not yet subsided. Some of the largest companies dealing in digital assets, like BlockFi, Galaxy Digital, Sequoia Capital, etc., have been impacted by FTX’s bankruptcy since it occurred in November. Additionally, the FTX crash will still hurt the cryptoverse in 2023, according to a CoinTelegraph study.
Investor confidence in the digital asset class has clearly been harmed by the sad circumstances surrounding FTX. Since remediation will take time, it is extremely likely that the crypto winter will be extended by many more months, possibly all the way to the end of 2023, according to the research.
Ethereum staking rewards and sharding
The Ethereum Merge was possibly one of 2022’s few positive outcomes. The energy-intensive Proof-of-Work (PoW) consensus mechanism was replaced by the energy-efficient Proof-of-Stake (PoS) consensus mechanism on September 15 for the second-largest cryptocurrency by market value.
The energy consumption of Ethereum decreased by 99.5 percent once the Merge was successfully completed, which is astounding to say the least.
The Merge also seems to be a gift that keeps on giving. Ethereum will execute the Shanghai update in the first half of 2023 as a follow-up to the switch to PoS. An enormous benefit for investors who have been staking ETH since the PoS Beacon chain was created in December 2020 is that this will start the progressive unlocking of staked ETH and staking incentives amassed thus far.
The launch of sharding on Ethereum is a further improvement that will come after The Merge. The workload of a blockchain is divided into smaller chunks during this procedure to speed up processing.
Sharding is therefore anticipated to significantly improve the scalability of the blockchain network. These two events could help Ethereum turn the corner and serve as a market-booster.
The XRP verdict
A definitive settlement between Ripple Labs and the Securities and Exchange Commission (SEC) may also be reached in 2023. The SEC filed a complaint against XRP in December 2020, stating that Ripple Labs had raised more than $1.3 billion through an unregistered securities sale since the coin’s debut.
Since the lawsuit, XRP has struggled to establish itself in the market and has been trading significantly below its June 2018 all-time high of $3.02. Although the case has gone on for almost two years, an end is in sight. This is due to a move to reach a decision as soon as possible that Ripple and the SEC filed in September of this year.
The case won’t be put before a jury as a result. Instead, a judge will have total control over the decision, which should hasten the procedure. If nothing unexpected arises, the XRP case might result in a decision as early as 2023.
David Gokhstein, a former candidate for the US House of Representatives, stated that if Ripple wins, it will have a tremendously good effect on the entire cryptocurrency business. Judge Torres stated that even though the decision is still pending, a summary judgement may be issued on or before March 31, 2023.
Stricter regulations are on their way
It is only inevitable that the regulatory status of the sector will become more stringent in the wake of the collapse of Terra and FTX. Nevertheless, stricter regulations are not always a bad thing. Additionally, it might lead to the creation of stronger regulations and safety nets for both new and seasoned crypto users.
Furthermore, tighter restrictions will draw in a lot of new consumers and instantly contribute to an increase in trust in a market that is generally unstable. Although cryptocurrency exchanges are scrambling to produce Proof-of-Reserves (PoR) audit reports to preserve a certain level of openness, 2023 is likely to witness more improvements in the field of transparency and more reliable methods of upholding trust and confidence among investors and dealers.
A greater push for decentralisation
The most established cryptocurrency on the market, Bitcoin, sets decentralisation as one of its primary objectives. The Terra and FTX crashes emphasise the necessity of this change even more. These incidents demonstrate why it is never a smart idea to give a select group of people control over user payments.
As a result, there has been something of an exodus after the FTX meltdown, with investors rushing to decentralised exchanges and advocating for DAO-controlled ventures. Furthermore, if these platforms can deliver on their promises, they may help to rebuild investor trust in the frail digital asset market.
Web3 has endured a difficult year. Nevertheless, there is still optimism that the digital industry will fare better in the coming year. A number of cutting-edge protocols are emerging and posing a danger to positively alter the crypto ecosystem. We can only hope that these developments will lead to better things for blockchains and cryptocurrencies in the future.
Practically speaking, however, it won’t happen right away. So let’s hope for the best while preparing for the worse, as the expression goes.