Crypto Trends to Watch in 2023: Market Recovery and More

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We can all feel it. This has been a crazy year for the crypto market. Many events, such as large altcoins falling to zero and crypto exchanges going bankrupt, have occurred. These events have made people wonder what the future holds for the crypto market in 2023 and whether it will be bullish or bearish. Since it’s impossible to predict the future, let’s instead look at some potential trends for the new year.

Finally a recovery

It is believed that the crypto market will begin to recover in 2023. While a full bull market may not return, it is believed that the worst of the bear market will be over by the end of the year.

Many predict that the bottom will occur in the first quarter of 2023, with bitcoin potentially bottoming out at around $10,000 or lower. As a result, most altcoins could drop another 60-80%. This could bring Cardano down to around 10 cents, which may be a buying opportunity for some or signal the end of its reputation as an “Ethereum killer”.

Keep an eye on the first trimester

The Federal Reserve is expected to stop raising interest rates in the first quarter of next year. This could help prevent the crypto bear market from collapsing further. The bottom for BTC could be around $10,000 or slightly lower. This is because the stock market, which is highly correlated to the crypto market, has yet to find its bottom and is expected to drop another 20-30%.

However, BTC could still experience a flash crash below $10,000. This could be due to a variety of factors such as a ban on bitcoin mining due to power shortages, Mount Gox creditors selling off their bitcoin, low liquidity, and liquidations. To protect your crypto assets, it is important to keep them on your own personal crypto wallet rather than on centralized exchanges.

The phrase “not your keys, not your coins” is becoming increasingly relevant in today’s market.

The SEC could crack down on another big crypto project, company, or exchange in 2023. This is due to the negative events of the current year and the continued impact of the FTX collapse. Solana appears to be in trouble as its price has dropped and projects are moving to other chains like Polygon.

Gensler is coming for crypto

In any case, another crackdown seems extremely likely as long as Gary Gensler continues as SEC Chairman. Gensler’s term won’t expire until 2026, so he has plenty of time to do some damage. That’s assuming he won’t be kicked out of the SEC for his close encounters with Sam Bankman-Fried, but that’s a topic for another day.

This means that every cryptocurrency besides BTC is a potential target. Indeed, almost all crypto exchanges and platforms offer cryptocurrencies other than bitcoin, which also makes them potential targets. A Q1 crackdown could be a catalyst for new crypto lows.

Regulations are needed

The next step for 2023 is that there will be a lot of crypto regulations. Now, most of these settlements will probably be very good, but a few will probably be very bad. Also, it is very likely that crypto regulations will vary from region to region despite attempts to create global crypto rules. Still, the collapse of FTX might finally be enough to spur some much-needed regulation.

Good, bad and it’s ok

The lack of regulatory clarity is the main reason why institutions have been hesitant to invest in crypto, especially altcoins. The establishment of rules in the US, EU and elsewhere could therefore lead to many inflows and contribute to a recovery in the first quarter for crypto.

More importantly, crypto regulations will effectively force crypto projects to decentralize. Indeed, the only way to avoid many of these regulations will be to be decentralized top-down, which was supposed to be crypto in the first place.

While most would agree that regulation would generally be good, some of these crypto regulations are likely to be very bad. The worst regulations are likely to be related to things like payments, DeFi and privacy, maybe even self-custody. The bottom line is that poor crypto regulations could be slowing DeFi adoption so far, however, it seems like DeFi has been left out of most crypto regulations as long as the protocols are truly decentralized.

Protocols likely to thrive in 2023 and beyond include Aave, Maker, Compound, and Uniswap.

Why?

Because all these protocols are a threat to the traditional financial system. The silver lining in all of this is that the crypto industry is likely to grow significantly with the right regulations and perhaps the harm won’t be as bad as we imagine.

Hopefully, this increase in adoption and capital will allow the crypto industry to push to remove bad regulations. Consider that powerful individuals and institutions want privacy the most.

DeFi will go mainstream

This will be due to a combination of better front ends, regulatory clarity, increased liquidity, and proof of resilience of certain DeFi protocols, which will increase overall trust in DeFi and a decline in centralized entities’ trust in the crypto industry. In short, people saw the writing on the wall in the form of Terra Luna and FTX.

Crypto Adoption Will Grow

In 2023, the number of crypto holders will increase significantly. For context, crypto adoption currently sits at around 4% of the global population. It’s not a lot, but the growth has been exponential and there are plenty of reasons why this trend will continue into next year. For starters, many platforms have built-in encryption features.

Most notable are Facebook and Instagram, which have tested NFTs on several smart contract cryptocurrencies. Even Starbucks is working on an NFT loyalty program on Polygon.

Not only that, but free speech-focused social media platforms like Telegram and Signal have integrated crypto features into their platforms with TON. And Elon Musk has made it clear that Twitter will also feature crypto integration. All of these companies have billions of users combined. Even a small percentage of crypto adoption by their users would be significant.

So here is. No forecasts but rather some trends to watch for 2023.

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