The FTX collapse dominated the world at a time when Tom Brady, one of its main shareholders, revealed an impending divorce from his longtime partner. Well, no one knows for sure whether the two events are correlated but collapsing of FTX shook the crypto market to the core. You see, FTX was the envy of most crypto companies; founded by a young person donning an Afro, Sam Bankman-Fried, and celebrity support made it stand out. However, this event triggered a public debate on the viability and sustainability of the crypto market widely touted in some circles as a revolutionary platform for the future.
Bold Crypto Predictions for the Future
1. Expect Regulation
In the US, lawmakers are exploring ways of bringing some form of standard to the crypto world which has largely been given a free hand in its operations. If anything, the FTX collapse and the loss of billions experienced retaliates the need to have the hawk-eyed Big Sam watching. The Terra Luna crash went into a freefall in May and detached its coins from USD, which led to a further crash in the company. Many investors in Luna and Terra lost their cash in a matter of days. The collapse only accelerated the incoming storm since most crypto companies froze withdrawals and effected layoffs in attempts to remain afloat. Some filed for bankruptcy.
A crypto market analyst remarked “After the catastrophic events that have unfolded in the crypto market over the past few weeks, it is clear that stringent regulation could arrive soon” and this will most probably come to pass in 2023. The US President tested the waters with an executive order that called for the responsible development of digital assets and asked government agencies to formulate a framework. It’s not a question of if, but when crypto regulation materializes.
2. NFTs Remain Murky Waters
NFTs refer to Non-Fungible tokens which are crypto-based assets, and they have taken the crypto market by storm in 2021 despite being in existence since 2014. Compared to 2020, NFT sales jumped from $95 million to $22.5 billion in 2021. NFTs provide a platform for fans and creators to buy, sell, and trade digital collectibles such as art. They are also used in gaming to foster interaction between players.
The crypto market also experienced a rise in Non-Fungible Tokens (NFTs). These tokens differ from traditional crypto assets like Bitcoin, Ethereum, or Litecoin since they are unique and not interchangeable. NFTs are tokens that prove the possession of digital property such as artwork, music, videos, and more. They run on blockchains and are extremely transparent.
The NFT market has also attracted controversy since some investors worry about the sustainability of this sector. The crypto markets volatility, coupled with a lack of transparency regarding the underlying asset that backs NFTs makes predicting the crypto market even more complicated than predicting traditional financial markets. Some people say NFTs are the new form of monetization while some remain skeptical. It all comes down to how risk-averse a person is before deciding whether to jump on the bandwagon or wait. Experts say 2023 will make or break the NFT market.
3. DeFi Needs More Exposure
Investors in the crypto market understand DeFi, which refers to decentralized finance. It provides an online world of alternative financial services fueled by cryptocurrencies and blockchain technology.
DeFi eliminates intermediaries such as banks and lenders by using smart contracts through software thus eliminating a central authority or regulator. Experts argue the DeFi space is in infancy, and there needs more information and illustrations to prove its viability. This doesn’t overrule an Amazon or Google within the DeFi space. Dr. Merav Ozair from Rutgers Business School, a fintech and blockchain expert, DeFi needs to scale up in the coming year.
4. Bitcoin Volatility and Uncertainty
As the largest cryptocurrency, Bitcoin forms a wider opinion on how the crypto market is likely to react in 2023. Crypto markets are notoriosuly unstable and accurate predictions are tricky. Bitcoin volatility declined recently with a few exceptions, like when it dropped from $64,000 to $30,000 in April 2021. But predicting Bitcoin’s movements is also not easy because of its unpredictable nature. However, most analysts agree that Bitcoin is and will remain an important part of the crypto market.
In predicting Bitcoin’s future price, analysts look at mainstream usage and acceptance, government regulations or bans, as well as its technological advancements. News events also drive prices up or down rapidly. The current global macroeconomic trends such as surging inflation, rising stock rates, and a looming recession don’t inspire much confidence for bitcoins. The only consolation is that these factors aren’t isolated to the crypto market. Another key factor used to predict the crypto market is the network effect, which states that the benefit of a good or service increases as the number of users increases. This suggests that predicting the crypto market can be done by predicting Bitcoin’s price, and its uncertainty casts a picture of the wider market.
5. Ethereum Shows Potential
Another popular cryptocurrency, Ethereum, has also surged this year—from around $1,200 to more than $4,000. This surge was sparked by the increasing interest in Decentralized Finance (DeFi) applications built on top of the Ethereum Blockchain. Ethereum also wants to migrate its systems to a faster, more efficient, and more energy-efficient platform. If properly implemented, these changes could see a surge in their value. Investors are already capitalising on the expected surge by hoarding the altcoin.
Analysts predict that Ethereum’s surge in value has further to go, predicting a price target of $5,000 by the end of 2022. If achieved, this would mark a four-fold increase since January 2021. The sheer size of Ethereum’s ecosystem, its flexibility, and its potential make it a strong candidate for predicting the crypto market in 2023. Keep a keen eye on this!
Be WARY…
In conclusion, predicting the crypto market is an arduous task with no certainties. The future of cryptocurrencies and tokens largely depends on mainstream acceptance, government regulations, technological advancements, and the sustainability of its surge.
Note
This article analyses opinions from different crypto market analysts and doesn’t endorse any of these crypto assets. Carry out due diligence before committing your resources. Hope this article brings you some insights into the crypto market.