There is no doubt that 2022 was a challenging year for crypto investors. There was the recent fall of FTX, one of the industry's biggest exchanges; previously thought to be trustworthy and run by one of the most prominent figures in the crypto industry. Earlier in 2022, “stablecoin” TerraUSD declared bankruptcy, as did crypto lender Voyager declared bankruptcy.
In addition to an overall loss of trust in crypto, there have been price drops similar to those seen in the stock market. On the last day of 2022, Bitcoin was trading at $16,537, down more than 60% from the start of the year. According to data from analytics firm IntoTheBlock, roughly half of bitcoin investors would lose money if they sold now.
But it wasn’t all doom and gloom. Perhaps the most interesting crypto event of the year was the successful Ethereum merge (hardfork), which transitioned the network from a proof-of-work to a proof-of-stake consensus method. Also worth noting is the continued rise (and demise) of DeFi & web3 brands, and overall resistance to censorship.
But of course, 2022 holds no comparison to the year 2021, which showed a meteoric rise in the popularity of cryptocurrencies. What’s in store for cryptocurrencies this year? Here are our crypto predictions for 2023.
It started happening in 2022, and it will keep going in 2023. Digital asset selection will transition towards higher grade names like Bitcoin and Ether based on factors like sustainable tokenomics, the maturity of respective ecosystems, and relative market liquidity. The riskier and more speculative coins will see a decline in interest as investors put their trust in proven markets, and that is because investors’ willingness to accumulate altcoins has been severely impacted by the deleveraging in 2022.
BYE BYE TO BROKEN BUSINESS MODELS
Every cryptocurrency has a concept, a purpose for being developed, and a target that the project is meant to reach. It should essentially solve a problem. But it became evident in 2022 that many of the projects in the industry either had no product at all, or they couldn't offer it in the way that was promised. As was often the case, investors were not even interested in the product and the price of the project was only driven by speculative enthusiasm.
The decentralised exchange Uniswap is the perfect illustration of this. According to an analysis of the exchange, the majority of the projects established on this decentralised platform were rug pulls, meaning that the token issuers merely intended to raise money from investors before disappearing.
These broken business models that cost investors millions and have detrimental effects on how the cryptocurrency industry is viewed must go. In 2023, we will continue to see a light shine on these parts of the industry that need improvement.
Lightning Network’s continued development will help put bitcoin in the hands of more people and deliver more use cases across the board in 2023. MicroStrategy executive chairman Michael Saylor has shared his firm’s plans to release Bitcoin Lightning Network-powered software and solutions in 2023. In a Twitter Spaces event late last year, Saylor shared that the company is exploring software and solutions that utilise the Lightning Network, such as solutions that “support” enterprise marketing as well as a cybersecurity solution aimed at corporate websites.
We believe this is just one of many ways the Lightning Network will begin to be utilised to make Bitcoin more accessible globally.
MOVING OFF EXCHANGES
2022 ended with one notable trend. As a result of the FTX fiasco, bitcoin investors have begun withdrawing crypto holdings from centralised exchanges and moving them onto hardware wallets. A BanklessTimes.com analysis states that 88% of all bitcoin volume at year's end occurred outside of exchanges, which is a three-year high. The decision to hold on to one's assets rather than cashing them in suggests that investor sentiment may be shifting away from centralised exchanges.
We for one are very happy to see it!
With cryptocurrency, you can own your hard-earned money rather than leave it to the mercy of a financial institution. And here at Coinstop, we want to help you secure your future! That’s why we stock the very best in digital security. From hardware wallets to recovery seed phrase storage devices, our products will help you to become your own bank. Cryptocurrency is the future, and it’s time to start securing yours!