There is no denying that 2022 was a year that most of us in the cryptocurrency market would rather forget. A large number of us either saw the value of our portfolio drop drastically or had even worse luck and lost our funds completely on one of the services that became insolvent. With everything thing that took place this year, it has been difficult for even the most bullish amongst us, to remain optimistic. The year felt like each morning we woke up, we were getting punched in the face, only to repeat the exact same thing the next day. However, if you are still here that should be considered a victory. Those who can survive the deepest parts of crypto winter are the ones that will most likely find success in the future.
2022 is quickly coming to an end, and even though it may have soured many on the market. We must always be looking ahead. Those who keep looking in the past will get stuck there. Those who are always looking to the future will be able to spot and take advantage of the next big opportunity that comes their way.
Today I will be going over some of my predictions for 2023. Keep in mind that these are only my opinions, and could end up being completely off. Either way, it will be fun looking back at this article a year later, and seeing what I got right and wrong.
1. There will Be Extreme Amounts of FUD
Like it or not, but in 2023 there will continue to be extreme amounts of FUD. It will be a continuation of the FTX situation, and the fallout from that and every other bankruptcy that is taking place. The government will likely try to use this as their opportunity to declare how dangerous crypto is. How they believe it is a scam, and they will try to sneakily implement harsh regulations that would handicap this industry.
This FUD that will be shown on TV will be absorbed by everyday people and they will look down on you for being so into crypto. That stereotype of people being into crypto are either hackers, criminals, or gamblers will come back into play. Your friends and family might even begin to look at you as the crazy one.
However, this isn’t the first time this has happened in the crypto market and it certainly won’t be the last. In fact, it seems to happen in every bear market. When prices go down, your friends laugh and joke at your expense. But when prices begin to soar, they will run back to you and ask you about what crypto they should buy. Be ready for it.
2. Crypto Will Recover
Even though it sounds unlikely right now, and maybe even hurts to think about. Crypto prices will rebound in 2023. This doesn’t mean that we will reach new all-time high prices, but we will be higher than we are today. There are three main factors for this.
The first is that the bottom is likely in, or very close to being in. We are simply running out of people who are willing to sell at prices lower than this. Normal retail buyers have already exited the market, and now only the core crypto enthusiasts remain. We are the buyers of last resort.
Secondly, it’s likely that the insolvency contagion is at an end, or near it. I’m certain that if these insolvencies didn’t take place, Bitcoin’s price would have never dropped below $25k. But they did happen, and now we are sitting at a price of just under $17k. While the last year has been difficult price-wise. Nearly every time that there has been peace and quiet in the market, Bitcoin’s price began to recover. Naturally, once these insolvencies and forced selling comes to an end, I believe that the price will begin to recover as well.
Finally, as we progress through 2023, will be inching closer to the next Bitcoin halving. In past cycles, the price has always begun to recover as we approach the halving, and see that happening again this time as well.
3. There Will be a Stronger Push Towards Decentralized Projects
If there is anything that 2022 taught us, it is that no one should be trusted in the crypto industry. We need to verify, not trust. Nearly everything that went wrong this last year was due to greed, dishonesty, making bad decisions, and fraud.
This will create a stronger push toward more decentralized cryptocurrencies, such as Bitcoin and Ethereum. But will also make DeFi thrive even more. Throughout all of the insolvencies with crypto lending firms and exchanges, DeFi performed normally. 2022 was a great preview of how DeFi, smart contracted and decentralization can help prevent us from repeating these self-inflicted mistakes again in the future.
4. Ethereum Will Begin to Deliver on its Promise
I strongly believe that the ETH successfully deploying the merge was a real turning point for Ethereum and its future. There had been real doubt for several years, on whether or not it would actually be possible for them to pull it off, and they did. While the merge didn’t solve any of the scaling issues that are currently holding ETH back, it also was considered the most difficult phase of ETH’s 2.0 upgrade path. Meaning everything from here on out will be easier to implement.
First, we will see staked ETH withdrawals implemented in the Shanghai update, and from there scaling will be at the forefront of their attention. While the wait has been much longer than most of us hoped. ETH is finally beginning to deliver on its promise of what Ethereum can be in the future. What this all means is that ETH is currently underpriced.
5. Solana will Never Recover
Unfortunately, I have come to the conclusion that I don’t think Solana will ever be able to recover from the FTX fallout. They lost their biggest backer and a huge part of their image. In many respects, SBF’s enthusiasm for SOL gave its reputation a huge boost, and likely greatly artificially inflated its price.
While SBF and Alameda have already sold large amounts of SOL, which has crashed its price significantly. There are rumors that they have a lot more to sell. But that isn’t even the worst of it. In the last few days, there have been reports that nearly 90% of SOL developers have stopped developing for Solana and have switched to other projects. A project can survive when prices crash if developers are still there. However, once developers leave all is lost.
6. Alternative Layer 1’s Will Not Be as Popular
This prediction is sort of a continuation of number 5, however, I believe that many of the Layer 1’s that were the darlings of the industry during the last bull market will wane in popularity.
The first reason is these Layer 1’s that were so popular such as Solana, Luna, Avalanche, Near, and Fantom were so heavily promoted by VCs and hedge funds. With the market collapsing, and insolvencies hitting many of these groups, there just won’t be the same manpower behind these projects promoting them. They were made to be pumped, make these funds giant profits, and be dumped on retail buyers.
The second reason is that I believe Ethereum will begin to not only scale, but its second layers will become more prominent as well. The sole reason why many of these alternative layer 1’s even exist is that ETH has been so slow to update. If ETH is finally able to deliver on its promise, the use case of many of these other chains will disappear.
7. Bitcoin’s Value Will Begin to Shine Home
There has been a lot of debate during the last year if Bitcoin has been able to live up to its promise. It’s promise of being one of the hardest forms of money, that is trustless, cannot be seized if held properly, and is an inflation hedge. Its use case of being a hedge against inflation is one of Bitcoin’s most debated issues this year, as many were disappointed with its performance. While it is true that its performance seemed very correlated to the stock market and the strength of the US Dollar. The fact of the matter is that Bitcoin is still up 5x from the Covid crash until now. That is pretty great if you ask me. It will only continue to go up.
But the area where bitcoin will really begin to shine is in its ability to be trustless and take self-custody. As governments begin to create their own CBDCs, this will become even more important. China has implemented an expiration on their CBDC when users must spend all of their funds or risk losing them. We can expect that to happen in other places as well. It might begin by receiving a stimulus that can only be used on gas, food, or necessary goods. But it will not end there. Governments love having control, and once they can obtain it, they won’t want to give it up. Bitcoin is freedom, and it will begin to shine through even more.
Overall, I think 2023 will be a year of recovery. The last year gave we suffered some pretty large wounds in the industry, some that set the entire market back quite a bit. It will take time to recover from it, but we will see better days. The next Bitcoin halving is only about 16 months away, and that is when the market will begin to heat up again. Until then, we accumulate!
How about you? What are your crypto predictions for 2023?
As always, thank you for reading!
