Mostly Volatile but Bullish Outlook: 10 Crypto Predictions for 2023
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1. One other major market crash might lead to BTC<$13K and ETH<$800 in H1 of 2023, possibly resulting from a combination of macro risk, some large crypto miner bankruptcy, a centralized crypto company bankruptcy (investment, exchange, or lending), stablecoin issues whether it’s de-pegging or regulatory restrictions, security issues, and/or some sanction/lawsuit against a major player.
Ripple effects of FTX collapse may lead to some potential bankruptcies, the people who are on the edge of failure would strive to survive before giving up, this will take a while, thus may roll over to Q1 or Q2 of 2023 if crypto winter lingers and they cannot save their businesses. Recent FUD on Binance is worrisome even though it didn’t turn out damaging yet. But it raises the flag of being too big to fail because it is the largest crypto exchange owning over 10% of the whole industry’s wealth. If the investigation about unlawful money transfers by some U.S. officials or global regulatory collaborations against Binance or similar size companies come true, that could be disastrous to the industry and take longer to recover.
2. Bitcoin reaches $25K in the first half and $35K in the second half of 2023. The U.S. CPI numbers released in almost every month of Q4 2022 are below market estimates and are in a declining trend, which gives the Fed more confidence to slow down rate hikes and tapering. Similar trends are observed in European countries and major central banks seem like they will finish quantitative tightening and the global macro conditions may ease some by then. China’s ending of Zero-Covid policy and opening the economy and logistics will help lower global inflation, so does the Russia-Ukraine war come to an end hopefully. Therefore, I foresee the risk assets winter and thus crypto winter will last until about the summer of 2023. However, the liquidity of money may remain tight for a while until the reverse to quantitative easing (rate cut), which could be later than 2023 or even 2024.
If we follow the historical trends of Bitcoin’s 4-year halving cycle related to the crypto bull runs of the past, the next bitcoin halving is around May 2024, which coincides with the macroeconomic cycle. In addition, the regulatory landscape may change, and it takes time, such as adding clarity on tax, token issuing & trading, and ESG of crypto mining. The institutional infrastructure for digital asset investing is developing as well, which could be ready together with the regulations. All combined the real bull is more likely to happen in 2024. Some people may fear missing out, thus keep DCA buying or buying big into some major bullish news ahead of the real bull run coming back.
Thus, Bitcoin price may rise gradually to $20K, $25K, and $35K in 2023. Similar growth for ETH, especially as POS matures. Throughout 2023, newly developed crypto projects (Alt
Coins) will keep building and delivering, so there might be small pumps here and there. However, it may take longer to fully boost and adopt. More stable economic conditions in 2023 than over the past few years as well as regulatory clarity for the Crypto industry could create a good foundation for future bull runs.
3. Following El Salvador, Central African Republic, and Brazil; another country will make Bitcoin Payment legal or as a legal tender. It’s been more than a year since El Salvador made Bitcoin a legal national currency, and the Central African Republic (CAR) approved Bitcoin as legal tender in April 2022. Even though their national investments seem to be losing value right now and are under criticism by many from the media, El Salvador keeps buying Bitcoin for their national reserve. In addition, Brazil made Bitcoin payments legal recently, and many Brazilian companies started buying Bitcoins. This trend will continue whether it’s in a bear or bull market. Countries with currencies more volatile than Bitcoin will consider a try and especially those countries with young generations concentrated who embrace innovation.
4. Some trillion-dollar AUM traditional funds will start deploying large amounts of capital into crypto assets. The world views are always two-sided, even though some financial institutions insist on their bearish views on Crypto, there will be some forward-thinking institutions who are bullish and find this bear market as an opportunity to prepare and dive in. Banking Giants US Bank, Morgan Stanley, BNY Mellon, Goldman Sachs, Citi, Wells Fargo, and many others are invested in crypto assets or infrastructure at various stages and extents. There are also recent efforts by BlackRock, Fidelity, Citadel, and Virtu to develop into crypto assets. These are all trillion-dollar financial firms that have extensive potential to push crypto assets to new levels. Right now, we only have $9 billion direct crypto holdings from these firms, but this number could change dramatically if these “piloting” routes become full steam ahead. Even though we don’t know what the key trigger will be, this change is going to come, very likely in the next few years.
5. Another major economy will approve and list Bitcoin/Crypto related ETF, which will lead to some institutional money to explore into the space (a very small % of their AUM but could be significant when added up), this could be a trigger for point #4 above. As much as China bans crypto, Hong Kong is now so eager to open up for crypto and compete with Singapore. Just recently, The Securities and Futures Commission (SFC) of Hong Kong approved CSOP's application to list its Bitcoin and Ethereum Futures ETF on the HSE on Dec. 16. And, Tether launches offshore Chinese Yuan (CNH₮) on Tron. Some westerners may not think this is too much of a deal, but if you recall how China was pushing hard to ban Crypto last year and this contrast in Hong Kong will give a bit of flavor of China wanting to keep Hong Kong the open financial window to the world. This is very telling and
gives more hope to other Asian countries to follow the trend, as do for Middle East and South American countries who are already embracing crypto quite heavily.
Plus, the ETFs in Canada, the U.S., Brazil, and Europe that are already trading, we will see the list added on. Some people may ask why to buy an ETF rather than the actual coins, we should understand there are still a lot of people not feeling comfortable opening a Coinbase account or getting a digital wallet but still want exposure to Crypto, so they can access ETFs using their traditional stock brokerage accounts. In other words, ETFs allow TradFi (Traditional Finance) audience to get into the door first. A Bitcoin spot ETF in the U.S. may not be that soon approved yet, but that day will come, and that impact will be significant.
6. Apple, Google, Meta, or Twitter may add crypto as mobile payments, possibly including USDC, Bitcoin, and even DogeCoin. USDC stablecoin was added to Apple Pay, to help to boost the use of the coin by allowing crypto businesses to accept the payment method. In addition, Apple plans to allow external iOS Apps in a potential boon for Crypto and NFTs. Twitter has reportedly filed paperwork with the Financial Crimes Enforcement Network (FinCEN) to begin the process of registering to process payments. There’s a growing narrative that Tesla CEO Elon Musk plans to remake payments and combine them into Twitter, so it will have a similar function as WeChat Pay. It’s no secret that Elon likes DogeCoin and it’s theoretically possible to add DogeCoin as a payment method on Twitter if legally it can work through. There are also ideas circulating that Elon may create a blockchain of his own for Twitter with its own unique token. Even though Meta’s global stablecoin project (Libra or Diem) terrified many central bankers, their efforts in Metaverse, Crypto, and Web3 are enormous. I won’t be surprised to see Meta move to embrace crypto further whether it’s payment or technology infrastructure. PayPal, Venmo, and Plaid already have Crypto functions, so the competition is rising among traditional techs, FinTech, and Web3 Tech.
7. Metaverse and Web3 Gaming will grow exponentially, especially integrating with AIGC (AI-generated content) and NFTs. Citi says metaverse could be worth $13 trillion by 2030. JPMorgan bets the Metaverse will be a $1 trillion economy by 2023. Deloitte says the Metaverse could add $1.4 Trillion a year to Asia’s GDP by 2030. Web3 Gaming is a major part of these forecasts. Recent hot AI-backed ChatGPT gives an example of how gamified tech can go viral in short periods of time, and that’s exactly where Web3 is good at. There’re also developers trying to build AI painting on the blockchain utilizing the decentralized computing power it has globally, which can be linked to NFT and Metaverse, as well as mining. I foresee this combination of different elements will come to a full circle ecosystem eventually, and 2023-24 is the key period to build that foundation.
8. SocialFi (Decentralized video, music and messaging, etc.) will keep building and prospering. SocialFi (social media-related crypto ecosystem) that could boost the monetization and gamification of social networking, to emphasize community ownership. In addition, there are emerging decentralized video and music platforms that allow the creator ownership economy to prosper. Which is essentially to build web3 applications on the success story of YouTube, TikTok, OnlyFans, Netflix, Spotify, etc.
9. Exponentially more Web2 engineers, lawyers, finance, and other types of young talents will join web3. Some engineers and project managers at Web2 Tech Giants companies have other full-time or part-time jobs on the side, among those, numerous of those are efforts in Web3 startups. The pandemic and work-from-home set up allowed this to be feasible. Even though there’s not many public statistics counting how many of these Web2 engineers do side work in the Web3 space, I find surprisingly the number of founders/co-founders/advisors/consultants in the Web3 space are the ones who still have full-time job(s) in the Web2 giants.
Most of their plans are that once their Web3 job income/valuation is equivalent to or better than their Web2 job or after getting a big investment from VCs, they will switch over to Web3. Because they believe Web3 is the future and is more fun. Set aside to comment if this multiple job thing is legal or ethical, this is very common and will become more of the trend as peer effects influence more and more of their friends and colleagues. The tech layoffs may hurt some but may strengthen their dedication to build their Web3 startup if they’re not able to find a lucrative enough web2 job. Even though the venture capital looking to invest in web3 is lower because of the market drawdown, these web2 talents have accumulated wealth from their high-paid web2 jobs that can sustain the development with their own money out of pocket. These groups of people have the best engineering and product skills, educational background, and “FAANG” tech giant track records that will help them succeed in the next Web3 bull run.
Besides engineers and products, lawyers, finance, and other types of jobs are seeing growing demand and also tremendous interest, especially among the young generations. More and more young talents will join to build Web3, and it will be most likely to make Web3 better and legitimate.
10. The adoption of digital currency accelerates, more countries launch central bank digital currency (CBDC), which could be a double-edged sword for Crypto. Recent and upcoming CBDC progresses/plans globally:
1) Central Bank of Turkey Plans to Launch a CBDC in 2023.
2) Pakistan Launches New Laws to Expedite CBDC Launch By 2025.
3) Bank Of England Opens Applications For 'Proof of Concept' CBDC Wallet.
4) The Reserve Bank of Australia (RBA) is expecting to complete its central bank digital currency (CBDC) pilot by mid-2023.
5) Having tested the wholesale usage of its central bank digital currency (CBDC), the Reserve Bank of India (RBI) is preparing to conduct the retail pilot of the “digital rupee.” The pilot should launch in December 2022.
6) The Bank of Korea is progressing to the next phase of its central bank digital currency (CBDC) development which is real-world testing in late 2022 and onward.
7) Sweden’s central bank has partnered with Norway, Israel, and BIS to test international retail payments through central bank digital currencies (CBDCs).
8) BIS and central banks of France, Singapore, and Switzerland to explore cross-border CBDC trading and settlement using DeFi protocols.
9) Iran has begun experimenting with a central bank digital currency (CBDC), launching a pilot scheme in partnership with two local banks.
These efforts may not sound too exciting to Geeks, Millennials, and Gen-Z, but this exactly tells the story that the central banks feel pressured and necessary to embrace digitalization, I view it’s primarily caused by the disruption of Crypto. CBDC developments will boost the awareness of the digitalization of currencies to the broader public and add some legitimacy to how people think about digital currency. However, CBDC could be a double-edged sword as some countries think it directly competes with Crypto and stable coins whereas others think it would overlap and collaborate. All in all, the development is more good than harm for the Crypto industry.