Will 2023 Be a Year of Growth for Crypto?

by Jurica Dujmovic
By Jurica Dujmovic

2022 was a tough year for crypto.

Three black swan events have been a major cause of concern for many crypto investors, starting with the fall of Terra (LUNA, Unrated) and then the insolvency of Three Arrows Capital. And currently, centralized platforms such as FTX, BlockFi and Celsius Network (CEL, Tech/Adoption Grade “C-”) are taking major hits in value and credibility.

However, these events could prove to be the perfect opportunity for crypto to weed out the bad players and start off on a clean slate as we head into the New Year.

To get a better understanding of what exciting things may be in store for the crypto market in 2023, I’ve reached out to three experts.

Expert No. 1: Max Thake

My first guest is Max Thake, a Berlin-based cofounder of Peaq, a blockchain network that enables the building of decentralized applications for a web3 machine economy.

Max Thake: In 2023, beware of bulls, but keep building. The macroeconomic conditions pressuring markets across the board will carry on for longer than optimists will admit. However, this is not the death knell of web3.

As always — but perhaps more than usual in this bear market — usability is king. If your project can deliver value to its users, then you will survive the chaos of the market and contribute to the next era of blockchain, which will have fewer veiled scams and stronger foundations than crypto in the bull market.

In the web3 space, 2022 was a year of swells and plummets: Terra collapsed, Ethereum (ETH, Tech/Adoption Grade “B”) celebrated the Merge and Sam Bankman-Fried’s empire shattered. These events will direct our understanding of how traditional corporations fit into web3.

Clearly, creating a Frankenstein’s monster of corporate structures built on the blockchain is a recipe for disaster. After the events of 2022, decentralized protocols will likely enjoy a bump in credibility, while centralized players getting too creative with their books will feel more regulatory heat — and will probably take a dent or two in terms of user confidence.

On the other hand, established corporations still have a place in web3 when they combine their power with the disruptive technology of blockchain startups. As the number of these collaborations increase, the result will be a flood of real-world use cases and values that prompt sustainable, healthy, responsible growth for the industry.

Expert No. 2: Yves Renno

Both Max and my next guest, Yves Renno, share a cautiously optimistic stance. Yves is currently head of training at Wirex, a digital payments platform. As a statistician economist, he has extensive experience with in-depth market analysis.

Yves Renno: I believe the market could reach new lows within a few weeks before settling down for months. In line with the Bitcoin (BTC, Tech/Adoption Grade “A-”) market cycle, a rebound could be expected in Q3 2023 ahead of the next halving that is scheduled for April 2024.

There are events that could weigh on the medium-term performance of specific cryptocurrencies. For example, the Shanghai hard fork on Ethereum scheduled for Q2 2023 will unlock the 15 million ETH tokens staked on the beacon chain, which is an additional supply that could curb a potential ETH rally.

With the prospect of the 2024 halving, 2023 could be one of the best years for crypto. However, there are important conditions to realize a great performance. Among them, decentralized applications, including decentralized finance apps, must improve their standards.

The sector still needs to set up a safe environment for investors with regard to smart-contract auditing or (re)insurance. Although critics suggest dApps and DeFi are the answer to avoid another FTX event, creating and promoting vulnerable or highly leveraged smart contracts can also threaten the stability of the crypto markets.

Regarding adoption, the collapse of FTX confirmed that many centralized crypto entities have implemented poor standards together with the extreme leverage that usually prevails in the traditional finance sector. The combination eventually exploded, harming both professional and retail consumers.

The lack of any serious regulatory framework and the absence of any sense of responsibility effectively decimated years of effort towards democratization. The road to adoption is long and full of obstacles. But there is no revolution without blood.

In the meantime, investing in crypto remains highly risky. Self-custody is the new trend. Hot and cold wallets are booming, and native crypto staking is on the rise. ChainLink (LINK, Tech/Adoption Grade “B+”) recently let holders stake their LINK tokens on the protocol. And more ETH is staked every day on Ethereum, with 60,000ETH just last week.

The safest and most rewarding way to invest is certainly to keep our cryptos on-chain, on their original blockchain or a dApp, and to contribute to the community’s governance.

Yves echoes what we’ve been collectively telling our viewers and readers for years now: Self-custody is best.

Expert No. 3: Max Shilo

My last guest is Max Shilo, digital asset analyst at CoinLoan (CLT, Unrated). He has years of experience both researching and investing in crypto and is an expert on current market trends and emerging coins and technology.

Max Shilo: What happens now can be split into two possibilities based on the healthiness of the market: We either see one (possibly the final) more leg down, or the market will consolidate and start growing again. The possibility of growth is backed by a myriad of historical data and various indicators. However, I’m hesitant to say that this a certainty.

From my perspective, there is a higher chance the market will see one more leg down, probably caused by an inevitable, yet unexpected black swan event. While no one can predict what this event might be, this year has taught us to expect the unexpected. The likelihood for such an event remains strong.

I would love to deny this and avoid talking about it, but based on the sentiment and bigger picture, it cannot be excluded.

There you have it.

The crypto market in 2022 has been one of uncertainty and volatility, especially considering the losses in value and credibility that three black swan events have caused. But while these events have been disruptive, they’ve also created an opportunity for growth and development in the space.

As a result, the industry is now more aware of the dangers posed by traditional corporate structures and is working toward creating a more secure, decentralized and reliable future.

Overall, it’s clear that the crypto market has a long way to go before it’s truly stable and secure.

However, with the right conditions and some luck, the industry could be poised for major growth … and this could come sooner than we expect.

Best,

Jurica

About the Contributor

A MarketWatch columnist since 2014, Jurica covers science, technology, privacy, security and futurism, earning him the title of top three contributors for three consecutive years. At Weiss since 2011, he manages social media content and contributes regularly to Weiss Crypto Alert.

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