Think back to this time last year.
Bitcoin sat near $50,000. Crypto advertisements graced most sporting events. And non-fungible tokens (NFTs) were sitting pretty.
Despite a January correction (BTC and ETH dropped 20% and 31%, respectively, in the first month of 2022), few people predicted gloom on the horizon; indeed, no one suggested the likes of FTX would cease to exist by the end of the year.
Yet here we are — and even with ongoing uncertainty, we’re going to put forth our crypto predictions for 2023. Now, while making predictions in crypto is something of a fool’s game, it’s still a valuable exercise.
It forces you to question your assumptions and think critically about the year ahead. After all, there’s plenty to consider. How will the Fed behave? How deep a recession is coming? And how will crypto at large respond?
Truth be told: there are countless reasons to feel *cautiously* optimistic for the year ahead.
Here’s what could happen in crypto in 2023.
Crypto industry predictions in 2023
Prediction 1: The final phase of contagion
Despite the high-profile collapses of 2022, the contagion is unlikely to be over. We still have the likes of Genesis and DCG teetering on a knife edge. The credit crunch is challenging their balance sheets, and the end game will likely play out early next year.
Even if these two survive, expect others to tumble. But once the bad debt has been erased from the ecosystem, we can look forward to brighter times.
Prediction 2: DeFi continues to shine
The last twelve months saw the destruction of many centralised lending firms. Meanwhile, decentralised finance worked without a hitch. As a result, expect activity to consolidate into proven decentralised players in the next twelve months.
Capital will flow towards platforms that harness blockchain technology’s transparent, frictionless nature. In turn, the regulatory debate will heat up.
Prediction 3: Regulators have their say
One undeniable truth about 2022 is that it put crypto in regulatory crosshairs. That’s not necessarily a bad thing; it’s just going to be a tough twelve months as the industry locks horns with authorities.
Many in power see the benefits of blockchain technology. But there will be a battle to avoid regulation threatening decentralisation.
Prediction 4: In Web3, utility becomes king
If previous crypto cycles have been fueled by speculation, the future will likely be all about utility. That could extend to enjoyable social experiences led by decentralised autonomous organisations (DAOs) alongside other, more tangible use cases.
We’ll see the emergence of meaningful web3 platforms and protocols, ultimately leading to a much more concrete, intrinsically valuable ecosystem.
Prediction 5: Select NFTs have their day
As an extension of the previous point, we should see renewed interest in a pocket of utility-driven NFTs. Part of this will come from ongoing investments from mainstream brands, building on the programs launched by Reddit, Starbucks and Disney in 2022.
Then we’ll see native web3 brands find their audience. Gaming NFTs, identity tokens, and token-gated communities will likely thrive. And you can expect novel NFT utilities to arrive from Elitium in the early part of the year.
Prediction 6: Real-world assets arrive on-chain
Tokenisation of real-world assets is a much-talked-about opportunity, but we’ve barely scratched its surface. Stablecoins are the most visible example, while we’ve seen the likes of MakerDAO invest $500 million DAI into U.S. Treasury bonds.
We’ve also seen early examples of blockchain loans collateralised by off-chain assets. And we’ve started to see real estate arrive on-chain (with one house selling on OpenSea last year).
Expect much more tokenisation of real-world assets in 2023.
Prediction 7: Bitcoin goes truly global
People may question El Salvador’s warm embrace of Bitcoin, but it’s by no means the only nation that’s welcomed the cryptocurrency with open arms.
In marginalised economies, crypto is flourishing. And this trend will only turbocharge this year, with the African continent already a hotbed of innovation. As swathes of the world start to rely on Bitcoin, global adoption will quickly follow.
Prediction 8: Big exchanges shed services
The collapse of FTX was a watershed moment. A lack of regulation allowed it to happen, and we’ll now see steps to avoid any chance of a repeat. The disaggregation of exchanges will be one such step, splitting custody, brokerage and pricing.
That’s how traditional finance works, so why wouldn’t we see the same in crypto? In tandem, the best-known exchanges will likely consolidate power as users flock to the most trusted operators on the market.
Prediction 9: Data paves the path to new use cases
One of the most powerful features of blockchain technology is its vast, open data set. And ongoing advances in artificial intelligence and machine learning are making it all the more possible to harness this data in novel, unexplored ways.
Expect firms to dive deeper into on-chain analytics, yielding unexpected trends that take the industry into several exciting new directions.
Prediction 10: The industry regroups together
The one positive aspect of a bear market is that it weeds out the speculators.
Only the builders remain, allowing us to regroup, regain the trust of our users and, ultimately, rise from the ashes together.
The last twelve months have been shamefully brutal in crypto. But the villains of the industry have gone, freeing us to return focus to the positive aspects of the blockchain. We will have to work hard to restore faith in blockchain technology.
But doing so will make 2023 a year to remember for all the right reasons.