Like the traditional financial market, cryptocurrencies had a tumultuous year in 2022. As inflation continues to erode buying power and rising interest rates increase borrowing costs for businesses, the challenging macroeconomic background wiped out most of the crypto market value last year. According to CoinMarketCap.com, the valuation of more than 22,100 digital tokens reached $3 trillion in November 2021, only to nosedive precipitously to $795 billion as of Dec. 29, 2022. However, despite the extreme volatility characteristic of this asset class, cryptocurrency will not be buried any time soon. The technology even has more promising features and utilities to offer in the future, on the contrary.
So, between the good and the bad, investors are left wondering what is in store for crypto in 2023.
More choppy directions ahead
Analysts tend to have conflicting views about cryptocurrency movements in the time ahead. We shouldn’t blame them as it is difficult enough to predict the conventional financial market, let alone this new fickle digital asset. However, based on some individual assessments, here are a few.
• A strong argument for Ethereum
Ethereum could outperform and become more valuable than the incumbent Bitcoin. While Bitcoin was the first cryptocurrency to emerge and a prominent leader in the industry, Ethereum is more advanced regarding its underlying technology and usage.
Pulling data from BitInfoCharts.com, we can see that the transactions executed using Bitcoin have remained unchanged for the past seven years. Ethereum, on the other hand, saw its daily transactions jump from 40,000 in 2016 to approximately 700,000 in 2019, and that figure has been higher than one million transactions daily for the past two years, according to an article from the Motley Fool.
Additionally, the Ethereum ecosystem also facilitates features like decentralized applications (dApps), decentralized autonomous organizations (DA0s), and non-fungible tokens (NFTs). These technologies attract innovators and pioneers to further expand and improve upon the network. dApp protocol revenue alone brought in $3.8 billion during the last 12 months, per TokenTerminal.com. Overall, innovative and revolutionary technologies could make a strong case that Ethereum has intrinsic value, which potentially allows it to outperform Bitcoin.
• A move away from meme coins
Meme coins will continue to see their value evaporate in the year 2023. During the peak of the crypto mania, the meme tokens were the ones that saw their prices skyrocket the most. In particular, the rise of Dogecoin and Shiba Inu.
While virtually every cryptocurrency had a remarkable run in 2021, the phenomenon of the two meme coins was out of this world. For example, in 2021, Dogecoin’s value jumped 20,000% in a few months, producing many “dogecoin millionaires.” Shiba Inu’s situation was even more impressive when the coin exploded more than 121,00,000% in value between Jan.1, 2021, and Oct.2, 2021. Many so-called “hodlers” were able to reap a small fortune from the gains.
However, as is typically the case, people hold on to a position, hoping that it would make them even more money, rather than because of the fundamental soundness of the investment. As of January 2023, the two meme tokens have slashed roughly 90% of their value from the peaks. Since these are considered payment coins that have no unique underlying technology to distinguish them from other tokens, analysts expect to see more downside risks for this category of cryptocurrency. Some even foretell a 50% drop from today’s prices for those meme coins.
More intensified regulatory pressures
Besides digital assets dropping in prices, 2022 also witnessed the collapse and implosion of scores of crypto exchanges and business entities, such as Celsius Network, Voyager Digital, Three Arrow Capital, and most recently, FTX exchange. These high-profile failures from the industry have stoked more scrutiny from regulators.
As FTX filed for bankruptcy in November, its former CEO, Sam Bankman-Fried, is now charged with multiple counts of fraud. Lawmakers have since then pushed for more regulatory oversight. Before the undoing of FTX, President Biden signed an executive order on March 2022, demanding government agencies research cryptocurrencies and create a regulatory framework to ensure a safe environment for investors and consumers.
This trend is more likely to persist in 2023. As the crypto market continues to develop, regulators will try to control the industry in a way that provides more transparency and safety protocols in the system.
A new future ahead
While cryptocurrency is a volatile asset class, it holds the potential to disrupt the monetary and financial system in the future. Therefore, individuals who have the means to invest should allocate a small portion of their portfolio toward crypto, to not completely miss out on potential outsize gains.
HiRiBi, a unique platform that specializes in converting BTC into PayPal dollars, provides a medium to trade cryptocurrency in a fast and secure way. Also, the platform operates on an intricate algorithm that allows it to offer the best rate on the market. For example, HiRiBi generally allows users to sell Bitcoin at 15-20% higher than the average price on the market. Additionally, you can quickly convert Bitcoin into USD under a secure, private, and convenient method. The coin will then be promptly sent to your PayPal wallet. Try HiRiBi today if you don’t want to miss the massive opportunity of investing in cryptocurrency.
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