2022 was a challenging year for cryptocurrency and other global financial markets. Many crypto trading platforms and companies folded under the pressure of the ongoing crypto winter, but some events have set successful milestones and foundations for 2023. Let’s see what is predicted and promised for the industry this year!

Analysts and investors anticipate a boom in the cryptocurrency markets in 2023. It is impossible to predict the future of the crypto market with absolute certainty. Still, it is reasonable to assume that things will improve as innovative integration and mass interest in cryptocurrencies are key themes expected to prevail.

1. Quality becomes crucial among institutional investors

Increasing interest rates, high inflation, and weak equity returns have caused institutional investors to reduce their capital allocation to the riskiest assets in 2022. That’s why it is expected that investors will favor major coins like Bitcoin (BTC) and Ethereum (ETH) based on factors like sustainable tokenomics, the maturity of respective ecosystems, and relative market liquidity.

Ethereum’s successful transition to a proof-of-stake consensus mechanism has reinforced its ability to continue being a leader among layer-1 blockchains. Ethereum is expected to be one of the top picks for bigger investments and interest.

Investors' willingness to accumulate altcoins has been severely impacted by the deleveraging in 2022 and may take many months to recuperate fully.

2. Financial institutions will tokenize more than $10B in off-chain assets
The benefits of tokenization include increased liquidity, faster settlement, and lower costs. Even private securities or illiquid assets such as fine art can be tokenized and traded on the secondary market, opening the doors to a larger audience of investors. Already, MakerDAO has plans to deploy $1B into U.S. t-bills and other government securities with the help of BlackRock and Coinbase, allowing DAI holders to earn a higher yield on deposits.

3. Regulatory clarity is needed urgently
It is believed that the next market cycle in digital assets will be shaped significantly by the development of standards and frameworks for regulated entities. The regulatory framework should balance the need for reasonable standards for centralized entities with the need to protect the freedom to innovate at the base layer.

Ethereum is expected to be granted greater regulatory clarity in 2023, which could further encourage more people to invest in the project.

4. Total web3 monthly gamers will rise from 2M to 20M
It is not surprising that crypto gaming has been seeing positive changes even during crypto winter, with some surviving it very well. 2023 is predicted to be a year when a significant number of people will invest in gaming, and the sector overall will see profitable outcomes. Through the advent of this new technology, players have been able to generate income by selling in-game NFTs or earning cryptocurrency rewards, both of which can be exchanged for fiat cash.

According to Yat Siu, co-founder and executive chairman of Animoca Brands (a Hong Kong-based game software company), we’re going to see a big wave of high-quality games emerging in the market, which will bring on more mass adoption. That will come into full effect somewhere in 2023, maybe spilling over into 2024.

5. The Bear Market Will Be Over in 2023
The bulls will come back and perhaps stronger than before during 2023. Investors are optimistic that the crypto markets will rally very soon. History has shown that the cryptocurrency market experiences a bear run followed by a bull run. While many investors are currently in fear, those who persevere and stick through this phase will be rewarded once the market explodes.  

6. Decentralisation will see wider adoption
Decentralized autonomous organizations (DAOs) could reach their full potential, while non-fungible tokens (NFTs) will gain more ground. This will perhaps be the most important development trend of 2023. DAOs offer a way to address current issues of centralization and lack of transparency in the cryptocurrency industry. Due to this, new models of governance and collective financial management will be the focus.

More companies will be drawn to DAOs for their improved accountability and transparency!

7. NFTs should have more utility

NFT utility will grow more nuanced, personalized, and commercial as we collectively move past the “jpeg” era. At the same time, blue chip “jpeg” NFTs will be a multi-billion-dollar asset class. The term “NFT” will no longer automatically mean “digital art” as it has since a variety of use cases will emerge, all using NFTs as the base technology. The crypto community will have to look back on NFT projects from 2021 and 2022 with a critical eye. Those that haven't evolved utility will most likely fail.

8. Chartered Banks aim to offer crypto services

Banks chartered by the Federal Reserve have intentions to offer crypto services. An example of this is VaultLink, whose Digital Value Transfer Rail enables banks to offer crypto-asset services (custody, staking, exchange), digital value transfers, and real-time payments.

The process is done in a regulatory-compliant manner with true supervisory oversight. In 2023 VaultLink aims to collaborate with banking agencies to enable crypto services.

Despite obvious setbacks, many in the industry remain hopeful that 2023 will be a blooming year in the crypto industry leading to higher returns and increased liquidity. Moreover, more businesses will likely join the crypto ecosystem in 2023, driving the adoption of virtual currencies and blockchain technology even further. Let’s see what the future holds for us in 2023!

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