If 2021 is the ‘Year of Cryptocurrency’, then 2022 was the year that cryptocurrency collapsed. Millions were made and lost by crypto investors as crypto companies were founded and folded. As we are on the verge of 2023, one thing is clear: the ‘Roaring Twenties’ era of 2022 crypto parties and the general irrational enthusiasm of the market is over. 2023 will be the year crypto needs to grow and clear its movement. Tal Elyashiv, co-founder and managing partner of SPiCE VC, has five predictions for the year ahead.
Prediction 1: Natural selection of the cryptocurrency ecosystem
Natural selection of the digital asset ecosystem will be strong in 2023. This is a positive development! Good companies will grow stronger and bad ones will disappear or be restructured. This will leave a better positioned market for the future. We see Darwinism spreading rapidly in the market and only well-managed, well-intentioned companies survive. Going into 2023, there will be more shoes to throw away. However, this process is necessary and very healthy for the future growth of the cryptocurrency ecosystem. Reshaping and rebuilding the reputation and way of doing business of the industry, greater control, risk management, transparency and reality check will come to the fore. Institutional investors will continue to drive this.
Speaking of institutional investors, companies like Softbank, Sequoya, and Temasek also need to sober up. This process of maturation and sobriety will weed out some of the fraud, incompetence and lack of experience in the industry. Also, it should be noted that this is a good thing. The surviving companies will be stronger for it. Thus, the industry will once again be in a better position to start improving.
Prediction 2: Cryptocurrency regulations everywhere except the USA
Countries around the world will make critical decisions about cryptocurrency regulation in 2023. However, no meaningful regulatory movement will occur in the US due to legal dysfunction.
Regarding crypto regulation in the US, there will be one thing we know for sure in 2023: Internal conflicts. Let’s not forget the decentralized finance (DeFi) team from the Securities and Exchange Commission and the Commodity Futures Trading Commission versus Democrats and Republicans and the traditional finance (TradFi) team, 2023 will be just as fun as WWE, so grab the popcorn. However, no one benefits from the deadlocks resulting from unresolved power struggles, and this coming year will be no different in the digital economy. While one would like to hope that a new Congress can achieve meaningful crypto legislation, the odds of that happening are as high as Sam Bankman-Fried holding the Bahamian penthouse.
But while the US bickers and debates, countries around the world will make progress. In 2023, many of these regulatory regimes will take shape. The European Union will take a major step forward in voting and enforcing the Cryptocurrency Markets Regulation (MiCAR/MiCA) in early 2023.
Meanwhile, Asian regulators each handle crypto scarecrows differently. Hong Kong’s 2023 goal is to increase individual cryptocurrency access, which requires a specific regulatory strategy to support these goals. On the contrary, nearby Singapore is signaling for investors that it will tighten regulations after huge losses this year. South Korea, which is still grappling with this problem after the collapse of Terra, will focus solely on implementation. On the other hand, India, which is unique in the region, uses tax policy to guide behavior.
Prediction 3: Metaverse and NFTs come back from the dead
The brilliance and splendor of Metaverse and Non Fungible Tokens (NFT) may be tarnished. But the practical, versatile and inevitable uses of both will be much clearer in 2023. The latest narrative about Metaverse’s demise is like the level of interest and enthusiasm for market adoption a year ago. No one should look at Meta, and the building of metaverse infrastructure in general, as a 2023 or 2024 project. The truth is, the metaverse is inevitable. However, it will take years to fully bear fruit. However, 2023 will be the beginning of how we perceive ‘metaverse experiences’. New use cases in business, healthcare, education and more will bring to our collective attention the practical benefit of smaller metaverse doses, even in our daily lives. Along with AR/VR devices, developments in identity technology will come to the fore in 2023.
The same goes for NFTs. The NFT market will also experience a kind of rebirth in 2023. It will cease to be a factor of value on its own in the field of digital art and collection. It will also come closer to being what technology is supposed to be. 2023 will also see the versatility of NFT begin to shine. The funnel of innovative ways to leverage NFTs will continue to expand in 2023. From supply chain and logistics to healthcare, real estate and retail, NFTs will have a more pervasive and enduring role in digitizing operations.
Prediction 4: 2023 could be ‘Year of CBDC’ worldwide
The CBDC arms race will continue as central banks forge alliances with commercial banks and technology providers to strengthen their positions to test, launch and execute their own unique CBDC strategies.
More than 80% of the world’s central banks are already considering issuing a central bank digital currency (CBDC). In this context, 2022 passed mostly with trials and tests. However, the movement of nations around the world to make CBDCs a reality is gaining momentum. It will also become a major priority in 2023, especially as a global standard-setting race approaches. In addition, commercial banks are showing more and more interest in the field. Thus, it will begin to partner with central banks and software vendors to ensure success and mass adoption.
China’s digital yuan is far ahead of the rest. However, many countries are making progress. In this regard, there is a possibility that they will realize their targets in 2023. The Bank of Japan is conducting a launch trial with major banks in early 2023. cryptocoin.comAs you follow, Turkey has announced that it will launch its CBDC next year. The ECB plans to start work on developing a rulebook on the launch of a digital euro in early 2023. The world of money and payments is on track to adopt Blockchain more broadly in 2023. In fact, even SWIFT acknowledges the need to move in that direction.
Prediction 5: Institutional investments will skyrocket in the crypto industry
Institutional investors will make big moves with the big money in their hands. In 2022, we learned that beyond its organizational woes, crypto is closely tied to traditional market movements and the overall economy. The performance of the domain name for 2023 will again depend on the world economic sentiment. If concerns ease, we may see an increase in crypto prices as well as investments in the cryptocurrency market.
Regardless of market trends, we will likely see more traditional, blue-chip funds tokenize. This will make them easier to access for a wider investor base. Additionally, more and more major market players will enter the tokenization space. As a result, we will see a significant increase in M&A activity. However, as mentioned earlier, the caveat to all of this is whether legislators and regulators will take steps to ensure the necessary stability.
2023 will also be an excellent time to invest in venture capital funds focused on the Blockchain ecosystem. History shows that venture capital funds, which rose during the recession, outperformed funds with divergent crops. Moreover, this is very logical. Because the values in the Blockchain ecosystem will be much more reasonable in the next few years.
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