Cryptocurrency has been growing in popularity over the last decade. It has come a long way, from being unsupported by financial institutions to being accepted as a legitimate form of payment for goods and services.
But what does the future of cryptocurrency look like? Can we expect crypto to become an even more integrated part of our economy, or will its value decline over time? In this blog post, we’ll dive a little deeper and take a look at some predictions on how crypto might unfold.
First, let’s take a look back at a few notable events that took place in 2022 which give us an indication on where crypto might be headed to in 2023:
Notable Events of Crypto in 2022
2022 was a significant year for the crypto industry. While major events like the sudden collapse of FTX have taken a toll and helped Ukraine in times of war, cryptocurrency has managed to bounce back and find its way through the storm. Below you’ll find an overview of some major events that occured last year:
Largest Withdraws by BTC-e’s controllers
BTC-e is a cryptocurrency trading platform that allows exchanges of various cryptocurrencies, as well as the Euro, Russian Ruble, and the U.S. Dollar. The U.S. authorities shut down this platform in 2017 as it was found to be doing money laundering linked to several forms of cybercrime. In 2022, BTC-e sent $165 million in bitcoin to a group of exchanges, personal wallets, and other services. It was considered the highest amount of withdrawal since 2017.
The Collapse of FTX
The collapse of FTX in November 2022, shook the unsteady cryptocurrency market, dropping its market cap by billions which brought it down to less than $1 trillion. On December 13, the company’s replacement CEO, John Ray, testified before the U.S. House of Representatives Financial Services Committee that investors and clients had lost billions and that not all of it would be recovered.
Cryptocurrency Ukraine Donation
According to Alex Bornyakov, Ukraine’s Deputy Minister for digital transformation, the country has received “close to $100 million” in bitcoin donations despite its ongoing war with Russia. Crypto has helped Ukraine buy non-lethal goods, including fuel, food, and bulletproof jackets for soldiers during these desperate times of need.
Increase Of Crypto Investigations in 2022
As per CertiK data, there has been a significant increase in the number of crypto investigations from 2021 to 2022. The overall number of probes in particular rose by 81%, from 53 publicly disclosed instances in 2021 to 96 cases in 2022.
Given the escalation of regulatory and law enforcement actions in this area, this growing trend is expected to continue in the upcoming years, especially in 2023.
So these were some events that caused a turbulent year for crypto. Let’s look at the yearly view of the crypto to understand the market better:
Crypto Market Review 2022
The year 2022 has really been a challenging year for crypto, with several fallouts, collapses, and bankruptcies that have led investors to think twice before investing. The fallout of FTX and BTC-e withdrawals have affected the market trumendously. At the beginning of 2022, the crypto market cap reached a record high of $3 trillion, but by the end of the second quarter of 2022, it fell below $1 trillion.
Even after all that’s happend, there’s still hope for recovery. The successful upgrading of Ethereum from a proof-of-work blockchain to a proof-of-stake blockchain occurred in 2022.
Also, Stellar, a powerful cryptocurrency saw a 73% increase in the number of its total assets. It had 155,943 total assets by the end of the year. Additionally, the open-source, decentralized network handled $345.92 million of digital payments during the year. Stellar ended the year with over 7.37 million total accounts, up 17% from the previous year.
By 2023, world economies may be drastically altered by crypto adoption – let’s dive a little deeper and see what that could mean:
The Industry Prediction for Crypto in 2023
Many investors have started thinking about the future of cryptocurrency and what twist and turn might take place in 2023. So, to help you out, we’ve rounded up predictions from bullish to skeptical:
Harsh Crypto Regulation
It is predicted that the clashes over crypto regulations will come to an end. Governments will pose harsh regulations to overcome money laundering.
Chances Of More Losses in 2023
The FTX and Alameda collapse, have almost made it impossible to recover such losses. Investors can expect that there will be a closure of funds and companies faltering as the loss is too big for anyone to quantify and recover from.
Global Bitcoin Adoption
With an increasing number of bitcoin leaders and entrepreneurs from all around the world, it is possible that bitcoin will be a trend once again in the upcoming year.
NFTs Will Reach New Heights
NFT-continued funding’s desire for high risk in 2022 is a reliable sign that it will be among the first industries to recover. Last year, there were plenty of major investments in NFT from significant brands and Web3. Therefore, it is expected that there will be no stopping NFTs in 2023.
Regulators Will Impose New Laws
After the FTX collapse, governments are working tirelessly to ensure that there won’t be another collapse like it in the future. The Senate Agriculture Committee’s Digital Commodities Consumer Protection Act (DCCPA) imposed stringent regulations on clients’ assets to safeguard investors from another Voyager or Celsius.
If it continues, the Commodity Futures Trading Commission (CFTC) will supervise its implementation and prosecute anyone who breaks the law. However, there is opposition since some believe this will make DeFi protocols more difficult to use.
The Bottom Line
It can be seen as a positive thing now that there is less money in cryptocurrency. The amount of money entering the bitcoin market has dramatically decreased. This is brought on by a lot of things, such as fewer investors and a flush out of retails investors, lack of faith in the markets, and more regulations.
The amount of money invested in cryptocurrency is much lower than a year ago. It’s a good thing that the value of cryptocurrencies is declining. It shows that investors are becoming more circumspect, and the market is becoming more stable. Additionally, it indicates that the industry is getting more reliable and legitimate.
As the market cap declines, regulations are tightened and investors gain more faith in their assets, the future of the crypto industry looks bright.