2022 was an undeniably turbulent year for the cryptocurrency industry, which has led to numerous questions among market participants: “Will this ever end?”, “What to watch out for in 2023?” or “Is this even worth it anymore?”.
The cryptocurrency sector has been quite unstable lately. Even major players in the market, such as Bitcoin and Ethereum, experienced significant drops in value due to ever-changing adoption intent and rapid price fluctuations. The Fed rate surges and geopolitical sentiments, as well as the FTX collapse, which has been the talk of the town ever since the incident, have highly contributed to this uncertainty regarding the decentralized market’s recent sentiments. Factors like market cap, regulatory developments, and demand play, thus, an irrefutable role in pricing estimates.
Even if many analysts have doubted crypto’s ability to endure and survive, it is still here. If we are to look at the digital currency’s current status, it seems quite promising. There is a lot of discussion in the crypto community, and if you have just decided to invest, you are advised to conduct some research before taking any leap. That means everything from checking the ETH price multiple times to gaining insight into that crypto’s market cap and trading volume. But this is not revelatory news, as careful research has always been the go-to on this matter.
However, as the crypto sector recovers, we know you have lots of questions. So, here is what you can expect in terms of developments and trends in this new year.
Stricter Regulations May Follow
The crypto industry’s unregulated landscape has always been a cause for concern, but this has intensified since 2022’s tumultuous impact on digital coins. Investors are now looking to safeguard their assets; fortunately, governments have taken notice of their request. As a result of recent incidents in the crypto space, among which the FTX collapse is the most alarming, stricter regulations may follow soon to avoid chaotic situations. So far, the US government doesn’t have many regulations and laws surrounding virtual currency, but things will likely change.
Last year, for example, President Biden launched a proposed framework and an executive order for regulating digital coins. Since cryptocurrency scams have become a serious threat, regulations aim to prevent criminal activity. The Financial Stability Oversight Council (FSOC) has explicitly called out regulatory arbitrage, crypto spot markets, and stablecoins in the call on Congress to pass laws meant to regulate crypto.
However, regulatory authorities worldwide will do more to impose clearer and stricter rules for crypto companies. And apart from the areas above, things like staking, landing, DeFi, NFTs, and technological advancements will be part of their attempts. These regulations will ensure that crypto companies remain transparent and compliant and safeguard investors in crypto products.
Expanding Use Cases for NFTs
The NFT (non-fungible token) sector has lost much ground lately, but experts believe in a possible comeback. While it is true that the market was a victim of scams, high inflation, and the bear market in digital currency, the chance for it to recover is great in 2023. That is partly due to the gaming industry, which does not cease to explore the potential of NFTs. The P2E (Play-to-Earn) gaming model, in particular, goes all-in on NFTs, allowing players to earn rewards in non-fungible tokens (in-game perks, in this case) and further trade them for real-life money. Popular games of the likes include Axie Infinity, Decentraland, My Neighbor Alice, The Sandbox, and Star Atlas.
However, use cases of NFTs will likely expand, targeting areas such as real estate, art and collectibles, decentralized finance loans, food and drink, music, movie, and 3D printing (NFTs turn into tangible objects). Pretty exciting.
More Attention Toward DeFi
Decentralized Finance (DeFi) has gained ground in the crypto space as increasingly more participants show interest in exploring the area. But why? Well, it is an alternate world of investing and finance based on blockchain technology and digital currencies, so there would be no third party controlling it. All DeFi transactions are performed in a public ledger, which promises transparency, security, and rapidity. The so-called ‘smart contracts’ ensure that your transactions do not rely on a financial intermediary to validate them. A wide variety of platforms have started to leverage DeFi, but to date, Ethereum distinguishes itself as a leader in the community.
The DeFi ecosystem is, thus, a new way of conducting financial transactions, and this idea has lured many investors and users. But bear in mind that this is not a fully shaped area, and many changes -and challenges – are to be addressed for DeFi to disrupt traditional finance and reach its full potential eventually.
More Meme Coins on the Horizon
As absurd as it may sound, meme coins are all the rage today, with increasingly more investors taking this route. Dogecoin, the first of its sort, may have started as an Internet joke, but its current market cap (about $10.8 billion at the time of writing this article) speaks for the coin’s success. The viral image representing a cute Shiba Inu dog is on the verge of mass adoption, with Elon Musk being the first mover in this sense. After he gave up on Bitcoin, Musk continued with Dogecoin adoption, so anyone interested in buying a Tesla can do so with Dogecoin.
What does this tell us? That meme coins have real potential and will likely be a major trend in 2023. There are already more than 200 such coins in circulation, among which the most prominent players in the market are Shiba Inu (SHIB), Floki Inu (FLOKI), and Dogeliens (DOGET). So, it should come as no surprise for more to be launched in the foreseeable future.
5G Integration into Cryptocurrency
5G technology is slowly but surely making its way into various industries, and cryptocurrency is no stranger. After all, it is a much more rapid, lower-latency solution than most data transmission options. By incorporating 5G into the blockchain, digital currency transactions will be faster, and all traders and systems will be able to make them, regardless of their exchange’s location. This will allow participants to maximize their crypto and democratize transactions and trades.
Wrapping It Up
The cryptocurrency sector has a promising future ahead, with lots of trends and developments likely to happen in this new year, so stay close – big things are coming.
