After a nightmarish 2022, the cryptocurrency sector wants to start 2023 well. And the outlook is not as bleak as the economic news.
If there is one thing that is unanimous, it is that 2022 was the worst year known to the crypto ecosystem. Entangled in the economic slowdown like other markets, the sector suffered two major declines: that of Terra in May and above all that of FTX in November. It will also have lost two of the top three lending platforms with the bankruptcies of Celsius and BlockFi.
We can therefore be almost certain of one thing: we will not be able to do worse in 2023! After all, 2022 will not have been a year only painted in black. Innovation continues, decentralized finance protocols have proven to be quite resilient and a common regulation has emerged within the European Union, with the adoption of the MiCA and TFR regulations.
Furthermore, 2023 could be a year of transition, between an established bear market, economic uncertainties and the upcoming Bitcoin halving in spring 2024.
Markets: A well-established bear market
Of course, past performance is no indication of future performance. However, it seems complicated to get out of the economic crisis in 2023. As a direct consequence, the cryptocurrency market is not expected to return to the top this year.
Conversely, technical analysts are rather pessimistic. It’s best to look down. Therefore, we are closer to one BTC at $10,000 than $30,000. It will also be necessary to monitor crypto projects in very bad shape, such as Solana (SOL), which could risk its long-term survival in 2023.
Bitcoin: an even stronger king in 2023?
The Bitcoin protocol has unwillingly suffered the list of disasters that hit the crypto ecosystem in 2022. However, at the time of writing, it is maintaining an honorable price and has not dropped below $15,000 in 2022. Admittedly, difficult to predict the future development of the course. But what is certain is that the BTC will have held.
Market movements show that Bitcoin has been less overlooked than other cryptocurrencies. It remains the project that inspires the most confidence and, currently, long-term investors are turning to bitcoin. 2023 should therefore be a strengthening year for Bitcoin in the cryptocurrency market.
Also, after El Salvador and the Central African Republic, could BTC become currency in a new country? It is possible and could be on the side of Latin America. This project is particularly mentioned with more or less seriousness in Brazil, Argentina and Honduras.
Green mining: a real perspective in 2023
Once seen as a pollution unworthy of its usefulness, bitcoin mining is gradually changing its image. More and more energy providers understand that mining can help monetize infrastructure with intermittent energy, in other words renewable energy. Additionally, the heat generated by servers can also have virtues.
The figures on the percentage of “green mining” (wind, solar, hydroelectric dams, geothermal, nuclear) vary between 20 and 60% depending on the source and above all on the field (pro or anti crypto). However, one trend is real: virtuous mining is gaining momentum and logic dictates that it will continue into 2023.
The first reason is rising energy costs. However, renewable energy is cheaper when miners use the excess energy generated. The second reason is the image. More and more miners understand that mining for coal or oil is frowned upon. Fossil fuels are therefore very likely to become a minority in the mining energy mix.
2023, crucial year for Ethereum (ETH)
Last September, The Merge Ethereum upgrade went smoothly. Since then, Ethereum has suffered like the others from the FTX earthquake. However, the fundamentals remain and 2023 is a very important year for Ethereum.
First off, The Merge was just the beginning of the updates. The next one, Shanghai, is expected to take place in March. Ethereum remains an ever-evolving protocol, which is far from having implemented all of its features. It is therefore necessary for these updates to go well for the trust to continue.
Indeed, strengthened by The Merge and the setbacks of Solana, Ethereum is the go-to protocol for new projects in the cryptocurrency sector. His seniority and resilience are two important assets in convincing new players. Similarly, the move to proof-of-stake, which consumes 100 times less energy than proof-of-work, has removed the barrier for institutions wishing to launch prototypes on a public blockchain.
However, Ethereum will face the risk of centralizing network nodes. Especially since the physical or virtual presence of these nodes in the United States makes the American authorities say that Ethereum is a network subject to its jurisdiction.
Polygon (MATIC), protagonist of alternative blockchains?
If Ethereum’s more or less declared competitors are numerous, no one has managed to counter its dominance. Worse, Solana, the most menacing of them, violently suffers the fallout from FTX. But there is one protocol that has been talked about forever: Polygon.
Previously presented as a sub-layer protocol (layer 2) to Ethereum, the Polygon solution developed its own blockchain and now plays both sides: with Ethereum and against Ethereum. Polygon’s success is explained by a very fast, inexpensive network that uses the security of Ethereum.
As a result, large projects have been launched on Polygon, such as the decentralized social network Lens Protocol, NFTs on Instagram or even those of Disney, which for the moment remains discreet about its ambitions in Web3.
2023, the year of DeFi?
2022 will have been the year of the fall of the CeFi (centralized finance) players, which reproduce the trends and errors of traditional finance. However, in cryptocurrencies and Web3 in general, some emphasize decentralization. It is therefore logical that the DeFi protocols have benefited from the bankruptcy of some giants in the sector.
2023 could therefore be the year of DeFi for at least three reasons. The first is the extreme distrust of centralized players, including that of Binance, the ultra-dominant platform. The second is the technical robustness of the protocols which work very well. Provision of liquidity, pools and smart contracts are all perfectly coordinated. The hacks we see are overwhelmingly caused by human error, scams, and security holes in some pools and not the protocols. The third is the maturity acquired by the Aave and MakerDAO protocols, which have built a real solidity and have been able to diversify.
If institutional players start using DeFi protocols rather than centralized platforms, its growth will surely increase tenfold and will be one of the big trends of 2023.