The Crypto Outlook for 2023 –

2022 has been a tough year for the crypto world. Confidence in this asset class has been damaged by the collapse of FTX. The crypto market capitalization has fallen by more than $2 trillion as the bearish sentiment has taken hold.

Through Alan Boulhimez, Director Investment Strategy

The Crypto Outlook for 2023 InvestingchHowever, this phenomenon has had the effect of making many projects more accessible. There are multiple reasons to be optimistic in 2023.

The first reason is that retail investors bought bitcoin in record volumes as prices fell amid the FTX debacle. ETC Group research shows that the smallest investors — those with less than 1 bitcoin in their accounts — added a record $1.55 billion in bitcoins in November 2022.

Main themes in 2023

  • The recession: Soft landing possible
  • NFTs on the Polygon and Ethereum blockchain could skyrocket
  • The “FUD” on the “mining” of bitcoin

Recession: Is a soft landing possible?

The macroeconomic situation seems turbulent. Economists wonder if the coming recession will be mild, moderate or deep?

A “soft landing” would mean that inflation, which is at its highest level in 40 years, would begin to decline without the economy falling into negative growth (i.e. a recession). Such a situation would allow central banks to reduce their interest rate hike programs. The latter having exerted strong downward pressure on stocks, bonds and crypto last year.

Crypto as an asset class and cryptoassets remain capable of drastically outperforming stock indices such as the DAX40, S&P 500, and Nasdaq. This is especially true during bear markets and recessions.

Analysts consider that the persistence of the high results of the “ISM” survey could encourage the Federal Reserve to continue raising its interest rates. In the week ending Friday, January 6, the S&P 500 posted a total gain of 1.5%. Over the same period, bitcoin rose 3.15% and ethereum 8.5%. Cardano, one of the top ten blockchains by market capitalization, rose by 27.2%.

As we head into the second half of the year, bond markets are betting that interest rates will start to fall, with the cost of capital coming down at the same time, providing startups and risky assets with a better environment. of growth.

At that time, the halving of the bitcoin mining premium (“the halving”) in 2024 will take place. Historically, when the supply of bitcoins coming to market is halved once every four years, demand – and prices – tend to increase exponentially.

NFTs on the Polygon and Ethereum blockchain will skyrocket

While headlines may suggest NFT markets have crashed, the fact is that cartoon monkey artwork and profile pictures are just the first iteration of what NFTs can be used for. .

Brands looking to build closer and deeper connections with their young consumers have turned to Web3 concepts in droves, such as blockchain, NFTs and metaverse, and we see this trend exploding in 2023.

The success of polygon (an upgrade of theEthereum) allowing the integration of dozens of mainstream companies is proof of this.

In August 2022, Nike (NYSE:NKE), which has a market capitalization of $196 billion, saw $185 million in NFT sales after its acquisition of virtual trainer marketplace RTFKT. These are sizeable sales figures for an established business looking to grow organically.

In doing so, Nike has become the most profitable brand in the world thanks to NFTs, ahead of Adidas, Reddit, Gucci, Hermes, Burberry, instagram, tiktok, robinhood and JP Morganall of which have started using Polygon and Ethereum NFTs.

On December 8, 2022, Starbucks (NASDAQ:SBUX), which has a market capitalization of $121 billion, launched its NFT loyalty program with Polygon. This offers interactive experiences and additional benefits for customers.

ETC Group research shows that Polygon users grew by 400% in the last five months of 2022, from 200,000 to over one million.

Investors should get excited about the potential use cases for NFTs beyond art: for example, for customer loyalty programs, schemes to encourage membership in creator communities, and the possibility to tokenize real-world assets.

When we talk about abstraction, we mean that we expect to see more projects and products coming out where the end user doesn’t necessarily know that cryptocurrencies and blockchains are running in the background.

Starbucks, for example, calls its NFTs “stamps,” while Reddit calls its NFTs “digital collectibles.” This could be due to the public’s misperception of NFTs as a technology.

Most importantly, NFTs are moving beyond a work of art to something much more consumer-friendly. The biggest brands in the world are now using them to find better ways to connect with their online audience.

Beware the Fear of Bitcoin Mining

In the land of cryptocurrencies, FUD stands for “Fear, Uncertainty and Doubt”. It is a tactic of ill-intentioned actors to focus on the fortunes of publicly traded Bitcoin mining companies to suggest doubts about the viability of the Bitcoin blockchain itself.

This happens in every bear market.

Looking back to the bitcoin bear market of 2018/2019, one can see doomsday headlines proclaiming the near end of bitcoin, given the problems bitcoin mining companies were facing.

At the start of 2018, bitcoin was trading at around $10,500. It fell into a range of $5,500 to $6,500 and remained there from June to November 2018, before dropping to $3,200. Many bitcoin mining companies capitulated and went out of business as their margins collapsed and could not cover the cost of producing bitcoins.

The Bitcoin network doesn’t care who is mining it. It will continue to produce blocks every 10 minutes, like a clock.

Bitcoin will survive. Investors must be prepared to weather the storm of headlines and spreading fear, however, in order to make the most of bitcoin’s price — the lowest in years.

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The Crypto Outlook for 2023 –

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