The opinions expressed by the entrepreneurs are their own.
How much will bitcoin or any altcoin be worth in 2023? Great question. Even professional traders cannot predict the price of crypto due to many influencing factors. But as an investor, I want to address something else. Are those who have already buried the grave right, or is last year’s market crash not the end?
Related: Now that Crypto has crashed, what’s next for the Metaverse?
Bugatti for Bitcoin — failed
In February 2021, the capitalization of Bitcoin exceeded 1 trillion dollars for the first time. The first cryptocurrency rose 900% in one year and traded at $54,000 per coin.
Despite the record price, there was no let-up by investors. For example, the payment service Square, owned by Jack Dorsey, then bought more than three thousand bitcoins.
Amid the rising price of Bitcoin, in March 2021, Jesse Powell, the founder of the Kraken cryptocurrency exchange, made a sensational prediction: by the end of 2022, one Bitcoin could buy a Lamborghini, and in 2023, a Bugatti.
The prediction failed. today you can buy a Kia Rio or a Mitsubishi Mirage with Bitcoin alone. And this after the boom in ETFs, NFTs, DeFi and stablecoins. So what went wrong?
Related to: Everything you need to know about NFTs and cryptocurrencies
High interest rates
In 2022, the growth rate of blockchain technology remained high. For example, we witnessed the upgrade of the Ethereum protocol; now instead of Proof-of-work algorithm, blockchain uses Proof-of-stake. After the change, the network will consume 99.95% less energy.
However, this event was overshadowed by others: the bankruptcies of the Terra project, Voyager Digital and Celsius Network cryptobanks, Three Arrows Capital hedge fund, BlockFi and FTX exchanges.
Also, inflation in the US has reached 7% in 2022, the same as in the early 1980s. To curb inflation, the Federal Reserve raised interest rates seven times a year. The base rate is in the range of 4.25% to 4.5%, the highest rate in 15 years.
The Fed’s policies have affected risky assets such as stocks and cryptos. The dollar is strengthening as interest rates rise, but riskier assets fall. Due to this and the bankruptcy of major crypto projects, the cryptocurrency market collapsed. The media once again began to talk about the beginning of crypto winter, a long downtrend and a decrease in the value of all coins.
But I do not agree that due to the recession (in the last year, according to Coinmarketcap charts, the market capitalization has been reduced more than twice, from $2 trillion to $800 billion), this sector can be stopped.
When it comes to crypto, price fluctuations are the last thing you should be focusing on. I look at less obvious factors to understand the market outlook.
The impact of venture capital
The activity of venture capitalists decreased significantly at the end of 2022. This information may panic beginners, but let’s read the news more carefully.
How has the timing of entry into projects changed investor enthusiasm? Crypto-seed and early-stage startups get bigger checks in 2022. Investors are buying into young startups, which means the game is not over and funds will be channeled into the sector.
In addition, the cryptocurrency market is only developing. You can fail in school but get into college on the first try. Thus, failure in 2022 is not a sentence, but only growing pains.
Related to: Decentralized venture capital will transform startup investing forever
Web3 development
Web3 is a new blockchain-based decentralized and tokenized embodiment of the Internet. It’s both financial apps and NFTs. But the most dynamic part of Web3 is blockchain gaming.
The crypto winter has not affected the growth of distributed ledger technology-based gaming programs. In 2022, the number of transactions in gaming blockchains increased by 94%.
It’s a trend so strong that only complete planet-wide blackouts can bring it down. Thus, the entire blockchain industry will become less speculative and more practical.
Return of NFTs
After COVID-19, even people far from business learned that the most affected sectors have actively recovered from the crisis. This is exactly what needs to happen with the NFT sector.
In 2022, it decreased by 97%. But autumn is not a trend, unlike the arrival of major players in this market. NFTs were launched by the giant Starbucks as part of a loyalty program. By the end of the year, the list of major companies issuing NFTs was joined by Reddit, Meta, Nike, Disney and Coca-Cola.
All of these companies have invested in developing their own Web3-based projects and will continue to develop them in 2023. In my opinion, other companies will pick up the trend, so the revival of the NFT market is only a matter of time.
Related: 5 Ways to Preserve and Grow Your Wealth During a Cryptocurrency Downturn
Accumulation trend
In December 2013, on the Bitcointalk forum, user GameKyuubi made a post with a typo in the title: “I AM HODLING!” He criticized traders who use bitcoin to get rich, contrasting their position with his position to hold the crypto even when market signals indicate the need to get rid of the asset.
The term HODL became a meme, and the change in the number of hodlers became the data for analytics platforms to gauge industry development.
New statistics from Glassnode show a dramatic increase in addresses for aggregators on the Bitcoin blockchain. These hodler’s wallets have received at least two transfers in the past seven years. However, funds were never withdrawn from those addresses.
The number of such wallets has reached almost 800,000, an increase of 18% during the year. The numbers show that the number of loyal users of the service is growing.
Hodlers do not make money from Bitcoin. They believe in its potential as a universal means of payment. And user growth is a significant factor in bitcoin’s global adoption. I’m sure that while some faithfully hoard cryptos and those who develop blockchain and projects based on it, seasonal and annual jumps are ripples in the pond. The most exciting things happen deep inside.
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