How the Crypto Market Will Shape Up in 2023

    TheMorningCrypto Desk
    TheMorningCrypto Desk
    Published on November 14, 2022 5:05 PM

    Updated on January 9, 2023 12:51 PM

    Crypto market wrap-up. A slightly probable insider peek into the 2023 global crypto market and how it is going to be for investors.
    How the Crypto Market Will Shape Up in 2023
    Source: unsplash

    The crypto market is the new Hogwarts for the fin-tech universe. In 2022, cryptocurrency values have seen much depression. Bitcoin soared to a record high of about $69,000 in November but has now fallen below $16,000, a decline of almost 76% from the peak. Professor of finance Carol Alexander of Sussex University predicts that Bitcoin will fall to a low of $10,000 in 2022, wiping out most of its gains over the previous year.

    The Volatility in Bitcoin Market

    During his three-day speech at Web Summit 2022 this year, Tim Draper discussed his support for bear markets.

    After successfully predicting that the value of the cryptocurrency asset would soar over $10,000 per unit a few years prior, Draper was asked what he believed the price of bitcoin (BTC) would be in four years. The multibillionaire investor went to a reception held by his Draper University, which focuses on blockchain technology, in mid-April.

    Despite losing 25% in days, the insolvencies affecting FTX, Alameda Research, and perhaps other significant crypto firms do not spell the end for BTC.

    Although quick, the unraveling for Stockmoney Lizards is not significantly different from past liquidity crises in Bitcoin's history.


    Source: TradingView


    Advancement in Decentralised Finance (DeFi)

    According to Bryan Gross, network custodian of cryptocurrency platform ICHI, "expected to be the biggest growth sectors of crypto" include new advancements like decentralized finance (DeFi) and decentralized autonomous organizations (DAOs). While DAOs could be viewed as a new internet community, DeFi aspires to recreate conventional financial goods without intermediaries. Deposits into DeFi services reached $200 billion in 2021, and 2022 is predicted to see increased demand.

    According to CNBC, Web3 is a more significant trend that includes DeFi. Web3 proponents claim that a small number of corporations, including Facebook's parent firm Meta and Alphabet, Alphabet, Apple, and Amazon, online control platforms. Web3 proposes a new, decentralized internet that uses blockchain and non-fungible coins.

    Crypto Regulatory Framework

    The most concerning part for the crypto industry is the regulatory framework.  

    A repetition of the global financial meltdown of 2008 is something that everyone wants to avoid. To achieve this, regulators have prioritized preventing and reducing "systemic risk" to the financial system. 

    So far, CFTC and US SEC are still trying to find a way to implement discussed regulatory factors into the crypto space. Traditionally, the CFTC controls commodities and derivatives, whereas the SEC regulates securities. Cryptocurrency's status as a security or entity is still debatable, as different parts of the ecosystem test established regulatory boundaries.

    For instance, a federal judge recently decided that virtual currency like Bitcoin constitutes a commodity, while the SEC recently asserted that nine different crypto tokens were securities in an insider trading case.

    Deploying a regulatory framework into the Web3 sector will be challenging for central and regulatory authorities.

    The above points will play a more vital role in shaping the crypto industry in the upcoming years. Soon the market will mature as investors and regulatory authorities spend time inside it.