The cryptocurrency market has left behind a year filled with troubles and crashes. Now market players are wondering what the new year will bring. Cryptocurrency experts share their predictions for what will happen in the crypto world in 2023.
Consensus cryptocurrency predictions
- The overall macro environment will continue to put downward pressure on high-risk assets like crypto. However, sideways movement over the next year is more likely than a drastic decline.
- Many projects that fail to achieve product-market fit will gradually be abandoned due to lack of funds and demand.
- Mergers and acquisitions activities will increase as companies with bad financial situation will be tried to be bought.
- Venture capital will slow down significantly in 2023, especially in the first half of the year.
- Cryptocurrency prices will continue to be correlated with the monetary policies of central banks.
- The gap between the market caps of Bitcoin and Ethereum will continue to shrink. However, in 2023, Ethereum will not surpass Bitcoin.
- The main narrative in 2023 will shift towards Ethereum layer-2 scaling solutions. TVL will increase for L2s. Zk-rollups will outperform optimistic-rollups in relative growth. Major L2s like StarkNet, zkSync, and Arbitrum will launch their tokens.
- Modular blockchains like Celestia will receive increased attention. It will also outperform alternative monolithic Blockchains of the previous cycle.
- The decline of centralized crypto-assets over the past year will intensify regulation for centralized entities, as Binance becomes the center of attention. Coinbase will benefit from the FUD around Binance.
- DEXs will publish the strongest key growth metrics relative to other DeFi use cases.
- The decentralized social ecosystem in Web3 will experience rapid growth as investments and activities in this sub-sector increase
- With the rapid adoption of NFTs among traditional brands, more users will join NFTs. Also, NFTs will continue to serve as a vehicle for crypto’s integration with arts and culture.
- Opensea’s market share will fall further and the marketplace will lose its monopoly status.
Crypto predictions of experts
General purpose zk-rollups will finally launch in 2023. In fact, it will become as usable as Ethereum. Arbitrum, Starknet, zkSync, and Scroll are all launching native tokens in 2023, and as rollups manage to absorb most of the smart contract activity from the base layer, there will be a recurring discussion about value accrual of L2 tokens against ETH. There will be fierce competition between Polygon zkEVM, Starknet, zkSync and Scroll.
Ethereum will not convert Bitcoin yet, and no other currency will be able to convert Ethereum. Still, Ethereum will outperform Bitcoin in 2023. Crypto prices will continue to behave like tech stocks. OpenSea will continue to lose its monopoly status and its abusive approach to copyright enforcement will fail. Genesis will apply for Episode 11 and Gemini will face pressure because of the Win program. GBTC and ETHE will not be resolved.
The SBF will not see a day in prison in 2023 and will continue to plead not guilty. U.S. regulators will use the FTX collapse to change the way the crypto industry is governed, similar to how Lehman and Enron have impacted politics around the world. In order to avoid FTX-like situations in the future, new laws similar to the Sarbanes-Oxley Law will be prepared.
The overall macro environment will continue to put downward pressure on high-risk assets like crypto. The market will bottom in a second wave of NFTs that will be multiples of the wave that peaked in 2022. The second wave of NFT PFP projects will be driven by the third/lower level projects of the last cycle that focus on entry-level luxury rather than high-end luxury. Polygon will be the third largest application layer by the end of 2023, both in terms of economic activity and market capitalization. I think people are underestimating the demand and ecosystem development that will come out of the dYdX Chain, which could also accelerate the Cosmos ecosystem.
The macro environment will perform poorly with high-risk assets such as digital assets. We may not have reached the final bottom in cryptocurrency prices. However, sideways movement over the next year is more likely than a drastic decline. 2023 will be a crucial year for developers and building as less attention will be paid to hype, narratives and pricing. Layer-2s will continue to gain traction. Some, including Arbitrum and StarkNet, will issue native tokens.
Results from Alameda Research, FTX, FTX US, Voyager Digital, Celsius, BlockFi and potentially other lenders will make 2023 a central year for companies offering institutional infrastructure for digital assets. Market share will be snatched for new lenders and market makers. In 2021, we will also see a reversal of the prominent trend where every crypto-finance firm is looking to create a complete main brokerage offering.
On the macro side, the sudden reopening of China with stimulus and the slowdown in FED rate hikes will raise the global macro risk appetite towards the summer months and crypto will benefit greatly from this. The upcoming BTC halving in March 2024 will keep the optimism in the industry at high levels overall. Privacy will continue to be an issue strongly advocated by many industry participants.
Arbitrum and StarkNet will launch their native tokens. Also, both will enter the top 10 on TVL by EOY 2023. NFT will increase its market share as Polygon acquires more traditional brands. The Cosmos ecosystem will implement upgrades such as multi-side-chain development, native stablecoin support. The withdrawal of staked ETH will be activated in the first half of 2023. Coinbase’s cbETH will then double its market share in Ethereum liquid staking. Also, the asset will be widely accepted as collateral by major DeFi protocols.
As the European Union finalizes MiCA legislation, the adoption of the Euro-based stablecoin will increase steadily. USDC will surpass USDT and become the largest stablecoin by market cap. But Tether will still be important and won’t crash in 2023. The gap between the market caps of Bitcoin and Ethereum will continue to shrink. But there will be no ‘inversion’ in 2023. The Spot Bitcoin ETF will not be approved.
BTC will remain the largest asset by market cap until the end of the year. But ETH will outperform in terms of price. Solana will outperform other alternative tier-1s. However, it will not reach its all-time high. Tier-2 scaling solutions will continue to see an increase in developer and user adoption. However, its native tokens will outperform BTC and ETH.
Once the era of easy money is over, the ability to increase both equity and debt financing across crypto and the broader market will make the 2023 outlook rather bleak. Firms will need to be more conscious about spending. It is likely that layoffs and reductions in staff numbers will continue.
Firms exposed to the crypto industry in 2023 will face constant pressure. More miners will declare bankruptcy or restructure as they face increasingly expensive debt payments from the machines used to secure loans and/or BTC treasuries. 2023 will also provide lower volatility than 2021-2022. This will result in fewer opportunities for traders to make easy profits.
We should also be prepared to see more innovation and drama in the stablecoin market. But improvements will come from increasingly bifurcated areas. Specifically, policy-driven actors will more fervently explore regulatory-compliant payment instruments as DeFi developers create censorship-resistant products that creatively integrate into protocols.
With all the events in 2022, confidence in CEX and CeFi lending services will drop to an all-time low. Many market participants will seek risk management, operational transparency, and market expertise that is overlooked in bull markets. A new enterprise-grade protocol like Liquid Collective will take some market share from Lido.
In 2023, L1 networks will continue to adapt to the evolving demands of the market. Cross-chain technologies such as bridges and IBC will mature further as new application blockchains gain increased attention and usage. As teams compete for mainstream attention and organic demand, crypto-based apps will become more user-friendly than ever before.
The social ecosystem in Web3 will experience rapid growth. As the regulatory frameworks surrounding crypto become more established, there will be more adoption of privacy coins depending on whether they are viewed as progressive or regressive policies. On-chain games will stimulate the creation of a new genre and stimulate the Web3 game market. GHO and crvUSD will surpass DAI in terms of market cap.
The correlation between TradFi and cryptocurrency will remain high during downturns as both markets increasingly share common participants. But crypto will likely bottom before TradFi. ETH will not convert BTC in 2023. No other L-1 will surpass ETH. Arbitrum and Starknet tokens will launch and will be among the top few L2s (by TVL). The total TVL of L2s will exceed $20 billion. The Solana ecosystem will likely be revived.
Binance will gain legitimacy from regulators outside the US. The DEX/CEX volume ratio will likely increase to ~25%. OpenSea’s market share will drop to ~25%. As the computational abstraction begins to take shape, Metamask will lose its share to the likes of Phantom and Argent.
Coinbase will increase its market share, but will still be in second place after Binance. Volumes of DEXs will increase significantly, especially ahead of any major regulatory pressure. As traditional markets become more accepting of crypto, the spot-to-derivatives volume ratio will drop over the course of the year.
Half of 2023 will not be overly eventful as the FTX contagion begins to unravel, forcing some of the funds to close shops or restructure. It will also introduce a stricter tone for western cryptocurrency legislation. However, nothing of serious note will pass. The main narrative in 2023 will shift towards ETH Layer-2 scaling solutions. Non-BTC/ETH Blockchains will continue to lose their relevance as the market remains in ‘safe havens’ as global political instability and inflation dissolve. There will be long-awaited NFT games and other highly innovative SocialFi applications entering the market.
The Appchain thesis will be strengthened with more applications launched as Cosmos and Ethereum L2 Blockchains. ZK Blockchains will scale and start gaining some traction. Proto-danksharding and staked ETH withdrawals will not occur in 2023. The regulatory response to last year’s events will cause turbulence. But ultimately, after fruitful talks for some clarity, crypto will be bullish. On-chain exchanges will fill the gap left by FTX.
Ethereum’s market cap will surpass Bitcoin in 2023 due to increased adoption demand in Tier-2s and Ethereum’s deflationary model. Tier-2 ecosystems will see pockets of growth mostly driven by the potential airdrop of Arbitrum, StarkNet and zkSync. Polygon will also gain some momentum in TVL growth based on the success of the zkEVM efforts. GameFi and P2E will be phased out in favor of games with real use cases for Blockchain technology. SocialFi will see a pump-dump cycle. Thus, a handful of protocols will emerge to provide some decentralized alternatives to today’s existing social media frameworks. Important protocols include Lens and Farcaster. But some exaggerated protocols like So-Col can also become strong contenders in the end.
Jae Ah Song
Due to recent market events, regulation for centralized entities will intensify. This may lead customers to choose to self-contain their assets until adequate credibility is rebuilt. Such a trend could support the growth of existing decentralized exchanges such as (dYdX and Uniswap). Web 3.0 social networking protocols (eg Lens Protocol, Bluesky Social) will further evolve to gain market share from existing social networking services.
L2s will continue to gain traction. Arbitrum will launch its token, which will surpass Optimism’s token and outperform the overall crypto market. TVL for L2s in general will increase. Zk-rollups will outperform optimistic-rollups in relative growth. Large ZK aggregations like StarkNet and zkSync will also release their tokens. This, in turn, will outperform the general market. Polygon will benefit from all of this. Ethereum will delay proto-danksharding to 2024, focusing on MEV issues this year. Wintermute will launch a derivatives exchange that outsources the storage of client funds to trusted custodians.
BTC will drop below $12,000 in the first quarter of 2023 as the 4-year market cycle continues despite ongoing macroeconomic concerns, as the public is beginning to fear that the Fed has an overly tight economic policy. BTC bottoms will be retested later in the cycle with at least a 75% reversal in price.
The Ethereum Shanghai upgrade, which allows users to unlock their staked ETH, will be delayed until Q4 of 2023. This, in turn, will function as a sell-news-buy-buy liquidity event. Fidelity’s timely launch of BTC and ETH trading for retail customers in Q4 2022 will boost consumer confidence and help Fidelity capture a meaningful percentage of BTC and ETH trading volume in the US by 2023. The relaunch of Arbitrum Odyssey and the airdrop of the Arbitrum token will kick off another ‘airdrop season’. The most notable airdrops will be Arbitrum, Celestia, LayerZero, StarkNet, zkSync and nftperp.
Overall crypto price levels will continue to depend primarily on macro conditions and correlate with other risk assets. A weak earnings season will likely drag stocks down further, causing crypto to do the same amid recession fears. Congress will likely be more active, quicker, and more rigorous in passing crypto-related regulations than in previous years. It will likely result in much less friendly arrangements for the industry than had been hoped for. ETH will gain a share of BTC in reduced issuance, fee burns and market cap dominance driven by the ‘ultra-solid money’ narrative. However, ETH will not convert BTC yet in 2023.
With the adoption of NFTs accelerating among traditional brands, more users will be included in NFTs in 2023 than in previous years combined. To this end, NFTs will be disguised as seamlessly integrated digital collectibles that overcome technology’s image crisis. Prolific art bowls will further differentiate it from the rest of the NFT market in terms of price performance. In the blue-chip PFP segment, most survivors will disappear from the scene as market power becomes increasingly monopolized.
While the US will enter a minor recession, Europe will experience a more severe recession. Cryptocurrency winter will continue until the first half of 2023. Fear and uncertainty in crypto will remain high on centralized exchanges until one of the larger exchanges receives a proper audit from a major audit firm. The Tier-2 war will heat up with Arbitrum token launch and many new events to capture user adoption. It will eventually reveal that some Tier-2s are far ahead in development than others, especially when it comes to decentralization. This will be a key factor in determining the winner of the battle for market share. There will be new use cases for NFTs towards the end of the year. Also, more traditional brands will continue to participate in the NFT game. Polygon will benefit most from this and will eventually be among the top 10 projects by market cap.
There will be constant innovation in the industry regarding scaling, NFTs, UX, retention and other unique use cases. Ethereum rollups, especially Polygon, Arbitrum, StarkNet and Optimism, will be used continuously with innovative products and solutions being launched. These platforms will host dApps that are easy to develop for new users and have a simple UX. There will be no bull market in 2023. Institutional adoption will take place instead.
Privacy will be a big issue. Due to regulatory scrutiny, full privacy coins will struggle. But solutions like zk.money, which explores a middle ground between privacy, resistance to censorship, and regulatory realities, may be suitable for the product market. A national legal framework for stablecoins will be introduced in the US. If well prepared, this will lead to significant growth in the market value of stablecoins over time. It will also drive dollarization in the digital asset space. Globally, some CBDCs will see the light of day. But unless they run on public rails or promote use, they will only see limited adoption.
Market conditions will remain mostly bearish for the first half of 2023 as recessions unfold in the US and Europe. Weak gains will likely push stocks down further and crypto markets will do the same. In this period, interest in digital assets and volatility will decrease and crypto markets will mostly move sideways.
ETH will not reverse BTC in 2023. However, it will gain significant ground in terms of market value. Most of the existing EVM non-compliant L1s will perform poorly compared to ETH. Inter-subnet communication via Avalanche Warp Messaging will make bridging subnets more efficient. Maybe it will get more projects and developers to experiment with Avalanche. GMX will continue to grow, but will eventually be exploited again as long as it continues to offer minimal spread and price impact on trades.
Modular blockchains like Celestia will receive increased attention. It will outperform alternative monolithic Blockchains of the previous cycle. Arbitrum will likely issue a token in the first half or second half of 2023. This will result in a mini altcoin season for tokens in its ecosystem. Total Value Locked in Ethereum L2s will gain significant ground in the TVL of non-Ethereum L1s, perhaps even surpassing it. It will be a significant advance in zk-rollups technology. But most won’t launch or receive significant attention in 2023.
With crypto market capitalization hovering between $0.65 trillion – $1 trillion, the bearish market structure will create more uncertainty among users over the next three quarters. More firms will go bankrupt and more bad players will be liquidated. In 2022, the decline of centralized assets and the disadvantages of centralization of power will drive DEX adoption more than ever before. ETH market cap will approach BTC. But he won’t be able to pass it yet. L2 adoption will increase with the launch of Starknet and Arbitrum. Thus, more and more NFT Gaming projects will bridge L2. Polygon will continue to forge partnerships with traditional non-crypto brands and strengthen its position in the NFT industry.
The importance of decentralized identity solutions will continue to increase as we build the infrastructure for self-governing identity and enable harmonious recruitment of corporate capital once regulatory clarity is achieved. While the market awaits clearer regulatory guidance, market share will continue to focus on established companies that prioritize transparency and have a proven track record. This will make it difficult for new entrants.
Interest in Blockchain technologies that protect privacy and increase censorship resistance will resurface in 2023. In the second half of 2023, the withdrawal of staked Ethereum will be activated. Also, no spot Bitcoin ETF will be approved in 2023. Healthy adoption of tier-2s and side-chain-based scaling solutions will continue into 2023. Income generating platforms will record a significant rise.
Normalized to the total crypto market cap, DeFi TVL will increase by at least 50% from the beginning of the year to the end. ETH will be net deflationary again at the end of the year. It will also reinforce the ‘ultra-solid money’ narrative and gain more market dominance than BTC. The future still remains in multi-chain. So much vilified Solana will start scaling steadily towards the top thirteen. Quarter 4 will see at least one L2 token launch. The total amount lost in bridge-related exploits will drop significantly from the 2022 value and will not exceed $500 million.
NFT volumes will increase at least 4x from the beginning of the year to the end of the year as new use cases come to the fore, old use cases re-emerge, and the user experience continues to slowly improve. The Twitter outlet will see more brands turn their attention to the metaverse and web3 customer loyalty programs. Web3 social networks will gradually gain strength. Metaverse land prices will increase at least 2-3 times.
In 2023, adoption of Ethereum layer-2 solutions like Optimism, which aims to solve Ethereum’s scalability problem, will continue to increase steadily. We are also likely to see less rate hikes and lower inflation. This will lead to an increased appetite for risky assets like cryptocurrencies and a return of individual investors to the industry. Decentralized Exchanges like DYDX will begin to outperform centralized exchanges as investor confidence in CEXs continues to wane.
2023 will continue to be a challenging year overall for market participants. The market will continue to change throughout the year with short periods of volatility during which Bitcoin will not make new highs. Bitcoin and Ethereum will continue to gain overall dominance as market participants sell their other assets and try to get back to ‘value’. NFTs will continue to be one of the leaders in overall adoption by traditional companies, as total volumes increase over the year as people seek volatility in the cryptocurrency space. As the industry continues to gain legitimacy among market participants, most of the NFT volumes will occur in a select few projects this year. The Shiba Inu will launch the Shibarium by the second quarter of 2023. It will also surpass the volumes of Dogecoin and attract more market participants.
Build activity on ZK-rollups like Starknet and Aztec will increase with the launch of many new DeFi + Privacy projects. On the other hand, DeFi’s TVL as a whole will remain low as returns are not attractive compared to other places. Web3 applications created for mobile devices will be developed and launched on the existing UX. USDC will also allow the creation of Cash App-style apps where the crypto integration is much more nuanced.
The overall forecast for the digital asset markets in 2023 is bearish. Defi tokens with administrative rights will continue to fall. But the Defi narrative with real world assets (RWA) will attract attention as most of Defi is cyclical and market participants are starting to understand it. However, networks like Centrifuge will not gain popularity as the remaining resources are focused on more elite networks like Ethereum. Protocols like Aave or Maker that bring RWA to Ethereum will benefit. Binance will face a lot of challenges and scrutiny, but it will be fine. NFT volume will remain low. BTC will continue to dominate.
Markets will continue their downtrend. It’s unlikely to return to ATHs until the Fed actually does. There will be a significant bear market rally(s) that most market participants will bet on at the start. Most L1s will not reach their peak in valuation, TVL or usage. 90% of the new L1s released will be DOA. While optimistic-rollups continues to evolve, zk-rollups will remain relatively under pressure until at least the second half of 2023. L3s will take some attention away from the Cosmos application chains. Validiums will begin to attract more attention. ETH will not convert BTC. CBDC test/trials will begin.
Towards the end of the year, Fed pivots will start the recovery process as Bitcoin sets a low. Most NFT projects and coins will continue to bleed as liquidity dries up further and people realize that a good project does not mean good value accrual in tokens. Ethereum will surpass Bitcoin’s market cap, albeit for a short time. More edits will be made. A few more cryptocurrency companies will be making mass layoffs.