Last year was filled with upheavals and disruptions in the blockchain sector. There was a massive decline, a significant blow to investors and market participants. In addition, the crypto world was also rocked by the collapse of FTX, a leading cryptocurrency exchange. All these contributed to the overall sense of uncertainty and instability within the sector.
Settling into 2023, it is difficult to predict precisely what the future holds for the blockchain sector. Some industry experts are optimistic that the market will see a gradual price and adoption rate revival, while others are less optimistic.
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However, the fact remains that the blockchain industry is still very much in its infancy and will likely continue to be marked by a high degree of volatility and uncertainty. We can only reflect on the defining trends that have shaped the cryptocurrency industry recently and look ahead to what the future may hold.
Here are five trends that will define the blockchain space in 2023
Market bottoming and recovery
Although the much-anticipated Bitcoin Halving is coming up next year, 2023 will play a crucial role in the ecosystem’s comeback. 2023 will be a year of recovery. A full bull market may not return, but the worst of the bear market will be over by the end of the year.
There are predictions that the bottom will occur in the first quarter of 2023, with bitcoin possibly reaching a bottom at around $10,000 or lower. As a result, most altcoins could fall by 60-80%.
Also, the Federal Reserve is expected to stop raising interest rates in the year’s first quarter. This could help prevent the crypto market from crashing further. After reaching the bottom, we should see bits and pieces of market rallies towards the end of the year, but the full bullish trend won’t be back until 2024.
Continued DeFi growth
DeFi (decentralised finance) has been a major trend in the blockchain industry in recent years, and it is expected to continue to grow and evolve in 2023. Institutional interest in DeFi has picked up over the last year. Financial services firms such as BlackRock and Citigroup invested over $1 billion each in DeFi platforms through 2022.
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DeFi is poised to mature and stabilise through 2023. Any new technology has its ups and downs. Having seen a strong bullish phase in 2020-2021 and a cruel bearish slump in 2022, the time is ripe for DeFi’s stable growth based on experiences gained from the just concluded year.
More crypto adoption
In 2023 the number of crypto holders will increase significantly. The crypto adoption index reportedly represents around 4% of the global population. Not outrightly impressive, but the growth has been exponential, and there are reasons why this trend will continue in 2023.
Lots of platforms have been integrating blockchain products. Most notable are Facebook and Instagram, which have tested NFTs on multiple smart contract cryptocurrencies. Also, free speech-focused social media platforms like Telegram and Signal have been integrating crypto features into their platforms with TON.
Furthermore, Elon Musk has stated that Twitter will also feature crypto integration. These international companies have billions of users combined, and just a tiny percentage of crypto adoption by their users would be significant.
According to a report by crypto trading platform Crypto.com published on December 20 2022, taking into account growth rate and depending on the market conditions going further, the number of digital asset owners should continue to grow from its current figures of around 402 million and reach anywhere between 600 million and 800 million in 2023.
The collapse of FTX in 2022 was a major event in the blockchain industry, and it is possible that it could lead to regulatory changes in 2023. The collapse sent shockwaves throughout the industry, and it remains to be seen how regulators will respond to this event and whether it will lead to new laws or stricter oversight of the crypto market.
However, it is almost certain that there will be lots of strict regulations. Also, it’s very likely that crypto regulations will vary from region to region despite attempts to create global crypto rules.
While some agree that blockchain regulation would generally be good, some of these regulations are likely to be harsh, stifling innovation and defeating the essence of blockchain technology. We can only hope that the regulations wouldn’t be extremely harsh and the crypto industry grows significantly in response to the good ones.
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Crypto scams will be on the rise
According to a report published by cybersecurity and data privacy firm Privacy Affairs, the total amount of funds stolen through hacks and scams in the blockchain space in 2022 accounted for nearly $3.5 billion. Social media platforms led by Instagram, Facebook, WhatsApp and Telegram are the most used playgrounds for crypto scams, and the 20-40 age group are the most susceptible to crypto scams.
This implies that irregularities in the nascent sector will not stop in the new year. Crypto-related scams and fraudulent activities are not abating soon. Users must protect themselves by using established and secure wallets, avoiding cryptocurrency projects that guarantee outrageous returns, not clicking suspicious/malicious links and never getting crypto investment advice from influencers.
2023 is set to be a defining year for the blockchain, and enthusiasts are eager to see what the year holds for the industry. Generally, we hope that it will be much better than 2022.