Cryptocurrency Market Risks: Forecast for 2023

A potential risk for the cryptocurrency market in 2023 is new possible bankruptcy cases, Anton Bykov, a senior analyst at Esperio, told cryptonewsherald on December 28.

The expert also noted that in the outgoing year, there was a consequence of speculation in 2021, when players forgot about risk control and sought to maximize their profitability, “accelerating the quotes of any more or less decent project with the help of borrowed capital.”

“It is clear that this could not continue indefinitely: we have a huge number of examples of how bubbles burst in both the stock and cryptocurrency markets, so there is nothing surprising here,” the analyst said.

At the same time, bankruptcies of firms that have already occurred, including the collapse of the FTX crypto exchange, no longer pose a danger to the market.

“It is hard to believe that their management did not try to get out of this situation by pouring their assets into the market, not really thinking about the consequences for their value. Thus, new possible cases of bankruptcy are a potential risk,” Bykov noted.

According to him, the Digital Currency Group may be a candidate for bankruptcy, where they were forced to cover losses from unsuccessful investments with the funds of a subsidiary.

In addition, the expert clarified that it is necessary that the most cautious approach to investments prevail: it is worth buying only the most reliable coins that can survive a protracted bear market (characterized by a decrease in asset prices. – Ed.). As he explained, only BTC (bitcoin) and ETH (ether) can be attributed to such cryptocurrencies, while the rest can not only fall even more than twice from the current levels, but will never recover from losses.

“This was also the case during the previous market crash after 2017. Most of the hype coins of that year turned out to be of no use to anyone today. The crypto-currency market is just about speculation: there was no real mass use of decentralized projects, and there is not, and the situation is unlikely to change in the future, because people simply don’t have much motivation to switch from reliable and regulated financial products to muddy and inefficient coins.” Bykov says.

The analyst also expressed the opinion that it is always necessary to look for new trends.

“We should consider Web3 projects as a possible new market driver,” he concluded.

On October 25, Bykov suggested that the recovery of digital assets may be delayed and begin only at the end of 2023. In addition, he believes that bitcoin can fall below $10,000.

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