What awaits the cryptocurrency market in 2023

Crypto industry experts believe that in order to restore confidence in digital assets, it is necessary to strengthen the regulation of companies in this industry. After all, the bankruptcy of the largest exchange FTX scared away many investors, and the market faced a massive outflow of capital. The correspondent of the Kapital.kz business information center singled out the most interesting opinions of analysts about the prospects for the industry in the new year.

Crypto winter will last until the end of 2023

Coinbase analysts predict the dominance of bearish sentiment in the cryptosphere until at least the end of 2023. In their report, the experts indicated that the bankruptcy of FTX scared away many investors. As a result, the industry faced a massive outflow of institutional and retail capital. The market has entered a state of “crypto winter”, which may drag on for the next 12 months. Capital prefers to either move into stablecoins backed by real assets, or leave the cryptosphere altogether, writes coinspot.io. “The unfortunate events surrounding FTX have undoubtedly undermined investor confidence in the digital asset class. Recovery will take some time, and it is likely that the crypto winter could still last several months, perhaps even until the end of 2023,” experts say.

Return of the bull market

Co-founder and former head of the BTCC exchange, Bobby Lee, in an interview with CNBC allowed the return of the bullish trend in the cryptocurrency market only by the beginning of 2025. “I think it will be quite bearish in the next year or two. I predict a return of the bull market in two years… Time will tell. It is difficult to determine exactly when this bear market will bottom,” he said. According to Bobby Lee, Bitcoin remains “relatively resilient”, having lost 10-20% amid a 50% drop in altcoins. The expert believes that in order to restore confidence in the digital asset industry, it is necessary to strengthen the regulation of companies in this industry, especially those providing custody services. “I have always been a supporter of more regulation in the cryptocurrency market,” writes forklog.com. For understanding, I’m talking about the regulation of companies, not the asset itself, because it is inert. It is the same commodity as gold and silver. No amount of regulation can change the chemical composition of gold or silver. It’s the same with bitcoin,” Bobby Lee explained.

China will “love” cryptocurrency

Former BitMEX bitcoin exchange CEO Arthur Hayes believes that China can return to the digital asset industry with the help of Hong Kong. This is confirmed by media reports about the plans of the Hong Kong Securities and Futures Commission (SFC) to ease the requirements for trading cryptocurrencies. If the bill is passed, retail investors will be able to “directly invest in virtual assets,” said Elizabeth Wong, head of financial technology at the SFC. Arthur Hayes called Hong Kong a “trustee” through which China interacts with the rest of the world, so the reorientation of the PRC administrative region is part of Beijing’s strategy to weaken its position against cryptocurrencies. “When China loves crypto, the bull market will return. It will be a slow process, but the sprouts are already blooming. […] If these flows really materialize in the way I imagine, they will become a strong support for the next bull market, ”the expert believes.

“Printing press” of the US Federal Reserve

On Scott Melker’s podcast, Arthur Hayes stated that the first cryptocurrency hit the low of the current cycle as almost all “irresponsible organizations” ran out of BTC to sell. He explained that in financial difficulties, centralized lending firms often first turn to loans, and then sell bitcoin, which acts as a reserve liquid asset. “When you look at the balance sheet of any of these heroes, you won’t see bitcoin… They sold it during the wave before they went bankrupt,” he added. So the expert explained the reasons for the fall of the first cryptocurrency even before the bankruptcy of centralized credit companies. He believes that the period of large-scale liquidations is over, and the digital asset market expects a partial recovery in 2023 against the backdrop of another launch of the US Federal Reserve’s printing press.

Market maturation

Miller Value Partners founder Bill Miller told Barron’s that he remains optimistic despite the Bitcoin crash in 2022. In April 2021 he said, that bitcoin is gradually becoming mainstream. If in 2017 BTC was pumped up mainly by speculators, now institutional investors are also entering this tool. “We are seeing a gradual maturation of the market,” he said. The 72-year-old billionaire predicts that in the long term, most investors will switch to digital currency. It will be treated as a hedging instrument. “About 1% of the capital can be stored in bitcoin, but if the investor is ready, then he can increase this share. The main factor for the leading digital currency was holding positions after the bankruptcy of the FTX exchange,” he said.

Falling quotes to 0 dollars

Consulting company BDC Consulting conducted a survey among 53 top project managers from various fields. Against the backdrop of the bankruptcy of the FTX exchange, the leaders of cryptocurrency companies expect a further fall in bitcoin quotes, up to a complete depreciation. On average, respondents expect the price of the first cryptocurrency to stop the fall at $11,479. Only one interviewee suggests it will rise to $17,000. Three more did not rule out a fall in the value of bitcoin to $0. The study showed that more than half of top managers are going to increase investments in cryptocurrencies and do not plan to reduce them. A third of the respondents will not take any active action.

$500,000?

Galaxy Digital founder Mike Novogratz is still optimistic, and in a Bloomberg Television commentary, he maintained his forecast for the price of the first cryptocurrency to rise to $500,000. According to him, it will now take more than five years for Bitcoin to reach the goal due to significant changes in the macroeconomic situation. Mike Novogratz previously predicted such growth within five years. “The reason why bitcoin fell from $69,000 to $20,000 is the decision of US Federal Reserve Chairman Jerome Powell to find the superpower of the central bank and start the fight against inflation with a series of key rate hikes,” he explained. For this reason, the expert believes, all assets that are considered inflation hedges have fallen in price.

Note, according to the American Forbes, large holders of digital currencies suffered heavy losses in 2022 after the collapse of the Terra ecosystem and FTX. According to the publication, crypto billionaires have lost about $116 billion. Since March, the capital of the founders of the industry and the largest investors has decreased by about 50%. Many of them have left the list of billionaires. For example, in March 2022, Changpeng Zhao’s stake on the Binance exchange was valued at $65 billion, and now it has fallen to $4.5 billion. Coinbase CEO Brian Armstrong’s net worth fell from $6 billion to $1.5 billion, while Gemini founders Cameron and Tyler Winklevoss each fell from $4 billion to $1.1 billion.