2022 turned out to be a difficult year for crypto enthusiasts. The fall in cryptocurrency rates, difficulties with mining, and the collapse of Terra FTX and other projects in the crypto industry have cast doubt on the industry’s prospects. State regulators added fuel to the fire, which created additional threats to the crypto sector. In this article, we will outline the main trends that may await the cryptocurrency market in 2023. Let’s get started!
#1 Bitcoin & Crypto Market Reversal
The fall of the world’s main cryptocurrency has been going on since November 2021. From its all-time high (ATH) at $67.5K, BTC has dropped several times in value and is now trading just below $21K.
And this is not the limit: bitcoin has not yet reached its bottom. Many analysts share the same opinion but name different ranges to which BTC value will fall. Thus, there is still the possibility for bitcoin to decrease to $10,000.
Still, when can we expect a market reversal? Well, analysts give conflicting forecasts. For example, back in November, experts from Coinbase noted that the collapse of FTX would extend the crypto winter for at least a few more months and maybe until the end of 2023.
In addition, investors continue to withdraw funds from cryptocurrency assets. It is enough to refer to the total cryptocurrency market capitalization chart, which demonstrates the frustration of crypto holders.
Analysts from the FXStreet portal have different opinions. They also believe that BTC’s decline will continue, but at the same time, point to an emerging bullish trend, which can be observed today. Among the many tools that predict an uptrend, pay attention to the number of investors who hold from 100 to 10K coins: it has increased by 327 new addresses.
As you can see, there are different predictions. Therefore, we remind you to conduct your own research before trading and investing!
#2 Rise of Ethereum (ETH)
After the recent update known as ‘The Merge,’ when Ethereum switched to the Proof-of-Stake algorithm, many people started talking about the good prospects for the coin in the new year. And there is a reasonable explanation for this.
In 2022, large states paid special attention to mining, preparing for the introduction of legislative restrictions. These restrictions, in turn, are associated with the negative impact of mining on the environment, and the environment is now considered one of the priority areas in developed countries. A miners’ crisis was also caused by high electricity costs and low income from the Proof-of-Work algorithm.
The Ethereum 2.0 update will make the coin attractive for investment. Although altcoins, including ETH, used to follow BTC price movements, now Ethereum can go ‘free-floating.’
#3 Popularization of Stablecoins
The FTX collapse has led investors to avoid high-volatility markets. As noted by Coinbase, some crypto enthusiasts have switched to stablecoins to protect their assets. As a result, the share of stablecoins in the market has increased.
However, this strengthening only continued the trend in recent months. While the level of BTC dominance was falling, stablecoins gradually became more popular.
So far, USDT remains the most popular stablecoin. USDC, in turn, is the second largest stablecoin by market capitalization, which has proven to be a reliable asset with transparent reporting.
#4 Risks From the Real Sector
The crypto industry highly depends on traditional finance and real-life politics. Over the past year, the US Federal Reserve has repeatedly raised the base interest rate, which made loans more expensive and reduced companies’ free funds.
Another challenge for the crypto industry is the legislative bodies of different countries. Experts from CoinDesk predict a greater struggle between states to regulate the crypto sector in 2023. According to Forbes Advisor, they will bet on creating their own digital currencies CBDC (central bank digital currency).
#5 Growth of the DeFi Sector
Finally, the collapse of FTX helped popularize the DeFi sector. Centralized exchanges turned out to be unreliable in the eyes of their clients. Thus, many began to transfer funds to decentralized exchanges, and it looks like this trend will continue in 2023.
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This information is provided for informational purposes only. Such information is not intended as and may not be relied upon as trading advice. Before deciding to trade cryptocurrencies, you should carefully consider your objectives, level of experience, and risk appetite. Please do your own research and due diligence on the services provided by online cryptocurrency trading platforms.