Think back a year ago. Bitcoin was trading around $50,000, you couldn’t watch sports without seeing cryptocurrency ads, and you could get rich by minting NFTs — or at least it felt that way.
Who could have predicted the collapse of Celsius Network and Voyager Digital? Or that Matt Damon would become a crypto punchline? Or that Sam Bankman-Fried, the "darling of the crypto world," would go from Anakin Skywalker to Darth Vader?
This is all preface. There's no crystal ball in the market. Predictions are often wrong. Trends can shift in an instant. But then again, perhaps a 2023 prediction, after the FTX gloom clears, is exactly what we need right now.
“As we head into 2023, what happens to cryptocurrency funding in the first quarter will be critical to whether we’re in a sustained bear market,” said Jamie Burke, CEO and founder of Outlier Ventures. On the one hand, he noted that “the strength of the VC market continues, with billions still pouring into the space and a significant amount of capital waiting to be deployed,” and that “we’ve seen record filings this year.”
However, Burke acknowledged that "it's undeniable that the venture capital environment is changing" and that "fund managers are conserving capital" rather than "scattering money" during bull markets. He predicted that next year, many investors will "double down on companies that are already in growth phases."
As for what this means for the market as a whole, or how cryptocurrencies might fare in 2023, we've gathered predictions from some of the smartest minds in the space—from the bullish to the skeptical.
1. An epic regulatory battle
The exact outcome is anyone’s guess, but 2023 could be the year the regulatory conflict reaches a climax. “[Regulators] will propose draconian crypto regulations, and the community will engage in an epic battle against those who threaten decentralization,” said Laura Shin, host of the “Unchained” podcast.
2. Web3 platforms continue to grow
Alex Zhang, head of Friends with Benefits DAO, predicts that “the macro market downturn is expected to shift crypto projects from speculation to utility — and a major category of utility is meaningful, fun social experiences.” He expects this to translate into “more meaningful Web3 social platforms and protocols” and foresees the growth of “interoperable identities, on-chain social graphs, and cryptographically abstracted social experiences.”
3. More bleeding, more loss, more pain
"The gloom is far from over," said Cas Piancey, co-host of the Crypto Critics' Corner podcast. "Firms, banks, and funds are desperate for the market to move past the FTX and Alameda debacles, or to focus strictly on their malfeasance," Piancey said. But like it or not, "you don't want to see a credit crunch and exposure to bad counterparties. We're going to see funds closing and companies failing that we didn't anticipate—primarily because the impact is so large and hard for any of us to quantify."
4. Bitcoin truly enters the global adoption stage
When I spoke with Alex Gladstein, chief strategy officer of the Human Rights Foundation, he had just returned from a Bitcoin conference in Ghana. "I was blown away," Gladstein said. "I was stunned by the number of Bitcoin entrepreneurs and leaders from so many different countries." He'd met people from rural Cameroon, the Democratic Republic of Congo, Somalia, and conflict zones. "They're all building the Bitcoin ecosystem. It's truly amazing," he said, which is why he believes "global adoption is probably going to be the big headline story next year."
5. Focus on life beyond crypto/bitcoin/blockchain
When asked about his prediction for 2023, What Bitcoin Did podcast host Peter McCormack simply replied, “Royal Bedford will win the league.” It was obviously a cheeky joke (McCormack acquired the team in 2021 ), but it may contain a kernel of a deeper truth: for many in the space, it’s useful—even healthy—to focus on other interests during crypto winter.
6. Web3 Becomes Popular
“Fashion will continue to lead the way in Web3 adoption,” said Cathy Hackl, Chief Metaverse Officer at Journey. “We’ll see further collaborations between Web3 influencers and luxury brands looking to explore new business models and engage with their customers.” Hackl predicts, “With the rise of generative AI, we’re likely to see blockchain play a significant role in helping us distinguish between AI-created and human-generated content.”
7. Don’t underestimate NFTs
“The continued high risk appetite for NFT funding in 2022 is a strong indicator that it will be one of the first sectors to recover next year,” Burke said. “Over the past year, we’ve already started to see NFT investments from major Web2 brands [Starbucks and Disney] and across Web3. … This shows no signs of stopping in 2023. Brands will continue to flock to NFTs.”
8. Games and DAOs continue to grow
Burke is equally bullish on gaming, as “well-known Web3 games that have been in development for quite some time, including Big Time, Star Atlas, and Ember Sword, will finally see release in 2023, either as fully-fledged games or more playable demos.” As for decentralized autonomous organizations (DAOs)? “While the current bear market appears to have forced a pause in the space, the growth of new DAOs has been exponential, with more new DAOs created each month in 2022 than in all of 2021 combined,” Burke said.
9. Large exchanges become “decentralized”
“The exchange stack is disaggregating — we’re seeing custody, brokerage, and exchange/price discovery being broken down into different players, just like in traditional finance. This makes it impossible for another FTX to emerge,” said Haseeb Qureshi, Managing Partner at Dragonfly Capital. Qureshi then offered a parallel prediction: “When trust is low, incumbent players consolidate. Coinbase, Binance, Uniswap are likely to gain market share because people are less likely to trust smaller and weaker players. Network effects become stronger.”
10. Market Restructuring
“Take a close look at the situation and assess the damage,” said Sandra Ro, CEO of the Global Blockchain Business Council. He then offered some advice to the entire sector: “Reintegrate with humility, rebuild with integrity, gain trust again, and (the market) will rise again.”
