VanEck: 11 Predictions for the Crypto Industry in 2023
Original title: "11 Crypto Predictions for 2023 》
Original title: "
Original Author: Matthew Sigel, VanEck
Original compilation: Ning, Gyro Finance
Are cryptocurrencies dead? The answer is no, we believe that the financial disruption of cryptocurrencies will continue to evolve, and here we share our predictions and theoretical basis for cryptocurrencies trends in 2023.
1. BTC will fall to $10,000-$12,000 in the first quarter of 2023 amid a wave of miner bankruptcies, which could mark the bottom of the crypto bear market.
The median market capitalization of the MVIS® Global Digital Asset Mining Index is currently only $180 million, with almost all constituents burning through cash and trading well below book value. With rising electricity prices and falling BTC prices making BTC mining largely unprofitable, we predict many miners will go bankrupt, reorganize or merge. The loss of XRP in the US Securities and Exchange Commission lawsuit (probably in the first quarter, more on that below), may coincide with this last downtrend, which will push the BTC halving market after 2020 to almost All over.
2. In the second half of 2023, BTC will rise to $30,000. Lower inflation, eased energy concerns, and a possible truce in Ukraine, along with the improvement in M 2 supply, will provide impetus for a new round of market recovery.
BTC and the broader crypto ecosystem have endured a rather brutal winter in 2022, with many companies in the space imploding and market sentiment depressed. BTC, on the other hand, has already traded as a risk asset in the previous year and has shown price sensitivity to interest rate hikes."One of the reasons why BTC has not responded well to high interest rates is that the political response to inflation in developed markets has been to try to cap energy prices, extend sanctions, and micromanage economic activity to promote"energy transition
. Ending the war in Ukraine might at least reverse these policies, making BTC mining more politically acceptable. On the other hand, the war is also creating a more economically integrated Eurasia, incentivizing new payment methods in cross-border trade, like China and Russia are doing with the digital yuan and possible gold-for-oil deals .
In developed markets, we think consumers will see BTC as one of the long-term store-of-value categories, as well as a hedge against M2 inflation. In emerging markets, however, the focus is more on remittances and neutral alternatives to dollar hegemony.
If our recession forecasts materialize, the Fed pauses rate hikes amid subdued inflation, money printing and persistent government budget deficits. In the above scenario, the mere lack of bearishness against the crypto space could cause the price of BTC to turn around again and return to $30K.
3. Financial institutions will tokenize over $10 billion in off-chain assets.
Institutions will adopt blockchain to simplify custody and settlement, reducing costs for clients. KYC/AML will be implemented using identity protocols and permissioned sub-networks/apps. With the help of BlackRock and Coinbase, MakerDAO has planned to deploy $1 billion in U.S. Treasury bonds and other government securities, allowing Dai holders to obtain higher deposit yields. KKR partners with Avalanche and Securitize to tokenize private funds. The Monetary Authority of Singapore’s Project Guardian is also accelerating as an initiative in partnership with the financial industry to test the feasibility of asset tokenization and applications in DeFi. The Monetary Authority of Singapore recently participated in a deal targeting a liquidity pool that includes tokenized Singapore Government Securities, Japanese Government Bonds, Japanese Yen and Singapore Dollar.
Among open source blockchains, we believe Ethereum, Polygon, Avalanche, Polkadot, and Cosmos are in a strong competitive position. VanEck is also expected to map real-world assets on an open-source blockchain in 2023.
4. Brazil will become one of the most crypto-friendly countries in the world and tokenize a portion of sovereign debt issuance on-chain.
Latin America is seeing the fastest adoption of cryptocurrencies and stablecoins in the world due to ongoing inflation and a rejuvenating demographic. Brazilian regulators have aggressively promoted the creation of a sandbox for private companies to advance the sector. The country's largest bank, Itau Unibanco (ITUB), plans to launch an asset tokenization platform to convert traditional financial products into tokens and provide custody services for clients, so the tokenization of sovereign debt may start in Brazil first.
5. Twitter will beef up its payments offering with a national currency license to more directly compete with Venmo and Cash App.
Twitter's current payment capabilities are limited to point-to-point small consumption, such as BTC via the Lightning Network, but generally reflect poor user experience. We expect Musk to implement a payment feature more akin to WeChat Pay, which would prompt consumers to pay merchants for services. In November, Twitter filed registration paperwork with the Treasury Department’s Financial Crimes Enforcement Network (finCEN), laying the groundwork for it to process payments, likely in U.S. dollars, BTC, and possibly other crypto assets like Dogecoin, The New York Times reported. .
6. A country, especially an oil exporter, will announce the addition of BTC and other digital assets to its sovereign wealth fund.
We’ve heard first-hand from multiple crypto companies that Saudi Arabia’s sovereign wealth fund is already mining BTC, albeit on a small scale. Additionally, Russian government officials have made clear their intention to address cross-border trade in crypto assets. Russia's largest bank, Sberbank, recently integrated its blockchain platform with the MetaMask and Ethereum blockchains, and several Russian media also reported that Russia actively purchased BTC mining machine ASICS in November.
7. There will be a new decentralized stablecoin with a market cap of $1 billion in the market."A stablecoin is a currency that interacts with things like the U.S. dollar or gold"Stablize
A digital currency linked to a reserve asset. Stablecoin projects vary in the way they maintain their pegs. For example, both USDT and USDC are operated by centralized entities that collateralize their tokens with fiat currency reserves, including cash and government treasuries. Dai, for example, is managed by a decentralized entity whose users deposit ETH into a smart contract to mint USD-denominated, over-collateralized Dai. As of November 17, 2022, Dai has more than $5 billion in circulation.
Algorithmic stablecoins differ in that they are collateralized with digital assets, either undercollateralized or overcollateralized. Typically, an algorithmic stablecoin is anchored by another digital asset and/or an on-chain algorithm that balances supply and demand. Typical use cases for algorithmic stablecoins include: use in transactions, use them to run decentralized autonomous organizations (DAOs), and provide staking rewards to holders. We observe that there is still considerable demand for censorship-resistant stablecoins that cannot be seized by regulators.
Therefore, despite the collapse of LUNA and the decoupling of its associated algorithmic stablecoin UST, various decentralized stablecoins will still thrive in 2023, including for example Aave's GHO offering, which will employ an overcollateralization strategy and rely on arbitrage and community leadership Monetary policy to stabilize the token at $1.
8. Ripple will lose the SEC lawsuit.
Since 2020, Ripple Labs has been engaged in a legal battle with the SEC over its token XRP. The SEC's lawsuit alleges that XRP is an unregistered security. Given the prominence of Ripple and XRP in the digital asset space, the outcome of this case could have far-reaching implications for the industry and set a precedent for future cases.
Ripple has the backing of many of the biggest players in the industry, such as Coinbase and the Blockchain Association, and the advocacy continues to grow, with 12 separate entities now providing legal support to Ripple. Both the SEC and Ripple have asked a federal judge for summary judgment in the case, so a ruling is likely before the end of the first quarter."Unfortunately for cryptocurrencies, the SEC won its case against blockchain-based publishing company LBRY (LBC-USD) in November, a U.S. district judge in New Hampshire wrote:"There is nothing in the case law to suggest that a token that is both consumable and speculative cannot be sold as an investment contract
. Using this as a precedent, our odds of Ripple winning have been materially reduced. Ripple CEO says the cryptocurrency firm will move to another country if it loses the case. In addition, significant financial penalties are highly possible.
9. Gary Gensler is leaving the SEC after proposed legislation failed to gain broad support."Crypto enthusiasts had hoped that SEC Chairman Gary Gensler was a proponent of advancing the U.S. digital asset ecosystem. However, the SEC currently continues to"market manipulation
grounds for rejecting or postponing decisions on BTC spot ETFs. Oddly enough, BTC futures ETFs and even inverse BTC futures ETFs have been approved.
Chairman Gensler has said on multiple occasions that he believes BTC is a commodity, but most other digital assets are securities. Still, there is considerable uncertainty over which agency will regulate the industry, with the SEC and the Commodity Exchange vying to oversee the space. Given the effectiveness of proper guidance and regulation in avoiding the explosion of the cryptocurrency industry in 2022, it is unfortunate that the BTC spot ETF was forced to become the product of controversy. Specifically, the Grayscale-dominated OTC:GBTCBTC Trust, which trades at a roughly 48% discount to NAV, also involves questionable loans from several of Thunder's major market participants."As a result, we're seeing an uptick in the probability of Chairman Gensler being replaced, now that the 2022 midterm elections are behind him, he faces increased scrutiny that will likely become the White House's political liability. Four US lawmakers sent him a public letter on Nov. 8, mocking the SEC's double standards on transparency. Rep. Ritchie Torres, Democrat of New York, wrote to the U.S. auditor general in December demanding that the federal legislative watchdog investigate the SEC's failure to protect the public from"FTX (FTT-USD) Poor Management and Malpractice
impact review. The strongly worded letter also comes with scathing criticism of the Gensler chairman's leadership, with even the SEC union of 3,500 workers battling the chairman over pensions, a return to work and an overstretched workforce. struggle.
Since 1934, the mean tenure of SEC chairs has been 2.75 years; with a median of 2, we predict an SEC victory over Ripple would provide it with a decent exit.
10. With multiple AAA games entering the market, Web3's total monthly gamers will rise from 2 million to 20 million.
The total addressable market (TAM) of traditional games is staggering, with 3.2 billion people participating in the world, and the total market value can reach 300 billion US dollars. As a digitally native activity, games (also known as digital assets) have been purchased and used by hundreds of millions of gamers around the world. Nonetheless, we believe there is a category gap between traditional and crypto games, creating empty space for growth. Specifically, blockchain-enabled games open up the possibility of transferring game assets between games, which was nearly impossible before.
Early Play-to-earn and Play-to-own games lacked high-quality production values and sufficient budgets to appeal to mass-market audiences. But with some of the traditional AAA titles aiming to fill the void by launching in 2023, we think there will be new titles popping up to drive mass adoption."In tracking this prediction, we observed that the future potential of Web3 is becoming increasingly recognized by the traditional gaming industry. EA CEO Andrew Wilson recently called Web3 the"The future of our industry". Ubisoft CEO Yves Guillemot echoed the sentiment, stating that blockchain games are the industry's biggest challenger."revolution
, announced plans to develop blockchain games. Microsoft (MSFT), whose acquisition of Activision is now in jeopardy due to an FTC lawsuit, has also been investing in Web3 startups as a significant part of their exploration of the space.
Across the industry, gaming companies continue to hire blockchain, NFT, and crypto experts in their quest to find what’s next in gaming. With blockchain games and cosmic platforms expected to attract $9 billion in venture capital this year, a breakthrough in 2023 is more likely than ever.
11. Ethereum will enable withdrawals from the Beacon Chain.
