The first half of 2022 has been terrible for the crypto market. Two of the most notable cryptocurrencies (Bitcoin and Ethereum) lost over 50% of their all-time highs in late 2021. Regulatory bodies are swinging into action to minimise risk for investors because of emerging cryptocurrencies.
Governments are also seeking ways to capitalise on cryptocurrency and curb cyber crimes surrounding cryptocurrency. Lawmakers in Washington D.C. are putting efforts into figuring out how to establish laws and guidelines to make cryptocurrency safer for investors.
With these in mind, here are the top 5 cryptocurrency trends to look out for in 2023. Some of the cryptocurrency trends to expect in 2023 are:
- Governments Introducing Their Cryptocurrency
- Cryptocurrency Regulation
- Crypto ETF Approval
- Moving Toward Decentralised Finance (DeFi)
- Institutional interest in the cryptocurrency and enhanced corporate crypto features to sweeten the deal
Governments Introducing Their Crypto
El Salvador, in 2021, became the first country in the world to approve crypto as a legal tender. Other countries have done the exact opposite.
The precarious nature of cryptocurrency is one reason governments have banned the use of cryptocurrency. Other reasons include outrageous transactions, the use of electricity, and volatility. Therefore, many other countries have either banned cryptocurrency or restricted its use. Some countries include Algeria, Bangladesh, Bolivia, China, Turkey, Vietnam, and Nigeria, to mention a few.
Crypto has also become a viable option for countries with currency because it is decentralised, meaning any banks or government bodies do not regulate it. CBDC protects people from investing in volatile cryptocurrencies, curbs fake currency circulation, and reduces costs associated with physical cash management. It also balances the unpredictability of regular digital currencies and the value of cryptocurrency offers. Therefore, in 2023, other countries will launch their official digital currencies (CBDC). More countries will join Dominica, Grenada, Montserrat, Nigeria, and India, which introduced their CBDC in 2022.
Cryptocurrency Regulation to expect in 2023
Many lawmakers are working towards making cryptocurrency safer for investors and less attractive to cybercriminals. So, parties like the EU, Dubai authorities and Switzerland are working to regulate cryptocurrency.
The European Union is at the advanced stages of finalising the new Markets in Crypto-Assets Regulation, while Dubai authorities are setting up the world’s first authority focused strictly on virtual assets.
Many countries are legislating, consulting, negotiating and researching ways to regulate cryptocurrency. Hopefully, we will see many of these come to fruition in 2023.
Crypto ETF (exchange-traded funds) Approval
Crypto ETFs are exchange-traded funds that track the value of cryptocurrencies. An ETF is traded on the public stock markets and regulated by the Securities and Exchange Commission (SEC). Investors buy and sell ETFs just like regular stocks. An ETF goes a long way to provide security, convenience, and tax efficiency.
If a cryptocurrency has ETF approval in USA., it would be available for trading on traditional stock trading avenues, like the New York Stock Exchange (NYSE). In the coming year, we will have many more cryptocurrencies working towards getting ETF approval.
Decentralised Finance
Decentralised finance, or DeFi, uses emerging technology to remove third parties and centralised institutions from financial transactions. It uses emerging technology to remove third parties and centralised institutions from financial transactions.
A person can hold money in a secure digital wallet, can transfer funds in minutes, and anyone with an internet connection can use DeFi. With an internet connection, traders (actually, anyone) can lend, trade, and borrow using software that records and verifies financial actions in distributed financial databases. Examples of DEXs are Uniswap, PancakeSwap, dYdX, and Kyber.
DEXs reduce the cost of transactions by eliminating banks and other financial institutions. The software may be too complex for the average investor.
Institutional interest in the crypto and enhanced corporate crypto features to sweeten the deal
Cryptos can save customers and businesses money by avoiding high costs. Hence, Institutional interest in crypto will surge in 2023, not only for the value it brings to the corporation but the convenience and security it offers their customers. We will probably see more of these trends among conglomerates.
Some way institutions can get involved in cryptocurrency is by making and accepting payments in cryptocurrency. Besides adding cryptocurrencies to their balance sheets, many institutions (businesses and governments) are investing heavily in cryptocurrency.
As of June 2022, institutions, a broad category that includes ETFs like VanEck in Canada and sovereign governments like El Salvador, held 6.47% of the all-time value of bitcoin.
Institutions and governments looking to experiment with cryptocurrency often consider bitcoin even though 2022 was not a good year for bitcoin.
We can expect other cryptocurrencies like Dogecoin, Ethereum, and others to level up and attract more institutional investors in the coming year.
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