2022 has been a tough year for the crypto world. Confidence in this asset class has been damaged by the collapse of FTX. Cryptocurrency market capitalization has fallen by more than $2 trillion in bearish sentiment.
through Alan Boulhimez, Director Investment Strategy
However, this phenomenon has influenced many projects to become more accessible. There are many reasons to be optimistic in 2023.
The first reason is that retail investors bought bitcoin in record volumes as prices fell during the FTX crisis. ETC Group research shows that the smallest investors – those with less than 1 bitcoin in their accounts – added $1.55 billion in bitcoins in November 2022.
The main themes of 2023
- Recession: A soft landing is possible
- Polygon and NFTs on the Ethereum blockchain can skyrocket
- “FUD” in Bitcoin “Mining”
Recession: Is a soft landing possible?
The macroeconomic situation appears to be turbulent. Economists wonder if the next recession will be mild, moderate or deep.
A “soft landing” means that inflation, which is at its highest level in 40 years, will begin to decline without the economy falling into negative growth (i.e. recession). Such a situation will allow central banks to reduce interest rate hike programs. The latter put strong downward pressure on stocks, bonds and cryptocurrency last year.
As an asset class and cryptoassets, cryptocurrency is capable of dramatically outperforming stock indices such as the DAX40, S&P 500 and Nasdaq. This is especially true during bear markets and recessions.
Analysts believe that the continued high results of the “ISM” survey may lead the Federal Reserve System to continue raising interest rates. For the week ended Friday, January 6, the S&P 500 posted a total gain of 1.5%. In the same period, bitcoin increased by 3.15% and ethereum by 8.5%. Cardano, one of the top ten blockchains by market capitalization, rose 27.2%.
As we enter the second half of the year, bond markets are betting that interest rates will begin to fall, while the cost of capital will fall, providing a better growth environment for startups and risk assets.
Then, in 2024, the bitcoin mining reward will be halved. Historically, when the supply of bitcoins coming into the market halves every four years, demand and prices tend to increase exponentially.
Polygon and NFTs on the Ethereum blockchain will grow rapidly
While the headlines suggest NFT markets are crashing, the fact is that cartoon monkey artwork and profile pictures are only the first iteration of what NFTs can be used for. .
Brands looking to build closer and deeper connections with their young consumers have turned to Web3 concepts like blockchain, NFT, and the metaverse, and we see this trend exploding in 2023.
the success of polygonal (an upgradeEthereum) is proof of this by enabling the integration of dozens of major companies.
In August 2022 Nike ( NYSE:NKE ), with a market cap of $196 billion, saw $185 million in NFT sales after acquiring virtual trainer marketplace RTFKT. These are big sales numbers for an established business looking to grow organically.
While doing so, Nike became the world’s most profitable brand thanks to its pioneering NFTs Adidas, Reddit, Gucci, Hermes, Burberry, instagram, tiktok, robin and JP Morganall of which started using Polygon and Ethereum NFTs.
On December 8, 2022, $121 billion market cap Starbucks (NASDAQ:SBUX) launched an NFT loyalty program with Polygon. It offers interactive experiences and added benefits for customers.
Polygon users grew 400% from 200,000 to one million in the last five months of 2022, according to ETC Group research.
Investors should be excited about potential use cases for NFTs beyond art: for example, customer loyalty programs, devices that promote membership in creative communities, and the ability to tokenize real-world assets.
When we talk about abstraction, we mean that we expect more projects and products to come out where the end user will not know that cryptocurrencies and blockchains are running in the background.
For example, Starbucks calls its NFTs “stamps,” while Reddit calls its NFTs “digital collectibles.” This may be due to the public’s lack of acceptance of NFTs as a technology.
Most importantly, NFTs are moving beyond artwork to something more consumer-friendly. The world’s biggest brands are now using them to find better ways to connect with their online audience.
Avoid fear of Bitcoin Mining
In the land of cryptocurrencies, FUD stands for “Fear, Uncertainty and Doubt”. It is a tactic of malicious actors to focus on the fortunes of publicly traded Bitcoin mining companies to cast doubt on the viability of the Bitcoin blockchain itself.
This happens every bear market.
Looking back at the bitcoin bear market of 2018/2019, given the problems faced by bitcoin mining companies, one can see doomsday headlines heralding the imminent end of bitcoin.
At the beginning of 2018, bitcoin was trading around $10,500. It fell in the $5,500-$6,500 range and stayed there from June to November 2018, before falling to $3,200. Many bitcoin mining companies have given up and gone out of business as their margins collapsed and they could not cover the costs of producing bitcoins.
The Bitcoin network doesn’t care who mined it. It will continue to produce blocks every 10 minutes or so for hours.
Bitcoin will survive. Investors should be prepared for the storm of headlines and the spread of fear to make the most of bitcoin’s price.