It is true that 2022 has been a volatile year for the blockchain space. The industry experienced it all - from dramatic token price drop-off to a surge in trading patterns, the collapse of NFT valuations along with trading volumes, the failure of multiple centralized firms, and the meltdown of FTX. Many investors have even labeled it as one of the worst years for crypto since the sector hit mainstream financial markets. It was a rough year for crypto and blockchain as more than $1.3 trillion was wiped off the value of the market. And bitcoin, the world’s largest digital coin, witnessed a price slump of more than 60%. While these sudden collapses caught investors off guard, the blockchain industry also faced the blow due to the stablecoin project and other crypto exchanges FTX, along with a worsening macroeconomic climate.
But in 2023, there is a visible silver lining that can emerge as a gleaming ray for growth. Organizations understand that financial instruments should have a business use case as well as the fundamental economic value that can be traded, utilized, and accurately valued by the marketplace. To sum up, the demonstration involves-
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leverage and margin activity to enter the crypto space
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the influx of capital to elevate the valuations of projects
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increase investor demand for overly optimistic projections
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construct new business models to avoid scrutiny and due diligence
In 2023 the scenario seems to be changing, but some market players still believe the market will meet with the same fate and experience another volatile year. However, one big question still prevails: What will happen next for blockchain in 2023? What follows are some predictions for the new year.
Read more: The Emerging Blockchain-Based Tokenization: What Investors Need to Know About it?
Trends and Predictions that will Dominate Blockchain in 2023
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Blockchain and Crypto Audits
Crypto audit rules are evolving slowly but finally. The current state of accounting and auditing rules today is not up to the task of auditing or offering services to firms operating in the crypto space. Many firms are publicly withdrawing from offering any crypto services for the time being. But industry leaders are finding themselves under intense scrutiny from the marketplace as well as regulators.
Crypto applications can become boring. But with trading volatility on the rise, asset prices reaching new heights, and new tokenized products being introduced in the market, the reality portrays a different picture. These activities are portraying neither confidence-inspiring for users nor are they presenting new activity offering options to be viewed favorably by regulators, insurers, and other conservative investors. Following the collapses and fraudulent activities in the crypto space, there have been recent instances where the market volatility period has ended, and the trend for crypto assets can become more boring.
Investors are seeking more transparency and comparability for crypto firms, as they have suffered reputational damage. Many questions are also arising as investors are asking about the specifics of what these engagements entail. With the introduction of new audits, firms and investors alike will be able to work on developing crypto-specific accounting standards and auditing.
Read more: An Experiment on Effect: How Virtual Technologies like Metaverse Transform Our Way of Life
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Regulation for Crypto and Blockchain-based Applications
A full-scale regulatory framework should be on the to-do list for many organizations across most countries actively planning to tighten the crypto laws and strengthen on-chain regulation. With investments flooding from every corner, organizations are complying with the regulatory framework, and insurance and audit firms are interacting with the crypto ecosystem.
Tokenized assets and blockchain-based applications are compelling investors, as the industry is experiencing a rise in price action and volatility. Enterprise adoptions of blockchain and tokenized assets are accelerating the pace, even in the face of declining prices for crypto assets. With crypto regulations on the rise, new frameworks have been put forward that are set to highlight the efforts and pronouncements. Effective regulation will prove beneficial for different industries, irrespective of their specifics, as it will help in incorporating more transparency, reportability, and comparability, enabling investors and regulators to weed out bad players. After such volatility and the collapse of multiple organizations in 2022, the pressure is now on organizations, regulators, and policymakers to implement some regulations.
Read more: The Evident Crypto Crash: Will it Derail the Next Web 3.0 Revolution?
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Adoption of Web3 will Hit the Mainstream.
In the crypto price predictions for 2023, investors are experiencing constant stop-and-start patterns, which is making it difficult for markets to deploy capital in the year's first half. The second half of 2023 is expected to witness recent changes in market sentiments. The Web3 initiatives, despite starting to slow at the beginning of the year, are likely to skyrocket at the end of 2023.
When looking back on the journey of Web3 in 2022 journey, Nike was able to generate total revenue of over $185 million with its NFT. The global Web3 market, which was worth $5.7 billion in 2022, is expected to continue to grow in 2023 as well. 2023 will unfold a version of Web3 and true decentralization.
Mass adoption of Web3 with new developments like decentralized social media, commonly called SocialFi, will experience a rise. Crypto firms are also working towards developing better wallets to manage digital assets and improved web3 browsers. DeFi platforms will also witness greater demand, along with code-enforced transparency. With the increase of institutional DeFi use cases and blockchains, venture capitalists will also strive to make Web3 mainstream.
Key Highlights
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2022 was a rough year for crypto and blockchain as more than $1.3 trillion was wiped off the value of the market.
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In 2022, Bitcoin fell over 60%, driven lower by high-profile company failures as well as a bleak macroeconomic climate.
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Many predictions made about the price of bitcoin last year missed the mark.
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Renowned market players ground themselves stuck with price calls for what could be a volatile year.
Read more: The Metaverse: How is it Revolutionizing the Way We Shop?
Final Thought
This past year was a rough one for the blockchain and crypto industry. And 2022 ended with what felt like a massive fraud being disclosed in the form of FTX. One critical issue will be how not to let the pendulum swing far to the punitive and restrictive side; that is why market input is so critical. Out of every market collapse, there were new opportunities to build a more sustainable and transparent market; however, that seems like the case for blockchain in 2023.
With interest rates around the world on the rise, investors and enterprises began weighing in on the risk assets such as stocks and bitcoin. Investors were also closely monitoring how the FTX saga would develop. The unexpected bankruptcies, as well as sudden collapses, were to blame as the market experienced new situations and worst crypto performances.
While the year 2021 was considered a record year for the crypto market as it briefly surpassed $3 trillion at the year’s end, many businesses, fintech firms, as well as venture capitalists experienced a different tone in 2022. In contradiction to what everyone anticipated, 2022 shifted the dynamics of the blockchain and crypto industry by wiping out more than $2 trillion in market cap. In 2023, investors can expect substantial changes in one of the world's most volatile asset classes.
The blockchain space will surely witness rapid growth and innovation. Even in bearish conditions, enterprises are releasing their blockchain-based games. Considering all the predictions, it is fair to say we can expect a lot of metaverse games and other blockchain-backed initiatives in 2023.
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