What is the future for crypto in 2023 the combination of events, challenges and opportunities?
2023 is a very important year for the crypto space, with many events changing its future and adoption in the future. While there are many different factors at play, there are three main factors that will affect the crypto market throughout 2023.
The rise of crypto products
Regarding the increase in the product, the following two major events will affect the crypto market.
ETH Shanghai update
In April 2023, Ethereum will launch the Shanghai update to transform into a proof-of-stake (PoS) blockchain, which is expected to improve the performance of the network. The PoS journey began with the launch of Beacon Chain in December 2020, when users deposited more than 500,000 ETH into a smart contract. Currently, more than 17.5 million ETH are secured in the contract, which reduces the total supply of the Beacon Chain contract.
After the development, users will be able to withdraw some of the ETH that has been locked up since the beginning, causing concern about the increase and decrease of the ETH price. However, despite the concerns, two important factors indicate that such a situation is unlikely:
All 32 ETH cannot be withdrawn – after 18 months from the Shanghai reform, withdrawal of 32 ETH per user will be available. Please note that withdrawals are entered first in the register and payments are given as a priority. This will slow down the entry of ETH into the distribution after the update.
Most of the ETH fans are underwater – the next thing that will happen to the ETH price is that most of it will be removed during the bull market of 2021. Therefore, most of the fans The wind is useless at this time, so they cannot be sold. .
The second increase will affect the market related to Bitcoin
The extended period that survived the destruction of Mt. Gox in 2014. At that time, Mt. Gox is the largest Bitcoin exchange, accounting for 70% of the world’s crypto trading volume. However, in February 2014, a malicious attack led to the loss of more than 850,000 Bitcoins, causing panic throughout the crypto community and ultimately shutting down the exchange.
Since the hack, the former owners of Mt. Gox in a legal battle to get their money. Fortunately, this distribution will end in September and the money will be returned to the applicants.
Interestingly, the largest holders of recovered Bitcoins are financial institutions that buy Mount Gox claims for a portion of their value from the stock market.
Despite the ongoing battle, one of the largest holders said they want to keep their Bitcoin, which has eased concerns about the massive sale of Bitcoin Guardian. However, when applicants receive their Bitcoin, fear, uncertainty and doubt will continue to exist, introducing some uncertainty into the market.
Challenge global macro environment
Crypto is in its own bubble, independent of macroeconomic events in traditional finance. However, over the years, the crypto market has become very close to traditional currencies and has been influenced by the general market. Events related to inflation, Dollar Index, VIX, FOMC meetings and bond yields are some of the key factors that determine the price direction of crypto and its does not change.
A recent example is the failure of Silicon Valley Bank (SVB), whose heavy exposure to long-term government bonds played a major role in its collapse, which for the bank to operate due to rising interest rates and poor business conditions.
Shortly after this incident, Circle, the issuer of the USDC stabilitycoin, confirmed that a part of the reserves backing the USDC – $3.3 billion, or 7% of the total – was held in the bank empty. This news caused panic-buying among USDC holders, as the stablecoin lost its $1 peg and fell to $0.87 on the morning of March 11.