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The year 2021 was the most effective year for the cryptocurrency market because there was a strong growth in assets of all types and kinds. The popularity of digital assets, technologies, developments continue to grow, although today you can see a significant correction and even fundamental coins have lost 80-95% of their peak value. Every day there are a lot of new projects with native tokens within them and the total number has passed 20,000 types.
Top 5 cryptocurrency trends for 2023
Today the crypto sector market capitalization is less than $1 trillion and by the end of 2022 the decline might occur to $300-500 billion which will be within the normal correction of the active growth phase in 2021. According to statistics, more than 300 million people worldwide use cryptocurrencies, digital tools for business, household and other spheres. Let's try to figure out the biggest crypto trends that are happening in 2022 and will continue for the whole year 2023, some of which may last up to 2025 and further.
Institutional acceptance of the cryptocurrency ecosystem
Financial companies, large global corporations have a skeptical attitude to modern ecosystems in the form of cryptocurrencies. However, some of them have started investment activities, investing confident capital in such sphere.
It has become very noticeable precisely concerning asset management. At the end of 2020 about $15 billion was spent on cryptocurrency for management. These are deposits from institutional investors.
For a long time large funds were not allowed to make a quick profit and cryptocurrency allowed to go va-bank
To give you an example, at the end of 2019 institutional investments in this market amounted to $2 billion and in 1 year the volume has increased more than five times.
Grayscale Bitcoin Trust is an opportunity for many companies to access Bitcoin. Assets in 2020 have been increased by 900%. With the general field of asset management, this amount is still low but in the future with clarity in regulation, the figure could increase greatly.
Companies like MassMutual are facilitating the transition and acceptance of cryptocurrencies around the world. And two years ago $100 million was invested in BTC.
Headlines after MassMutual invests $100 million in Bitcoin
A bit later other companies started joining in, including Square and MicroStrategy. They have shocked the entire business industry by putting a certain percentage of money into digital assets.
One of the main reasons for this change is to make cryptocurrency transactions easier for ordinary consumers and major financial institutions are helping to solve this problem.
Paypal along with Venmo have launched the possibility of cryptocurrency trading on their own platform. According to statistics from PayPal, customers who bought coins through the Paypal app visited the platform twice as often as before. At the end of 2021 the Chicago Mercantile Exchange launched futures contracts for micro ether.
Tracking data from the major wallets that store BTC, you can see that since 2020, volumes are increasing and companies, individuals who have more than 1,000 BTC in storage are only increasing. The information can be easily viewed on Coindesk.
Searching for "Bitcoin whales"
All of these changes point to the future of cryptocurrencies
, the trend of accumulation, hoarding assets is continuing and will be maintained. Large funds and investors are coming into cryptocurrency without stopping their turnover. Tesla gives the opportunity to buy cars and other items with BTC which also indicates the acceptance of coins for payment.
More DeFi applications
The development and emergence of decentralized finance is one of the main directions and trends that are attracting people in the cryptocurrency
community. Over the past 5 years, the request in the search engine "Decentralized Finance" has increased by 5300%.
Graphical representation of the request "Decentralized finance"
The main concept is classic financial transactions inside a blockchain. Transactions are performed using smart contracts but compared to traditional transfers and other financial services, they completely eliminate the presence of an intermediary.
Inside DeFi, it is possible to use credit, deposits, create derivatives and conduct other transactions. In 2023 according to many analysts, we will see rapid growth and development in the DeFi sector
. Its formation is only beginning.
According to DeFi Pulse the total value of digital assets which are linked to the decentralized finance sector, increased from $2 billion to $15 billion in 2020. A year later, the value was almost $100 billion.
Recently the most popular trend
in the DeFi sector has come from farming. The lucrative process involves lending digital assets on different platforms. In exchange, users receive other coins or some percentage.
This is compared to digital banking by someone who brings his or her cryptocurrency to the pool and then receives a percentage of the invested assets. Often depositors go to DeFi to get new cryptocurrency at high interest rates in return. In the modern world this is much more profitable than using centralized instruments with low interest.
One of the big platforms in the DeFi sector is Compound (COMP) that allows you to invest coins in a pool and receive native tokens in return which represent a stake in the project. Compound operates as a central settlement platform for lending in the cryptocurrency industry.
Similar projects to Crypto.com allow you to combine the world of classic financial services and the DeFi sector. Over the last five years, the search query of the described platform has increased by 2900%. The service helps customers to place a digital asset in a wallet, exchange cryptocurrencies and make a profit, make payments with Visa and similar plastic cards, using the cryptocurrency in the wallet.
Decentralized exchanges (DEX) are also gaining more popularity in 2022. Search queries have been doubled in the last 2 years. Such tools give a person the opportunity to perform any transaction with a digital asset directly without intermediaries. They also provide ownership rights and 100% control over the personal assets. The volume of trading within decentralized platforms increases every month.
At the beginning of 2021 trade volumes were $56 billion. Which is up 1,000% compared to 2020. The main DEX exchanges where the maximum trading volume takes place are
- Uniswap a trading protocol for Ethereum which gives liquidity to many DeFi applications on the Ethereum blockchain. The exchange is considered one of the best on the market, considering decentralized offerings.
- SushiSwap - Uniswap forms. Underestimated exchange that is developing and for a long time is in the list of the best decentralized platforms.
In addition to the described exchanges it is necessary to highlight other not less popular: Pancake Swap, Dydx.
NFT - the main trend in 2023
The NFT sector was still in 2017 but it is only now gaining steam and popularity. Ordinary users, large investors were able to discern all the advantages of the technology inside where elements of creativity, for example, images, can be sold for large sums and be 100% the owner of their work. By the end of 2021, NFT began to be used more often in the form of technology so in 2023 it will be continued to focus on this.
Another thing to keep in mind is the GameFi sector, the meta-villages within which NFT uses as its foundation. For a few years, it will be the meta-universes and the gaming sector that will be mainstream. Not so long ago, Facebook rebranded and as a result of this rebranding, they defined new goals - the creation of their own meta-universes. Due to the changes, it was possible to attract the attention not only of the cryptocurrency community but also of the whole world. Other large organizations including Epic Games began to develop meta-universes
by the example of Facebook. This makes it possible to say that in the future the development of such a niche will be fast and many token projects will give big profits to investors.
NFT is a non-interchangeable token that gives the creators of this or that content full ownership rights.
Graphic example of search interest for "NFT"
Only in the last few years as you can see from the graph, the request for a "non-interchangeable token" has grown by 3,300%. Such tokens represent digital claims to assets or unique things, content. The thing on its own can be digital or physical.
NFT images - the peak of popularity in 2021
Bitcoin is an interchangeable token; other assets may not have claims to physical things. As a result, they can be subdivided into smaller pieces, exchanged and other transactions can be carried out. The NFTs give ownership of a domain name, items of creativity, items from collections, etc.
Often tokens are created
in the ETH network, many with an embedded smart contract describing the particular product that they are representing. There are still few NFT projects on the cryptocurrency market that can be divided into several parts but this crypto trend in 2023 will be gradually changing.
It is difficult to accurately estimate the total capitalization and scale due to the fragmented nature of this market. Looking at specific NFT sites, it is possible to get a general idea. According to analysts' estimates, monthly trading volumes at the end of 2021 were at $15 million. In 2022 the figure has increased and for 2023 these values will rise. Everything is due to the market price of the whole sector which increased from 3 million to 33 million in January 2022.
The idea of NFT started to be popularized by trading services like CryptoKitties and CryptoPunks. Their tokens gave ownership rights to collectible items in the form of pixel pictures and digital cats.
Expert estimates showed that CryptoKitties had $40 million worth of transactions and some NFTs managed to sell for $300,000. One of the most expensive CryptoPunks projects was an image worth $762 000.
Since then the non-interchangeable token sector has begun to evolve and more practical uses have appeared so the trend is continuing, especially noticeable in the arts. Technology can be used to write music, paintings, create video content and sell property rights. Every asset gives you full ownership rights. For example, a blogger who creates a video and posts it on YouTube is not the owner. Under the terms of the platform, any content, once uploaded belongs to the platform. With NFT, this problem completely disappears and everyone has 100% ownership of their creation.
Technology solves the problem of ownership rights, copyright. The AsyncArt service makes it possible to generate income from the sales of the art elements they make.
AsyncArt - a platform for placing artworks on the blockchain
The trend is constantly expanding with large art houses and auction sites moving into this sector. Also, the popularity of the NBA Top Shot shopping service sells basketball collecting items from the sport's professionals. This gives fans the opportunity to buy or sell items of their favorite players. Over the past 2 years, public interest in NBA Top Shot has increased 6 times.
The regulation will be in charge of the cryptocurrency market in 2023
As soon as technology, cryptocurrencies and other blockchain-based developments
started to grow in popularity, governments began to keep an eye on them. The government's increased scrutiny began in 2017 when there were widespread ICOs. In 2021 there was a bit more clarity on the regulation of cryptocurrencies. However, legal issues related to the nature of digital assets are confusing regulators and a good example of this is the situation with Ripple, showing the general crypto trend.
In 2020, the SEC started a case against Ripple Labs. The SEC believes that the corporation was offering $1.3 billion in assets when the majority of XRP coins were sold to regular users.
SEC continues to investigate even in 2022, putting XPR crypto-asset at risk
It can be considered the norm in the cryptocurrency industry to challenge certain coins or instruments. In addition, even in 2022 there is no precise understanding of what can be considered a "commodity" and a "security" in the digital world.
XRP is hardly the only story with regulators. The CFTC launched a case against the BitMEX trading platform. The complaint was that the exchange was using an unregistered platform in violation of CFTC regulations.
With all the financial markets, many expected the first cryptocurrency ETF to emerge. That's what happened in 2022. Since 2020, the SEC has been actively working on rules that allow cryptocurrency ETFs to be bought/sold.
In the past year some more changes were adopted by the Comptroller General's Office for Foreign Exchange. Financial companies can now be custodians of their clients' digital assetsa nd a presidential working group has announced steiblocks and is actively studying the concept during 2021-2022.
The most stable cryptocurrency asset is Tether (USDT) which is backed by the real dollar and trades at a 1:1 ratio to the U.S. dollar. Despite this, it has legal problems and in the middle of 2022 there was talk it might completely disappear.
The market capitalization is $66 billion in July 2022. More than half of the entire cryptocurrency market consists of Tether. Stablecoins are often used for DeFi projects because of their stable exchange rate. Assets that have been backed by real currency are used to conduct financial transactions via blockchain. This is due to minimal volatility and the price of all capital is not reduced during transactions.
Central banks are trying to stay ahead of technology by providing markets with their own digital assets. Many believe that the active uptake and distribution of different types of steblecoins could cause strong speculation without the possibility for legitimate regulation. CBDC tokens are called CBDCs and are gradually being introduced, studied by more than 80% of the world's banks.
The U.K. is the first to start working with such a project. In 2020, BIS and the 7 largest CBs in the world began work on CBDCs. Such assets were planned to be used for government policy needs.
Chinese National Bank wishes to be the first in the world to implement cryptocurrency technology
and for 2022, 2 CBDC pilot projects have been completed, giving out 20 million tokens. In the second test, customers were able to make financial payments using tokens without using the Internet. The transactions were commission-free at merchants and without any type of intermediary.
Today, even the U.S. Federal Reserve began reviewing the digital dollar project. If CBDC is applied and successfully implemented, such an innovation could completely change the possibilities of international payments.
Expanding the DApps market
DApps are decentralized applications, programs that operate in a peer-to-peer network. The potential of this direction is very large. DAppRadar collected statistics which showed an increase in transaction volume by more than 10 times within 1 year (2019-2020).