Cryptocurrencies: Here’s What To Watch In 2023

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Blockchain, cryptocurrencies and NFTs have had to endure a grueling year, but 2023 could be an opportunity to address some critical issues.

If 2021 ended with a lot of optimism regarding the blockchain market, 2022 registered a diametrically opposite trend, with the sphere of the general public now looking to the cryptocurrencies with some distrust, a caustic attitude that will not fail to mark the evolution of the sector in this area 2023 which we are about to enter. It is impossible to predict the destiny that awaits the cryptosphere, but the episodes of the last few months trace a future landscape which is already widely noticeable.

A slow start with revolutions to come

Starting in May, the digital currency sector underwent a series of increasingly authoritarian and painful shocks, a trend that culminated in late November with the strong FTX bankruptcy. “The failure of the EARTH-Moon project first, and then the FTX, led to what the British would call a ‘reality check’: a forced ice shower for all improvised and sometimes unprepared cryptocurrency fanatics,” he says. . Leonardo De Rossi, Professor of Blockchain and Cryptoassets at Bocconi University. A “bitter medicine” that according to De Rossi corresponds to thestart of a new cycle characterized by “pragmatism and skill” that will eventually scrutinize bigotry and improvisation.

Since these events are recent, everything indicates that the first quarter of 2023 will in fact open with a situation similar to the current one in all respects, that is, a slow decline in the market in which the most quoted tokens will be, albeit relatively stable, subject to repeated swings. The initial calm will therefore be followed by possible evolutions, perhaps by some storms. In fact, the chain crises very well awakened the attention of governments to the problems inherent in a sector that is still regulated very loosely today. Washington, in particular, is trying to find a system that is officially designed to protect investors of cybercrime and scams.

Some curse that the Biden administration is simply seizing the opportunity, that it is taking advantage of the dramatic moment to try to stifle a newborn libertarian market; it doesn’t matter whether the legislators’ intentions are sincere or opportunistic, the fact is that the United States has been stuck for a long time to define what its views on the blockchain case are and the FTX collapse represents the fuel that will ignite political discourse. On the other hand, the subject of cryptocurrencies has involved the White House, the Federal Reserve, the Security and Exchange Commission and even the IRS, or the tax collectors with stars and stripes, for months now. On the other side of the ocean, the Groupe d’action financière (GAFI) and the European Union are also ready to strengthen the controls in the cryptocurrency exchange sector. Giuseppe Denaro, crypto evangelist known for war name In Zaragastfor example, it expects “a greater sensitivity on the part of regulators to a scenario such as regulating a market in full madness to control the big players in the market”.

The forms of this regulatory evolution are the subject of wide debate. There is a fear that the very essence of the blockchain is deeply distorted, but a greater bureaucratic attention it would put in place significant guarantees dedicated to investors who have so far received little protection. Efficient regulation would therefore smooth the volatility high risk high reward characteristic of the category in favor of greater stability and potentially could curb fraudulent activities. Finding the right balance that makes everyone happy seems like a pipe dream, but the factors at play offer such a patchy and uncertain view that all options still remain on the table. There is also a risk that, as Alberto De Luigi, co-founder of Sequentia AG, points out, Administrations will be trapped in a «quixotic battle for the income statement of crypto assets», that they will choose a regulatory neuter path instead of fertilizing the growing cryptocurrency sector. «We therefore welcome those jurisdictions that know how to innovate, as was done in Liechtenstein, in the heart of Europe with the blockchain act (TVTG) that came into force in January 2020».

The decentralized court

De Rossi describes 2022 as a «Janus Two-faced that looks to the past and sees the future», a rhetorical figure that highlights how the many setbacks of centralized exchanges are making it necessary to go back to the times when «those who invested did this because he really understood and metabolized the technical and monetary specifics of bitcoin itself». If, on the one hand, the FTX crisis convinced the powers that be to assume the legislative reins of the blockchain branch, the cataclysm also provoked the diametrically opposite situation, that of decentralized finance (DeFi). An alternative to returning to the matrix of the past could therefore be found in the strong horizontal potential of blockchain systems: instead of relying on a few individuals who hold total control of the “money”, we would rely on an infrastructure where no figure is truly dominant. Users who make use of non-custodial wallet on the other hand, recorded sharp growth and the volume of P2P trading European rose only in the last month of 28%. The world of DiFi is full of potentially deleterious flaws, but it still orbits at a relatively infant stage of its journey and the potential for growth is virtually endless. The decentralized world will hardly be reached by legislators and politicians in the immediate future, which makes its nature a paradise – but also a hell – for all those who feel more adventurous and who want to set up a market that may in the future assume important dimensions. , but which in the present runs the risk of becoming a Wild West.

Investments in 2023

Italians are a nation of savers, they tend to hide their money under their mattress, an option that, while possible, is not materially easy to implement in the digital currency industry. At the same time, some precautions must be taken. Bitcoin and Ethereum promise to be influential enough to be able to count on growth that will show its extent in the long term, but the counterparts live in a more lame condition. “Over the last 12 years, we have witnessed around fifteen catastrophic events, from which bitcoin has always recovered,” he says. Andrea Mediri, CFO and co-founder of The Rock Trading. In addition, the bankruptcy of giants paves the way for a series of benefits: the choice of a winning business model and greater protection for those who invest. It is the victory of the platforms that choose to operate in regulated regimes”. Leaving the sphere of influence of the major cryptocurrencies, the situation plunges into a deep volatility, the consensus often cited in the environment therefore suggests relying on investment differentiation by not betting more than 5% of your portfolio on the blockchain field. Given how 2022 ended, it’s still possible to dominate for a while bear market marked by a deep cautious attitude, but this deviation is just the natural consequence of a decidedly turbulent vintage. Overall, all the experts we contacted to write this article, however, agree in adopting an optimistic tone regarding the technological evolutions of the future, explicitly suggesting that Big Tech and traditional financial operators will be increasingly interested in the blockchain world.

Source: Money It

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