Everything about Bitcoin, DeFi and more – overview

1) Regulatory: It’s getting really uncomfortable

Basically, the big money will only flow into cryptocurrencies if institutional investors consider the framework conditions to be sufficiently regulated. Accordingly, the increasing regulation can also be seen as a bullish indicator.

However, there is concern that over-regulation could emerge in 2023, with harm outweighing positive factors. The heads of authorities and politicians are currently outdoing each other with tough demands on the crypto sector. Be it from the ECB and the European Commission, some of whom are calling for an almost ban on Bitcoin, or from Joe Biden and Elizabeth Warren from the USA, who are also calling for tough regulation.

The first results of the sometimes exaggerated regulation mania are, for example, reporting requirements for crypto transactions from 1,000 euros in the EU or the very strict equity requirements of the Bank for International Settlements (BIS) for banks that want to keep crypto currencies on their balance sheets. For example, financial institutions that hold cryptocurrencies in the future should deposit disproportionately high percentages of equity – we’re talking about up to 1,250 percent.

The year 2023 will therefore be a nail-biter in terms of regulation. The risk that additional requirements, sometimes even bans, will be imposed on the sector must be rated as high. The prices of the cryptocurrencies are likely to react correspondingly sensitively to regulatory reports.

2) Banks come out of ambush

Despite some critical statements about Bitcoin and Co., the large Anglo-Saxon financial institutions in particular are showing that they are more likely to expand their involvement in the blockchain sector than reduce it. Goldman Sachs is investing in blockchain start-ups despite the crypto crisis, JP Morgan is testing public blockchains like Polygon more than ever, and asset manager BlackRock sees tokenization as the biggest future evolution of the financial sector.

The current crypto crisis is an outstanding opportunity for traditional financial institutions to position themselves favorably in the crypto sector and to prepare their products for future upturns. At the same time, they have an advantage over crypto companies with their licenses and experience in regulatory issues. Strange as it may sound, traditional financial institutions could become a major support in 2023.

3) NFTs with more potential than DeFi in the short term

The commercial establishment potential of NFTs could be greater in 2023 than that of the DeFi sector. While one can assume that the loss of confidence in CeFi, particularly from FTX, should strengthen the DeFi space, the uncertainty is too great for hype next year.

On the one hand, the DeFi sector is struggling with a great deal of regulatory uncertainty and, on the other hand, the fear of protocol hacks is paralyzing the establishment. There is also a lack of user-friendly offers.

In contrast, NFT projects are generally easier to implement from a regulatory point of view, appeal to a broader section of the population and offer significantly more use cases that can be implemented quickly. The probability of a new NFT wave, which is no longer just about collectible cards, but about a new generation of NFTs, including dynamic NFTs, is considered to be high. The areas of blockchain gaming, (phygital) fashion and brand building / communities alone offer quickly scalable applications that can quickly lead to so-called mass adoption with the help of social media. NFTs could therefore become the catalyst for a crypto upswing in 2023.

4) Newcomer topics: digital identities, sustainability and decentralized social media

Every year, certain topics are in focus and manage to generate greater public attention. For the year 2023, the following three topics in particular should provide topics for discussion:

1. Digital identities: Tech companies like Meta, state bodies like the EU Commission or even Web3 protocols like KILT are fighting for sovereignty in the administration and presentation of digital identities. Cardano founder Charles Hoskinson even speaks of “identity wars” that he sees breaking out in the next 24 months.
2. Sustainability: The crypto industry is practically forced to establish itself as a sustainable industry. Last but not least, Ethereum was also switched from the energy-intensive Proof-of-Work to Proof-of-Stake. At the same time, the pressure is increasing – not only from the state, but also from investors – on the mining companies to rely on sustainable energy sources. In addition, blockchain technology can become a key technology for the energy transition. In this context, the tokenization of CO₂ certificates is likely to become a major driver in 2023.
3. Decentralized Social Media: Ever since Elon Musk took over Twitter, the crypto industry has increasingly focused on social media. Above all, truly decentralized alternatives, such as DeSo or the Lens Protocol, could trigger a new dynamic in the social media space.

5) The Comeback of Bitcoin Mining Stocks (that Survived)

Bitcoin mining companies are suffering particularly badly from the crypto crisis. Bankruptcies are the order of the day. The situation is so dramatic that the previously upheld difficulty, i.e. mining difficulty, had to be lowered. It can be assumed that this consolidation process could last another three to six months.

However, those who are still standing, i.e. have survived, can look forward to more market share. If the Bitcoin price then recovers, they should multiply their share prices in a short time. Bitcoin mining companies are therefore good candidates for a successful comeback in the second half of 2023.