Crypto Assets Market Outlook for 2023

In 2022, events such as interest rate hikes and the FTX collapse had a tremendous impact on the Crypto Assets market. This prompted industry participants to begin contemplating how to build a more transparent and healthier trading ecosystem. Decentralized exchanges and enhanced compliance have become possible development directions.

Regarding the DCG event, it currently seems unlikely to further deteriorate to the point of affecting the large amount of Bitcoin assets held by Grayscale. Therefore, there is no risk of a large-scale liquidation triggering a market decline in the short term.

On the Ethereum side, the foundation has confirmed that the Shanghai upgrade will proceed as scheduled in March, which undoubtedly injects a shot of adrenaline into the industry. This upgrade will address the staking liquidity issues that have plagued the market over the past year. Historical experience shows that the Ethereum Foundation often chooses favorable macro environments to promote significant upgrades, so March will be a time worth paying attention to.

In addition, multiple Layer 2 projects based on ZK technology plan to launch testnets or mainnets in the third or fourth quarter of 2023. These internal industry factors suggest that a market downturn driven by significant events is unlikely to occur in the coming year.

From a cyclical perspective, there are about 470 days until the next Bitcoin halving. If historical patterns repeat, a new round of market activity may begin to take shape by the end of this year. Additionally, the Crypto Assets market typically exhibits the characteristic of short bull markets and prolonged bear markets. The current bear market has lasted for over a year, and according to past experience, it may soon reach the bottom.

Comprehensive analysis of various factors shows that the most difficult stage of 2022 has passed. The market is gradually regaining confidence and seeking new narrative logic, currently in a consolidation phase. Looking ahead to 2023, driven by the interest rate hike cycle and internal industry factors, a wave of market hotspots may emerge in the second quarter, and another wave of increase may be welcomed in the fourth quarter.

Unless there are significant black swan events or a drastic deterioration in the macro environment, the bottom of this round of Crypto Assets market may have already appeared. It is expected that there will be multiple significant upward trends next year. I hope that in the new year, investors can maintain firm belief and reap abundant rewards.