Crypto Assets Market Outlook: A Rebound Expected in 2023

In 2022, the global interest rate hike wave and events such as the FTX collapse brought a huge impact to the Crypto Assets market. However, with the continuous evolution of the industry ecosystem and the advancement of important technological upgrades, the Crypto market is expected to welcome new opportunities in 2023.

Market Status and Challenges

Last year, the interest rate hike policy became a major factor affecting global assets, and the Crypto Assets market was no exception. At the same time, the FTX incident severely impacted market confidence, prompting industry institutions to explore a more transparent and healthy trading ecosystem. Decentralized exchanges and compliance have become possible development directions.

Currently, the DCG incident does not seem to further deteriorate, and the risk of large-scale asset forced liquidation is relatively limited. From the main driving factors of the market decline, there is no new significant threat at the moment.

Ethereum Shanghai Upgrade: Industry Booster

The Ethereum Foundation has confirmed that the Shanghai upgrade will take place as scheduled in March, which undoubtedly injects a strong dose of confidence into the industry. This upgrade will address the liquidity issues related to Staking that have troubled the market in the past, and is expected to become an important turning point for the Crypto Assets market in 2023.

Historical experience shows that the Ethereum Foundation often chooses a favorable macro environment when making major strategic decisions. Therefore, March may become a key time node.

In addition, several Layer 2 projects based on ZK technology plan to launch testnets or mainnets in the third or fourth quarter of 2023, which will bring new vitality to the Ethereum ecosystem.

Cycle and Outlook

From the perspective of internal industry factors, there are no significant potential risks in the coming year. Instead, there are two important positive factors: the Ethereum upgrade in March and the development of Layer 2 in the fourth quarter. These factors may not be sufficient to drive the market to decline significantly.

It is worth noting that Bitcoin is approximately 470 days away from the next halving. If historical patterns repeat, a new round of market activity may begin to sprout by the end of this year. Additionally, from the perspective of the Crypto Assets market cycle, the current bear market has lasted for more than a year and is nearing its end.

A comprehensive analysis of the macro environment and internal industry factors indicates that the most difficult phase of the Crypto Assets market has passed. It is now in a consolidation phase, recovering confidence and seeking new narrative logic.

Looking ahead to 2023, with changes in the interest rate hike cycle and positive factors within the industry, it is expected that there may be a wave of market hotspots in the second quarter, and a potential resurgence in the fourth quarter of the second half of the year.

Unless there is an extreme black swan event or a severe deterioration in the external environment, the current market bottom may have already appeared. A more intense upward trend is expected next year.

In the new year, I hope that participants in the crypto assets market can maintain a strong belief, embracing new opportunities and challenges.