4 Cryptocurrency Predictions for 2023
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Loading... - Nick Muiruri
- 26 Jan 2023
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One of the world's most volatile asset classes can expect some big changes in the new year.
If you thought Wall Street had a bad year, take a closer look at how the cryptocurrency space has fared. Based on data from CoinMarketCap.com, the aggregate value of more than 22,100 digital currencies has tumbled from nearly $3 trillion in November 2021 to less than $795 billion as of early morning Dec. 29, 2022. That's about a 74% drawdown in less than 14 months.
But given the well-known volatility always present in the crypto space, not even a 74% decline in a short time frame is enough to sway the resolve of digital currency enthusiasts.
The big question is: What happens next for cryptocurrencies in 2023? What follows are four predictions for the new year.
1. Ethereum will (briefly) surpass Bitcoin in market value
The first crypto prognostication for 2023 is that Ethereum (ETH 3.35%) will do the impossible, even if only for a very short time, and surpass the market value of Bitcoin (BTC 1.29%).
The toughest aspect of this prediction is that Bitcoin and Ethereum tend to be highly correlated. When one rises or falls, the other usually follows. Rarely have digital currencies diverged from Bitcoin and moved on their own merit-based tangible news or data. But with stocks in a bear market and the U.S. economy potentially headed for a recession, we may get our first taste of individualization sprouting up in the cryptocurrency space.
For its part, Bitcoin has always been the king of cryptocurrencies. The perception of scarcity, given its 21 million token cap, has lured investors into supporting a lofty value per token. But when we examine Bitcoin's utility, it leaves a lot to be desired. The average number of Bitcoin transactions completed daily is effectively unchanged over the past seven years, based on transaction data from BitInfoCharts.com.
Compare that to Ethereum, which averaged 40,000 transactions daily in 2016, around 700,000 transactions daily in 2019, and has consistently been above one million transactions per day for the past two years.
While the Ether token can, in theory, be used for payments, Ethereum's real utility has been on display as a medium for decentralized application (dApp) development. In terms of dApp protocol revenue, data from TokenTerminal.com shows that Ethereum towers over every other project, with $3.8 billion in revenue over the trailing-12-month period.
In other words, a strong fundamental/tangible case can be made that Ethereum is the more valuable cryptocurrency when compared to Bitcoin. Read More…
