Predictions For The First Half Of 2023 In “The Future Of Cryptocurrency.”

Long-term forecasting is challenging, but shortly, industry professionals will be watching developments like institutional adoption of cryptocurrency payments and regulation to try and gain a better understanding of the market. Let’s try to break down the future of cryptocurrency.

Cryptocurrency Regulation

Expect ongoing discussions on cryptocurrency regulation as lawmakers in Washington, D.C., and throughout the world attempt to develop rules and laws that will make bitcoin safer for investors and less desirable to hackers.

U.S. government representatives have expressed a strong interest in stablecoin regulation, particularly in light of the recent Terra Luna crash. The stablecoin TerraUSD (UST) debugged from the dollar in May due to the collapse in cryptocurrency markets, which also brought about a drop in the associated cryptocurrency Luna. As a result, many investors from Terra and Luna saw their money disappear quickly. Within a few weeks of Terra’s failure, the cryptocurrency market crashed again. As a result of the dire market conditions, several crypto firms announced layoffs and blocked withdrawals to reduce costs. Since then, some businesses have declared bankruptcy, including Celsius and Three Arrows Capital.

Because of the snowball effect, federal officials suddenly have more ammunition to advocate for crypto regulation.

Marcus Sotiriou, a market analyst at digital asset broker GlobalBlock, says: “After the disastrous events that have occurred in the crypto market over the past few weeks, it is evident that harsh regulation could emerge soon.” “The failure of DeFi lenders may be the justification policymakers have been seeking to impose harsh regulations on cryptocurrencies.”

Even though there is still more to be done, there have been significant regulatory advancements in 2022. The “responsible development” of digital assets, including stablecoins, is the subject of an executive order that President Joe Biden signed in March and directed federal departments to investigate. The first framework resulting from President Biden’s executive order on digital assets was just released by the U.S. Treasury Department. It describes how the U.S. should interact with foreign nations over digital assets.

Jerome Powell, the chairman of the Federal Reserve, stated in 2021 that he had “no intention” of outlawing cryptocurrencies in the United States, while Gary Gensler, the chairman of the Securities and Exchange Commission, has frequently discussed the roles played by both his organization and the Commodity Futures Trading Commission in regulating the sector.

Gensler has stated numerous times that investors are likely to suffer if stricter regulation is not put in place. Additionally, it stands to reason that the IRS would want to ensure that investors understand how to disclose virtual money on their tax returns. The remarks of Powell and Gensler are in line with a growing consensus among U.S. politicians and the Biden administration that further regulation of cryptocurrencies is required.

According to Wang, the absence of clear legislation prevents American businesses and investors from operating, representing a “major obstacle for cryptocurrencies.”

Potential Effects of New Regulations on Investors

Although cryptocurrency regulation can be contentious, many experts believe it will benefit both investors and the sector as a whole.

Increased regulation may lead to excellent stability in the famously unstable cryptocurrency market. As long as it hits the appropriate balance, it safeguards long-term investors, stops fraudulent conduct inside the crypto ecosystem and offers explicit guidelines to encourage business innovation in the sector.

In already unpredictable markets, regulatory news may impact cryptocurrency prices. Due to market volatility, experts advise limiting your cryptocurrency investments to no more than 5% of your whole portfolio and never putting money at risk.

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Broader Institutional Cryptocurrency Adoption

In 2021, mainstream businesses from several sectors showed interest in cryptocurrencies and blockchain technology; in some cases, they even made their own investments. For instance, AMC declared that it would take Bitcoin as payment last year. By enabling customers to purchase on their platforms, fintech businesses like PayPal and Square also place a bet on cryptocurrencies. Even though the corporation has billions of dollars worth of cryptocurrency assets, Tesla accepts Dogecoin payments and is still deciding whether to accept bitcoin payments. Experts anticipate an increase in this buy-in.

More extensive, international firms may accelerate this adoption even further in the second part of this year, according to some experts. Weiss predicts that organizations will start investing in cryptocurrencies, including Amazon and the central banks. A significant shop like Amazon would “provide a lot of legitimacy” and “start a chain reaction of others accepting it.”

Amazon recently shared a job listing for a “digital currency and blockchain product lead,” which spurred rumors that the company is moving in that direction.

What Increased Adoption by Institutions Means for Investors.

While most individuals don’t currently see the benefit of purchasing with cryptocurrencies, the situation may change as more merchants begin to accept them. Although it may take some time before buying goods or services with bitcoin will be a wise financial move, increased institutional adoption may lead to more applications for regular consumers and affect the price of cryptocurrencies. Nothing is guaranteed, but if you purchase cryptocurrencies as a long-term store of value, the greater the likelihood that demand and value will rise as it finds more “real-world” applications.

Future of NFTs

Non-fungible tokens, or NFTs, have existed since 2014, but it was in 2021 that this cutting-edge technology became widely accepted.

NFTs, which stand for digital ownership of a variety of unreplicable intangible goods, have caught the interest of prominent people and large corporations like American Express and Gucci. According to data gathered by DappRadar, an app store for decentralized applications, total NFT sales reached $25 billion in 2021 instead of $94.9 million the previous year.

However, whether NFTs are merely a fad or a trend is still debatable. According to data from DappRadar, NFT sales declined below $1 billion in June for the first time in the previous 12 months.

Experts’ opinions are still divided; some call NFTs a “bubble,” while others argue that the smart contracts used in blockchain technology, which underlie them, actually provide genuine value. Artists and producers are asserting that this is the newest method of income in the meantime.

Recent evidence suggests that the market may finally be slowing down. At the beginning of the year, nearly a million accounts were actively buying or selling NFTs; however, recently, only roughly 491,000 accounts were doing so. Because of the dropping value of cryptocurrencies, and other macroeconomic factors, including inflation, rising interest rates, and Russia’s conflict in Ukraine, several experts predict that the NFT industry will continue to be negatively impacted.

What Investors Should Know About the Fall in NFTs

Numerous people purchased NFTs throughout the past year, either as investments or just for enjoyment. Whatever the reason, the recent collapse of the cryptocurrency market has significantly reduced the value of many digital assets.

Yang claims that from an investment standpoint, purchasing an NFT is “riskier” than purchasing cryptocurrency because it is “almost like a leveraged gamble on cryptocurrency.” He said that people don’t really understand the difference and buy them because they are entertaining, adding that it is essentially gambling.

It would help if you avoided NFTs, knowing that they are significantly riskier and more speculative than crypto, as bitcoin prices are generally declining. According to experts, most long-term investors will be better off investing in bitcoin or ethereum, two of the biggest cryptocurrencies, instead of an NFT, with a tiny amount of their portfolio (less than 5%, and never at the expense of achieving other financial goals).

Future of DeFi

If you have any cryptocurrency investments, you’ve probably heard of the phrase “DeFi.” It stands for “decentralized finance” and alludes to a digital environment where alternative financial services run on blockchain and cryptocurrency technologies.

DeFi replaces conventional intermediaries like banks and lenders with “smart contracts.” In essence, the software is replacing the companies we deal with daily to handle our accounts. As a result, there is no central authority to which DeFi entities must answer.

DeFi, however, is still in its relative infancy, much like the early days of the internet, when there were few websites, few online services, and primitive chat rooms, giving the impression of the “Wild West.” With that in mind, analysts predict there may be some hiccups along the way with its development, but eventually, there may be a Google or Amazon of the DeFi space.

According to Dr. Merav Ozair, a professor of fintech at Rutgers Business School and a blockchain expert, further, improvement is the next critical step for DeFi. The next stage, he argues, is to learn how to write good code and turn everything up a notch.

Meaning of Increased DeFi Adoption for Investors

DeFi is the place to go if you want complete and utter control over your possessions.

However, there may be a trade-off because fewer legal barriers exist to protect your assets. In many ways, DeFi resembles the “wild west” of banking and investment, where there may be no way to reclaim your money if you lose them to hackers or through other means.

DeFi is still in its infancy, so it’s wise to balance the dangers and potential rewards when contrasting it with other financial solutions. Since the DeFi market is unregulated, you’ll have to take more financial risks and have more freedom and control. To get started, you’ll need a basic knowledge of cryptography and purchase cryptocurrency.

According to experts, it’s ideal only to have 5% of your whole portfolio invested in cryptocurrencies, and only after you’ve amassed an emergency fund and paid off any high-interest debt.

Bitcoin’s Future Outlook

Since it is the most valuable cryptocurrency by market cap and the rest of the market tends to mimic its tendencies, Bitcoin is an excellent predictor of the crypto market.

After a tumultuous ride in 2021, the price of bitcoin reached a new record high in November when it surpassed $68,000. But in 2022, it all came tumbling down.

Amid continued macroeconomic uncertainty brought on by rising inflation, a weak stock market, rising interest rates, and worries about a recession, Bitcoin and the larger crypto market has been declining this year. Since last November, Bitcoin has lost over two-thirds of its value and recently fallen as low as $17,500. On whether bitcoin has bottomed out yet, experts are divided. Some claim it has already happened, while others predict a drop to $10,000 for bitcoin in 2022.

Because of this volatility, experts advise keeping your initial cryptocurrency investments to less than 5% of your overall portfolio.

But how far can bitcoin advance over the long run? Despite bitcoin’s rough start to the year, analysts continue to predict that it will reach $100,000; it is more a question of when than if. According to Kiana Danial, author of “Cryptocurrency Investing for Dummies,” Bitcoin’s background may offer some hints as to what to anticipate moving forward.

Ethereum’s Future Outlook

The second-largest cryptocurrency and most well-known alternative coin are called Ethereum. It can be a reliable indicator of the cryptocurrency market, much like bitcoin. Its value has increased dramatically over the past six years, rising from $0.311 at its introduction in 2015 to nearly $4,800 at its peak in late 2017.

Despite being some distance from its all-time high, the price of ethereum has the potential to increase significantly throughout the rest of 2022.

According to experts, the outcome of Ethereum’s significant upgrade, scheduled for September 19, could affect that figure. Ethereum is updating its technology to a less energy-intensive version known as “The Merge” among insiders. The network will allegedly become quicker, more affordable, and more effective as a result of the update.

Experts predict that ether might break $4,000 in 2022 and reach $12,000 if ethereum keeps its promises with the integration. Investors are keeping a close eye on every development leading up to the merger and, in some circumstances, profiting from the present market slump by purchasing the dip in front of it. According to experts, only time will tell whether ethereum’s price will rise or drop back to earlier lows.

The volatility of bitcoin and ethereum is another justification for investors to play a steady long game. Refrain from being concerned with short-term fluctuations if you’re buying with the intention of long-term growth. The best action is to “set it and forget it” and stop thinking about your cryptocurrency investment. Every time there is a price movement, whether up or down, experts warn us that emotional reactions can lead investors to act hastily and make choices that cause them to lose money on their investment.

The Future of Cryptocurrency

In reality, cryptocurrency is still a new and speculative investment with little historical data on which to base predictions. We can guess what value bitcoin may have for investors in the coming months and years (and many wills). No of what a particular expert believes or claims, nobody truly knows. For long-term wealth creation, it is crucial only to invest what you are willing to lose and to stay with more traditional investments.

Keep your investments modest, and never prioritize cryptocurrencies over other financial objectives like retirement savings and debt repayment with high-interest rates.