After a tumultuous year, the crypto market is making a fierce rebound in 2023. The purge of malicious and sub-par projects has awakened the market to focus on nurturing sustainable value and driving innovation, rather than making millions overnight. And with most cryptocurrencies off to a great start this year, the global crypto market cap has crossed the revered 1 trillion mark.
Does the upturn mark the onset of a bull run, or is this merely a bear market rally? Industry experts and financial analysts believe it’s the latter. Here are the top five reasons why.
1. The reversal of the trajectory has begun
Green has embraced the crypto market again. Bitcoin is priced at $23,072.61 at the time of writing, registering a 34.1% uptick on the two-week charts. Although bitcoin-halving is a year away, investors are bullish about the coin.
Bitcoin has been relentless in its efforts to strengthen the network, despite the steep downturns throughout last year. It recorded new hash rate all-time highs in 2022, ending in the 250-300 Exahashes per second range. It’s paying off, as demonstrated by the buoyant stance toward the asset.
According to The Week On-Chain, the weekly newsletter of analytics firm Glassnode, the recent surge in price action involved reclaiming multiple on-chain pricing models, which has historically signified a psychological shift in holder behavior patterns. The sustainability and strength of the current market momentum look promising.
Bitcoin: Investor & Delta Price Models, Source: Glassnode
“Analysis of cohort behavior shows that short-term holders and miners have been motivated by the opportunity to liquidate a portion of their holdings. On the contrary, the supply held by long-term holders continues to grow, which can be argued to be a signal of strength and conviction across this cohort. Given the effect of long-term holders on the macro trend, watching their spending is likely a key toolset to track over the coming weeks,” notes the newsletter in conclusion.
More blockchains are following suit
Bitcoin is not the only crypto project that is upgrading its features and performance for 2023. For example, the Shanghai upgrade of Ethereum is currently scheduled to be implemented sometime in March. It will give access to funds previously devoted to Ethereum’s Beacon Chain and allow depositors to participate in validating transactions and earn rewards in the form of newly-created Ethereum. It continues to be the dominant blockchain for developer activity.
The total number of monthly active Web3 developers has increased by 5.4% to more than 23,300 over the last 12 months. Polygon launched a zero-knowledge Ethereum Virtual Machine rollup, or zkEVM, to reduce Web3 transaction costs. Polkadot announced the launch of the latest initiative that helps its ecosystem fight scams. Since relying on security-minded individuals within the community has helped fight scams efficiently, the network will incentivize members to continue to do the work with bounties paid in DOT.
Ethereum 1-month price history, 24 Jan 2023, source: CoinMarketCap
2. Tightening crypto regulations are a boon
The crypto market has always approached regulations with caution. They used to be mostly hostile, if not always. For example, the crackdown on crypto in China took a toll on the market for months. Many countries have expressed their apprehensions towards blockchain companies and crypto products in the past. In fact, established projects like XRP and Binance have a history of locking horns with regulatory authorities from time to time.
Needless to say, the notorious LUNA crash and FTX fall have cast the industry in a bad light among regulators and governments. They are now more aggressive in their approach toward crypto projects.
EU will introduce stringent crypto rules
The EU panel has voted on tighter crypto rules for banks, that would mandate them to set aside a punitive amount of capital to cover holdings of crypto assets. According to one amendment, banks would have to apply a risk-weighting of 1,250% of capital to crypto assets exposures. That means, enough to cover a complete loss in their value. The EU’s executive European Commission is required to publish a report by June 2023 after analyzing the feasibility of the amendments.
But crypto regulations are not as bad as we think. If anything, they are in the interest of investors, which ultimately helps the industry sustain value. Many countries have taken the lead in pro-crypto regulations.
A stablecoin bill might be underway in the US
Pat Toomey used one of his last weeks as a Republican Senator before retiring from the U.S. Congress to introduce a new stablecoin bill that will create a regulatory framework for payment stablecoins. The Stablecoin TRUST Act of 2022 would serve as a framework for stablecoin regulation, he remarked. According to him, stablecoins are an “exciting technological development that could transform money and payments. By digitizing the U.S. dollar and making it available on a global, instant, and nearly cost-free basis, stablecoins could be widely used across the physical economy in a variety of ways.”
If the bill makes it through the Congress, it would permit non-state and non-bank institutions to issue stablecoins. That is, if they obtain a federal license created and issued by the U.S. Office of the Comptroller of the Currency (OCC), and the stablecoins are backed up by “high-quality liquid assets.” In addition to this, the stablecoin issuers must comply with a new public disclosure standard, outline the redemption policies, and provide regular attestations from authorized accounting firms.
Australia will license and regulate crypto service providers in 2023
The Australian government will introduce a framework for the licensing and regulation of crypto service providers in 2023, according to a recent announcement by the Treasury. The goal is to modernize Australia’s financial system and to develop appropriate custody and licensing settings to safeguard consumers.
The government will analyze the “digital assets that should be regulated by financial services laws” keeping in line with the “token mapping” efforts. It would list out the core traits of all digital assets in Australia, including the type, underlying code, and other defining technological features.
3. 2022 has weeded out the soil
2022 was ruthless to hollow tokens and flimsy projects, which had their eyes set on just building hype and misleading investors. What started out with the Luna crash spread like wildfire across the market, taking down many projects which had flawed foundations. While it didn’t spare any cryptocurrency, many bit the dust with no sight of return. The Luna collapse was followed by more, ultimately leading to the scandalous FTX bankruptcy.
Investors learned the hard way that weak projects can’t sustain value, no matter how much influencers are paid to shill them. On the bright side, they have turned their attention to projects that are exploring innovative use cases of blockchain technology. A closer look at the crypto market reveals that projects that continue to build value are performing well. A few good examples are Aptos, Hedera, Axie Infinity, Fantom, Theta Network, Synthetix, Optimism, Enjin Coin, and The Sandbox. Most of these cryptocurrencies have recorded double-digit growth in the last two to three weeks, to the pleasant surprise of the crypto community.
The mantra that rang throughout 2022 had been to continue building value despite the market setbacks. Projects that consistently pursued their goals, oblivious to the ups and downs in the broader market, have come out of the tunnel, it seems.
Blockchain games have found ground
Blockchain gaming projects, in particular, are trending. Gaming continues to be one of the fastest-emerging sectors. The integration of metaverse, NFT, and crypto incentivization has revived the market.
To say that the industry has garnered a large user base from the gaming population wouldn’t be an exaggeration. Traditional gaming, which has long been in the hands of a few gaming giants, can’t beat the unique value propositions of crypto gaming. The latter maintains a competitive edge with crypto rewards, fair tokenization of in-game assets, fast payout, and transparency – to name just a few.
Although the harsh winter of 2022 hit the market hard, play-to-earn tokens like AXS, SAND, and MANA are among the top-performing cryptocurrencies now. For example, AXS has climbed close to 32.08% in the last seven days and currently ranks #44 in the global crypto market. It underwent a renovation in late 2022, bringing forth new products and features that focus on game economies, decentralization, and community empowerment. Axie accessories, the first mini-game for NFT landowners, and additional features for the Land alpha game were received with enthusiasm, creating engagement in the community for good.
Axie Infinity 1-month price history, 24 Jan 2023, Source: CoinMarketCap
Similar projects like The Sandbox, Decentraland, and STEPN have also seen a significant influx in the last few weeks. The new research and development in the metaverse, VR, and AR sectors expedited traction to blockchain gaming.
As per the DappRadar x BGA Games Report, blockchain games and metaverse projects raised $1.3 billion during Q3 2022. To give you more perspective, gaming activities accounted for almost half of all blockchain activity tracked by DappRadar across 50 networks.
4. Blockchain penetration is on the rise
Most businesses have marked their online presence in the last two decades, whether it is through social media, e-commerce, or web marketing campaigns. Keeping pace with technology is no longer a luxury, but a necessity for businesses. If a company website seemed like an accessory in the early 2000s, it is a necessity today.
Web3 investments give hope
The time has come for businesses to mark their presence in Web3, too. Tech giants lead the way, by making huge investments in blockchain research and development. For example, Microsoft participated in a $46 million investment round to back Korea-based blockchain gaming operator Wemade recently, which was selling convertible bonds. Microsoft purchased $14.8 million in these bonds. M12, Microsoft’s venture capital fund, also led a $20M Investment round for the First Decentralized Data Warehouse. The project will transform any central database into a trustless data source connected directly to smart contracts, using its “proof-of-sequel” cryptography.
Google is another prominent company that has been aggressively investing in blockchain. Google’s parent company Alphabet invested over $6 billion in digital asset companies from September 2021 to June 2022 together with other major corporations in the legacy financial system.
NFTs as a marketing tool
Traditional industries are more open to blockchain now, as leading brands and celebrities have joined the blockchain wagon. We saw many celebrities like Cristiano Ronaldo, Jimmy Fallon, Justin Beiber, and Paris Hilton take their plunge into NFTs over the last two years. Brands like J.P. Morgan, Nike, Adidas, and Samsung have marked their presence in Web3 too. Fashion icons like Gucci, and Dolce & Gabbana launched digital collectibles that fetched as much as some of their products.
Beyond the hype
While it may seem like blockchain has been reduced to a buzzword, that is not the case. The technology holds a lot of potential and developers are putting it to good use. Many projects that explore relevant use cases of blockchain in real estate, entertainment, healthcare, education, and climate action have come forward recently.
Blockchain integration seems to be working well for projects that started out in Web2, too. A good example is The Sandbox, of course. And a recent example is Benji Bananas – a simple, engaging rope-swinging mobile game that anyone can download and play for fun. It integrated play-to-earn (P2E) mechanics underpinned by Ape Coin (APE) recently. The indirect alliance with the Bored Ape Yacht Club ecosystem paid off for the game in 2022. It also started a P2E gaming tournament last year, which improved its visibility among the crypto audience.
Traditional projects are now more willing to experiment with blockchain technology, inspired by the unparalleled transparency and decentralization it offers.
Another factor that accelerates crypto penetration is the mobile experience. DappRadar reveals that only 9% of users access Web3 via desktop. A substantial 48.2% favor mobile access, demonstrating the significance of the focus on convenience and flexibility when designing blockchain applications. Many blockchain projects are launching mobile versions and applications to lure in the new-gen user who spends most of his/her time on the phone.
5. Steady flow of funds to promising blockchain projects
Despite the ebbs and troughs in the market, promising blockchain projects have been winning investor confidence. Early-stage fundraising rounds of projects that make creative use of blockchain, in particular, have experienced increasing traction. Play-to-earn and move-to-earn projects are taking the larger slice of the cake.
A good example is Fight Out, which is building a blockchain fitness app and a high-end gym chain that will be anchored by advanced move-to-earn mechanisms. The platform’s gamification and metaverse tools have caught the eyes of crypto and fitness communities, fuelling traction to the $FGHT public fundraising rounds.
Fight Out Mobile Companion App
As we have seen in the past, traditional fitness applications and gyms have failed to retain customers. It is obvious that we need more than just a gym membership and dozens of notifications to get out of the couch and sweat it out. If gyms are too archaic for the modern lifestyle, fitness apps are not engaging enough. They also raise concerns about data privacy and security.
The Fight Out Companion App helps you become fighting-fit in the real world and the metaverse, by giving workouts personalized to your goals and ability. It tracks your progress and achievements and then integrates them into your Fight Out soul-bound digital avatar.
Fight Out does more than just boost morale. To begin with, you can convert the REPS rewards accrued in your account to buy gym passes, merch, private sessions, and NFT cosmetics for your avatar. The metaverse token of the Fight Out ecosystem is FGHT, which you need to compete in leagues, tournaments, or special game modes. It will be the sole cryptocurrency of the platform.
Investors are stocking up on $FGHT in bulk to take advantage of the early 50% bonus, signalling an early sell-out of the presale. The project stands out in the move-to-earn market with lower entry barriers and a diverse range of gamification tools, when compared to projects like STEPN. If the project unfolds as planned, the $FGHT token can fetch up to 20X returns for early investors.
Say goodbye to losing your gym motivation!
With Fight Out, you’ll be supported and motivated every step of the way on your fitness journey with our #MoveToEarn platform!
— Fight Out (@FightOut_) January 23, 2023
Another project that has caught the attention of blockchain investors is Meta Masters Guild (MMG), a pioneering mobile-first gaming guild dedicated to blockchain games. It is building high-end mobile games with play-and-earn integrations.
Meta Masters Guild
The first principle that underpins MMG is to never lose sight of the fun element. Being a play-and-earn project rather than a play-to-earn project, it shifts the attention back to the gameplay. Gripping gaming mechanics are integral to bringing traditional gamers aboard and strengthening the foothold of blockchain games, it points out. Most blockchain projects fall short when it comes to the entertainment aspect. MMG aims to bridge the gap.
It introduces three titles in the first stage that have the potential to bring traditional gamers aboard – Meta Kart Racers (a mobile-first PVP racing game where you must compete against other players in the Meta Kart Championship), Raid NFT (a turn-based fantasy fighting game where you should choose between several warrior classes), and Meta Masters World (a metaverse where members can explore games and experiences, collect resources, enter competitions, and much more).
You can convert the rewards earned in Meta Masters Guild (Gems) to $MEMAG tokens, which can then be staked or reinvested in the ecosystem through upgrades or cashed out in open marketplaces. The ongoing $MEMAG public fundraising rounds offer the best early investment gateway to Meta Masters Guild.
🚨 IMPORTANT ANNOUNCEMENT #MEMAGFAM 🚨
💪 Stage 2 of the $MEMAG presale is officially SOLD OUT! 💰
🙌 Thank you to our amazing community for your support! 🛡️
😉 Not to worry, there's still time to buy $MEMAG during stage 3 and secure your tokens! 💰
— Meta Masters Guild (@MEMAGgames) January 23, 2023