Three major crypto institutions, among others, recently shared their forecasts for the year 2023, and Ethereum appears to be a clear choice. Other big problems for Coinbase, Darma Capital, and Cumberland are investors moving to better projects, the explosion of new ideas from creative destruction, and the need for some fundamental changes to the crypto business as a whole.
According to Coinbase, the biggest cryptocurrency exchange in the United States, cryptocurrency markets won’t be completely separate from traditional financial markets until early 2023. This is because investors will focus on projects that are well-thought-out and have working token economies and well-developed ecosystems with liquidity.
The Ethereum Ecosystem Will Succeed, According to Coinbase
Additionally, according to Coinbase, the year ahead may be the year of layer-2 blockchains, as the market for Ethereum’s layer-1 rivals is oversupplied. As a result, Ethereum’s rivals will have challenges, according to Coinbase. Binance Smart Chain (BSC) and Ethereum (ETH) will continue to operate normally; however, TVL will migrate to layer-2 alternatives such as Polygon, Optimism, and Arbitron.
Furthermore, according to Coinbase, NFTs will experience another boom as they advance toward integration with customised IDs, ticketing, subscriptions, real-world assets (RWA) tokenization, and supply chain logistics. Additionally, more businesses will incorporate NFTs for consumer involvement and brand growth.
The American exchange anticipates that regulatory clarity will be essential to the next cycle as a result of human error leading to the failure of FTX and other projects in 2022. Coinbase predicts that institutional lending will take off and flourish in 2023 with stronger due diligence procedures, once the bottom is reached. This prediction may come as a surprise to some.
Regarding Bitcoin, the most valuable cryptocurrency by market cap, Coinbase believes that, contrary to what some analysts have claimed, the Mt. Gox distribution will not be the major event in 2023. Whoever wanted to sell has already done so. The distributions will also be spaced out.
Due to the Merge, Coinbase has a bullish view of Ethereum. Due to the switch to “proof of stake,” Ethereum is more efficient and deflationary. Furthermore, the U.S. exchange forecasts that as soon as withdrawals from the deposit contract become feasible following the Shanghai hard fork, the amount of liquid ETH will keep decreasing.
Darma Capital forecasts ETH will outperform bitcoin
Like Coinbase, Darma Capital sees the Ethereum Merge as a significant move that will boost the value of ETH. The Shanghai hard fork, which will raise ETH staking, is the same.
On a technical level, Darma expects innovations from Lido Finance and Obol Network, but views proto-danksharding for ETH as a game-changer. Darma thinks that most of the next wave of consumer-facing applications, like Arbitrum, Optimism, and Immutable, will be built on L2s.
According to Darma, “Vaporwave Chains” like EOS and Cardano will disappear as the general public loses interest in them as a result of a lack of on-chain adoption.
The outlook for Bitcoin is also not promising. The organization claims that although Ethereum will achieve the “flippening,” BTC will lose market share to altcoins. According to Darma Capital, this could be the result of a lack of utility, ESG issues, and a “failure as a digital gold.”
Generally speaking, the digital asset risk management advisor anticipates that the macroeconomic environment will cause the U.S. Federal Reserve to hold off on raising interest rates until the second quarter of 2023. As a result, Q3 2023 will see another bull run on the cryptocurrency market.
Three Developing Stories
In 2023, Cumberland DRW LLC anticipates that tough market conditions and clear regulatory frameworks will inspire creative solutions. Keeping this in mind, the organization says that small investors would give more weight to exchanges that offer transparency, spot trading without prefunding, ISDAs, and CSAs.
As three developing stories, the business highlights Bitcoin and Ethereum as reserve currencies, NFTs for IP tokenization, loyalty programs, and customer interaction, calling out MATIC, LOOKS, XMON, and GameFi in particular.
The Ethereum (ETH) price was $1,218 at the time of publication.