Summary Of All 2023 Crypto Market Outlooks
Summary Of All 2023 Crypto Market Outlooks
From Fisher8, VanEck, Messari, and many more. All summarised and distilled.
Preface: This really took a lot of time - it’s a labour of love. Do me a favour by subscribing to show your support, and never miss another newsletter from me. Come 2023 I’ll be doing more research and uploading more content!
With the year coming to an end, many companies are publishing their 2023 Crypto Market Outlooks. I’ve decided to summarise these market outlooks for easier reference, and also because I thought it’d be interesting to see what most companies are bullish on. Now, let’s dive in!
Overarching Biggest Points
Author’s Note: Below are the trends that appeared the most in all the market outlooks – trends that many of these companies are all simultaneously expecting to come true.
RE: Markets
2022 was the great reset necessary for a future uptrend
Market rebounds in H2 2023
BTC is still one of the purest plays for the upcoming global trend shift as sovereign currency sentiments change
Flight to quality tokens like BTC / ETH – fundamentals have not changed, and they’re still building
Altcoins to underperform / investor appetite for alts just isn’t there, but certain alts will still outperform – e.g GMX
Bitcoin mining capitulation will lead to a consolidation of the mining space – uneconomical miners will be forced to shut down
RE: DeFi & NFTs
App-chain thesis to be increasingly popular
DeFi to grow over CeFi as users realise that DeFi have fulfilled their use-case, especially after the collapse of CeFi in H2 2022.
TradFi to start losing market share and brain drain to DeFi, and CeFi will consolidate while DeFi grows
TradFi money to come in and build on De-Fi / TradFi to tokenize assets more in 2023 / Permissioned DeFi to be built
Real-world asset-backed De-Fi / Undercollateralized De-Fi
The biggest way to onboard retail will be TradFi that learn how to operate DeFi
Zero-knowledge adoption and use-case will grow tremendously
2023 is the year NFTs explore use cases outside of art – digital identity, memberships, subscriptions, etc.
Stablecoins as one of the leading narratives - DeFi protocol all jumping on the stablecoin train
RE: Some of the other interesting ones
5x more stablecoins in circulation than in 2021, indicating that market participants are willing to remain digitally native during a downturn; easy deployment once confidence returns
Stablecoins as the new narrative – stablecoins are one of the largest opportunities in crypto with ubiquitous use-cases – as such, many DeFi protocols have started launching their own stable.
Regulation is at an inflection point – every report more or less gave their idea of what regulation “should be like”, but at the end of the day it’s out of our control
A new decentralized stablecoin will reach $1B in market cap.
Fisher8 Capital
Lessons learnt:
Nothing can go uponly forever
Nothing is too big to fail - we are not backed by the government, so no firm will get bailed out
Mavericks in bear markets give opportunities to outperform even in a bear market
Altcoins to underperform majors
Major unlocks like $dYdX, $SAND, $GMT, $OP, $1INCH, $APT;
Flows from CeFi to DeFi as DeFi slowly improves to offer similar performance to CeFi ; unlikely that the next cycle is not accompanied by a much larger dependency on fully on-chain products
Changing primary market dynamics - projects won’t be in such a hurry to launch liquid tokens, and ventures will be more selective in their investments. Also, expecting more dry powder to flow towards 2023 funds
PMF and Originality remain key ingredients for success
Overall thesis for 2023 is to not bet on new ideas with it being difficult to raise high-quality talent. Instead, thesis is to bet on existing teams with reasonable valuations. (2017 ICO teams that became unicorns like AAVE, SNX) - the goal is to identify similar tokens
Read the full Fisher8 report here.
Pantera Capital
Author’s Note: Quite straightforward, broad strokes of the brush were used in making these predictions. But the one prediction I do like is on blockchain analytics - I have long since said that the top 3 most profitable businesses in this space are the exchanges, miners and analytic platforms. Maybe not the miners anymore, but I do believe analytics is still an incredibly untapped space.
QOTD: “If crypto has proven anything through its existence, though, it has proven that it can survive unfavourable times. Because of this, the industry will enter 2023 with a level of strength and durability that 2022 has given it. “
DeFi will continue to grow while CeFi consolidates
DeFi has shown resilience in the past year of CeFi collapses.
Will see more complex and interesting applications of DeFi, eg. synthetic assets, self-custody wallets, and prediction markets.
For CeFi players, the industry will consolidate into highly regulated players like Coinbase
Tremendous zero-knowledge adoption and use cases
Institutions will increasingly tokenized financial assets
Real-world assets / more assets represented on-chain
Blockchain-based loans, real estate real-world assets, and an overall surge in startups bringing TradFi into crypto in a regulatory-compliant way.
More analytics companies will emerge to leverage blockchain data
Blockchain analytics will continue to be essential in understanding on-chain transactions, and we will have broader applications - like blockchain indexing, wallet labelling, etc.
Developer tooling stack will continue to grow
Developer tooling eliminates the repetitive and tedious part of the job - more sturdy tooling will be provided as more devs enter the scene. This means faster build times and easy deployment for devs.
NFTs that will provide some kind of value
Utility NFTs will grow; More traditional companies will also adopt NFTs; all in all, using NFTs to bring something valuable to their owners.
End Quote: “Our job as an industry is to make that technology accessible, reliable, and safe for users around the world in order to usher in an era of financial transparency, dependability, and autonomy”
Read the full Pantera Capital report here.
VanEck
Author’s Note: I really liked VanEck’s in particular, because they threw in very wacky ideas which are always fun to think about, alongside fun predictions with great elaboration. Overall, a great piece that’s super easy to summarise, mainly because they did it for me.
Bitcoin will test $10-12K in Q1 amid a wave of miner bankruptcies, which will mark the low point of crypto winter.
Many miners will restructure/merge, with BTC mining being largely unprofitable right now.
In the second half of 2023, Bitcoin will rise to $30K. Lower inflation, easing energy concerns, a possible truce in Ukraine, and a turnaround in M2 supply will power the start of a new bull market.
An end to the war will mean a reversal in energy policies, making BTC mining more palatable.
In developed markets, more consumers will be enticed to the idea of BTC as a store of value and a hedge against M2 inflation.
In emerging markets, the focus is more on alternatives to dollar hegemony.
Financial institutions will tokenize more than $10B in off-chain assets.
Institutions will use blockchains
Real-world loans will gain increasing traction, and the tradfi industry will test the feasibility of asset tokenization and DeFi.
Real-world assets will also see larger adoption / practical innovations.
Brazil will emerge as one of the most crypto-friendly countries in the world and will tokenize a portion of sovereign debt offerings on the blockchain.
Twitter will compete more directly with payment services by integrating more payment functionality akin to WeChat Pay.
A nation will announce it is adding BTC and other digital assets to its sovereign wealth fund.
A new decentralized stablecoin will reach $1B in market cap.
Ripple will lose the SEC lawsuit.
Gary Gensler will leave the SEC.
Total web3 monthly gamers will rise from 2M to 20M as multiple triple-A crypto games come to market.
Ethereum will enable withdrawals from Beacon Chain.
Read the full VanEck report here.
Coinbase
Author’s Note: Coinbase had some interesting insights here and there – overall an enjoyable read.
Three key themes in 2023:
Flight to quality – favour higher-quality tokens like BTC / ETH due to maturity / tokenomics / market liquidity / fundamental thesis
Creative Destruction – low liquidity for alts, bitcoin miner capitulation, NFT downtrends all give time for the market to consolidate and take a breather before taking a step forward. One step back, two steps forward.
Foundational reforms – urgency for regulatory clarity, reform of crypto lending practices, and a path forward for institutional adoption through more risk management
Percentage of BTC holders underwater is nearing 50% - just below historical cyclical highs of 2011, 2015 and 2019 – major inflection points
Miners are in trouble, with many big miners acting as marginal sellers
Mt. Gox may not be bearish because funds have acquired claims and are more likely to hold + creditors who were involved are pre-2014 – they might be rich already
In the L1 game, BNB has been the clear winner in 2022 in increasing its valuation, followed by MATIC – while AVAX and SOL have come down from their peaks
Fat protocol to fat application as the new thesis – instead of value accrual to the blockchain layer, the thesis is now that the value of things on top of the blockchain eventually surpasses the value of the underlying blockchain
5x more stablecoins in circulation than beginning of 2021, indicating market participants willing to remain digitally native during market downturn
Stablecoins as the new narrative – stablecoins one of the largest opportunities in crypto with ubiquitous usecases – as such, many DeFi protocols have started launching their own stable.
NFTs long-term fundamentals to act as digital ownership still remains intact. Corporations and brands will continue viewing NFTs as a differentiated form of marketing spend, creating more real-world use-cases
Read the full Coinbase report here.
Messari
Author’s Note: At 168 pages, I decided to only include the points I found interesting. Most (if not all) of these came from Book 2, not from Book 1.
The North Star of Ryan Selkis (Founder of Messari)
The core substance of crypto: In a world where few, if any, of these institutions are viewed as both competent and ethical, crypto offers a third path that seems increasingly credible, despite its volatility.
Bitcoin is an increasingly important non-sovereign currency that will see greater dominance - Bretton Woods 1 was backed by gold, Bretton Woods 2 by inside money (Treasuries), to the new Bretton Wood 3 backed by outside money (gold bullion and other commodities); long term trend towards monetary debasement
Stablecoins should continue to build out use-cases as they have proved to be our most powerful export. Don’t fumble the bag.
There still is a need for new types of stablecoins, like an inflation-resistant one, or even real-world asset backed stablecoins
What Vitalik’s excited about - it could be a core area to focus on, seeing as to how every application envisioned in the ETH whitepaper is now enormous
Privacy-preserving & real-world asset backed stablecoins
Prediction markets
Identity modules around things like authentication, ENS, decentralized social, proof-of-humanity, sign in with ETH, etc.
DAOs
Hybrid applications that use blockchain and non-blockchain systems, like auditable centralized services
Expect more novel tools and protocols that address the multi-rollup world
Solana rebounds in 2023
TAM for DeFi remains massive - $15 billion DeFi, $23 trillion global financial services industry. Also, Uniswap, Lido and OS now generate more monthly fees combined than the entire ETH L1 - DeFi dominance vs Ethereum will grow in 2023
Most AMMs will fail to stand out of the pack & other DExs are not going to dethrone Uniswap
Real-World collateralized DeFi will see more implementation, like how MakerDAO is now dabbling into US Treasuries
Undercollateralized DeFi lending will see more innovation, as history has shown that platforms such have Maple and Goldfinch seem to have great risk management compared to CeFi undercollateralized lending
Lido and Rocket Pool strike as the next major long-term blue-chip DeFi assets, with the prediction that Lido will be the top fee generation dApp in 2023. Staking on ETH in general will see greater growth.
dYdX migration will be one to keep your eyes peeled for, as it could create the highest quality perps protocol on the market and compete with centralized alternatives
On-chain asset managers could see emergence as fundamentals take over and smart beta products / portfolio copy trades / sector specific plays still have huge gaps to fill - more innovation will be done on this side.
Bullish on new novel markets like Nori / Flowcarbon which try to revamp the carbon trading markets, by tokenizing carbon offsets
Bullish on real estate finance in crypto - tokenized real estate, etc.
Bearish on prediction markets because people have always talked about it but nothing is being done
There’s no such thing as bullish unlocks
NFT market playing out like Bitcoin in 2014 - incredibly volatile bubble that crashed, but also marks the beginning of the decade-long growth of Bitcoin into digital gold, and similarly will mark the beginning of NFTs growing to compete with physical art
PFP collections’ value proposition lies in how they build the community, and while it’s hard to understand the allure from an outsiders perspectives, it seems to be the only thing growing and working out so far
The institutions are here, for NFTs - tokenized fashion, digital drip, and many more have appeared in the past year.
P2E is here to stay, but it’s currently overhyped right now - bearish, until valuations drop for entrepreneurs in this sector
Bullish on AR/VR future, but not betting the farm on it happening anytime soon
Bullish Decentralized Social, alongside crypto-powered identity
Read the full Messari report here.
New Order
In 2023, they expect the unwinding of more FTX positions and bad debt to continue negatively impact the markets - not everything has been found. More insolvencies will be discovered
On the regulatory side, the breach of trust will set back progress and consumer confidence
But the 2023 outlook is optimistic - the year of visionary capital, where the ones who stay work tirelessly to bring crypto from speculation to core components of society
EigenLayer will be the most important innovation for ETH
The ability to leverage your existing stake to other layers through re-staking, allowing ETH stakers to have much more flexibility with staked capital while extending the same trust of ETH’s layer to other infra
As such, the innovation of such tech in 2023 will be one to watch - as it might dramatically change how decentralized networks are built
Blob transactions will not fix scalability issues
Modularity has to be reached first for them to fix ETH scalability – but that will come with lots of hurdles.
The data market will be extremely competitive as the amount of rollups and modular execution demand grows – we will see price competitiveness around gas
Modularity is essential in maintaining decentralization while scaling
ZK-Rollups will not see significant traction in 2023
Lack of product readiness, and inability to achieve sufficient decentralization
ZKPs will see usage though – whether for interoperability, or data sharing purposes.
Application-specific blockchains built on Layer 2s (aka Layer 3s) as the competitor to Cosmos
A fully modular blockchain infra stack that includes a general-purpose L2 with customizable L3s will beat monolithic app-chains because they’re not as efficient in terms of scalability
App chains like Cosmos are positioned to gain traction in 2023, but with the eventual deployment of L3s, app-chain narrative will switch from monolithic to modular ecosystems
The current version of Interchain Security of Cosmos won’t see a market fit in its current state
Mesh security will lead to validator centralization for Cosmos
Data Availability Sampling will revolutionize the development of blockchains for Celestia
Key Infra will be built to address the bottleneck of liquidity fragmentation in 2023
Either through cross-chain communication, or shared liquidity layers (e.g SLAMM cross-chain liquidity model)
Exclusive Orderflow as the most important problem to solve in 2023
Value extraction of MEV should accrue to users or validators (providers of supply and demand), not to builders and searchers
Extracting and redistributing MEV to be the most important problem to solve
Read the full New Order report here.
Arca Funds
Author’s Note: Arca Funds’ predictions are fairly straightforward, and I feel that it’s just an extension of the trends that we’re seeing - so no incredibly new insight, but still good to read and understand the most “direct” path forward
More businesses in crypto will focus on the core tenets - decentralization, transparency and auditability
Digital asset adoption will accelerate in areas with underdeveloped financial markets
Colombia plans to create digital currency, and countries like Argentina face a YoY inflation rate of 79%
Long-lasting adoption will be driven by some sort of tangible utility
NFT ticketing market, NFL fan tokens, JP Morgan using blockchain for collateral settlement
Digital assets as an asset class will continue to decouple from traditional markets and remain uncorrelated for the foreseeable future
Blockchain growth will be driven by the onboarding of Web2 and Tradfi corporates
Current companies are "the “dot coms” of internet - the 2nd “dot com” wave will be traditional companies implementing the internet for business use
TradFi will start to lose market share to DeFi
TradFi companies will see more of their employees using professional development plans to learn about blockchain technology
More formal education in blockchain tech will be made available
More Web2 companies will continue to utilize NFTs to strengthen customer relations
Gaming industry will continue implementing Web3 tooling
TradFi companies will focus on tokenizing traditional assets, especially in private markets
A universally accepted institutional stablecoin will be developed and launched
US regulation will be more dovish, paving the way for increased adoption overall
Read the full Arca Funds report here.
PwC
Author’s Note: It’s always good to see a TradFi companies’ take on Web3. PwC offers a good short and sweet outlook, and I particularly like the last point.
Disruptive tech often passes through cycles of speculative excess, but after the dust settles, transformative companies will emerge. Digital assets are no different – they will eventually reinvent much of the economy
Trust has to be re-established before digital assets can reach their full potential – if every few years a major institution fails, many people will stay away
Market success will hence come to those companies that build trust in digital assets. For example, making self-custody convenient and safe for end-users
Adequate risk management procedures, practices from TradFi will be used to build trust
Regulation will be seen, but not a complete framework
In the face of regulatory uncertainty, everyone should keep a close eye on developments.
TradFi will get it right
Forward-looking legacy financial institutions will be the real winners, and the dream to make TradFi obsolete is unrealistic
Legacy finance institutions have trust – if they can utilize the underlying technology, they’ll be able to scale safely
NFTs and Web3 will be everywhere – but invisible
NFTs will be ubiquitous – digital assets will be used in everyday transactions, but people will never know it’s Web3 tech. This will help grow Web3 immensely.
Digital asset advocates will be driven by merchants, social media and other consumer-facing companies that want a larger role in the digital economy
Read the full PwC report here.
a16z
Author’s Note: Very technical outlook, and not much commentary on the overall landscape of De-Fi / product market fit.
Blockchain goes mobile: more users will be able to verify blockchain data directly from devices, and have true decentralization for mobile frontends.
In the zero-knowledge scene, more transparent trusted setup ceremonies will be built, and better constructions for threshold elliptic curve digital signature algorithm will be seen.
Developer onboarding for zero-knowledge will ramp up, as education materials and resources become more available.
A practical deployment of the Verifiable Delay Functions will be seen
Fully On-Chain games will be built
Non-transferable tokens (Soulbound) will find a use-case
Decentralized energy - microgrids, carbon credits on chain, renewable energy certificates, etc.
Read the full a16z report here.
Thanks for your time,, you did a tremendous job here!