​Bitwise predicts the bankruptcy of at least one more major crypto company in 2023

What’s new? Experts at Bitwise Asset Management published a prediction assessing the prospects for the crypto industry in 2023. According to them, the market capitalization of centralized exchange (CEX) Coinbase will increase by 100% compared to the level at the end of 2022. In this, decentralized trading platform (DEX) Uniswap will surpass it in terms of the trading volume. Bitwise representatives believe that USD Coin (USDC) will surpass Tether (USDT) and become the world’s largest stablecoin. In addition, analysts expect at least one more crypto company to go bankrupt in 2023, with valuations exceeding $1 billion.

Bitwise’s prediction

What else did Bitwise predict? Analysts also assessed the implications of the release of the Shanghai upgrade to the Ethereum network, which will take place as early as March and will allow to unstake ETH. Bitwise believes that fears that the upgrade will cause a massive wave of sales are unwarranted, as it will also impose a one-step coin withdrawal limit. In addition, analysts, on the other hand, believe that the release of Shanghai will increase the number of ETH placed in staking by at least 50%, as investors will be able to set their own coin locking period.

Bitwise also believes that ETH will become more deflationary and the total circulating supply will drop by at least 1%. They expect the demand for Ethereum applications to be significantly higher in 2023 compared to 2022, resulting in more ETH being burned in transactions.

According to experts, the market recovery will be U-shaped rather than V-shaped. Cryptocurrencies have historically moved in four-year cycles, with three years of upturn followed by a year of decline. Analysts believe that in 2023, cryptocurrency has every chance to start recovering. However, this process will not be easy because of the massive crypto credit crisis.

The market will move sideways for a period of time before entering the next bullish phase. There is also a significant risk of another drop caused by the bankruptcy of one of the major crypto companies or regulatory actions. That said, according to experts, the next bull market will be the biggest and will bring new all-time highs and a wave of new applications that will affect the mass adoption of cryptocurrencies.

The initial promise of cryptocurrencies of virtually free and extremely fast transactions will finally become a reality in 2023. This will be brought about by a combination of the growth of Layer 2 (L2) solutions and the release of a planned upgrade to Ethereum called EIP-4844, which should reduce the average cost of transactions on the network by more than 1000%. As a result, the cost of transactions will be less than 1/10th of a cent.

Analysts said that the correlation of cryptocurrencies with stock markets will fall sharply, dropping below 0,5 and possibly as low as 0,25. A common criticism of cryptocurrencies over the past two years is that they have been highly correlated with stocks. Digital assets rose sharply during the bull market that followed the COVID-19 pandemic in March 2020 and peaked in late 2021 as the stock market began to retreat.

While macro factors will still be important in 2023, returns on digital assets will be driven more by cryptocurrency factors — what happens with technology, regulation, and other aspects that do not typically correlate with the stock market. The high correlation of cryptocurrencies with stocks is an anomaly, Bitwise said.

The US Congress will pass at least one significant cryptocurrency bill in 2023. The aftermath of the collapse of the FTX crypto exchange put cryptocurrency at the top of Washington’s agenda, analysts said. Even before that, however, Congress was preparing for numerous legislative initiatives, including measures to regulate stablecoins and steps to determine which agency should regulate cryptocurrencies. Experts speculate that the legislation will be ambiguous for cryptocurrencies: some parts of it will please the industry and others will cause concern. Overall, however, adding clarity to regulation will be good for digital assets, Bitwise believes.

On October 3, Bitwise announced the launch of a new exchange-traded fund (ETF) that includes organizations in the field of Web3. Created by cryptocurrency experts, the fund, called Bitwise Web3 ETF (ticker: BWEB), offers retail and institutional investors the opportunity to invest in companies creating the next iteration of the Internet.