Since the beginning of 2022, crypto investors have been on edge. Although Bitcoin was up 61% and Ethereum 409%, these leading currencies began trending downward toward the end of 2021. Positive market momentum gained throughout 2021 was drowned out by bearish trends early in 2022. The stock market took a hit due to Russia’s invasion of Ukraine, surging inflation, and other economic challenges. Cryptocurrencies echoed this market dip as they declined during this period at a much faster rate than the S&P 500 index. While many are looking for clarity to questions left unanswered in previous years, the future of crypto in 2023 will set the course for investors in years to come.
Nobody knows for certain what the cryptocurrency market will look like throughout the next year. With more questions than answers, many remain skeptical. However, there are a number of factors you should keep an eye on that will directly impact cryptocurrency as the market continues to evolve.
The future of crypto in 2023 will largely depend on:
As these factors are addressed and resolved, the long-term future of the cryptocurrency sector will become more clear. The picture may start to take shape by the end of 2022 as governments and developers begin to certify their long-term crypto plans.
In 2023 and beyond, the goal standard is to have crypto regulated by a global framework. Crypto regulations currently vary country by country which proves to be problematic. An international standard would greatly benefit investors, businesses, and banks alike as it protects them by safeguarding international financial stability and provides clear guidance for innovation.
Although things remain uncertain at a global level, on a federal level, crypto regulations continue to move forward. The Biden administration has orchestrated a team of highly knowledgeable and qualified analysts to shepherd the crypto regulation process. This team is led by Gary Gensler, chairman of the Securities and Exchange Commission, and Janet Yellen, U.S. Treasury Secretary. Yellen has offered a skeptical view of the cryptocurrency market, while Gensler has spent time encouraging and teaching students about the sector at MIT.
With highly qualified individuals steering the cryptocurrency regulation process, there’s hope that a system which suits investors, consumers, cryptocurrency businesses, and traditional banks can be developed. Despite congress introducing new cryptocurrency regulation bills early in 2022, the sluggish speed of bureaucracy has halted their initial momentum. However, this may not be a bad thing as many agree that issues of this significance deserve additional analysis and consideration.
As the legal framework of crypto is being worked out by government entities, cryptocurrency could soon be used by U.S. consumers on a large scale. It isn’t likely that the U.S. will verify cryptocurrency as legal tender in the near future. However, it is likely that retailers will start accepting payment through these digital currencies. As the use of crypto continues to increase and becomes more widespread, regulatory agencies and politicians will be led to take action much sooner. Even if an overly strict regulatory framework is to be introduced, this will likely be an improvement. Especially, compared to the disarray and disorganization of the current system. In the midst of uncertainty, one thing is for sure, the future of crypto in 2023 will largely depend on the international and federal regulation of cryptocurrency.