2022 has been a tough year for investors in general and particularly for digital assets “bagholders”. The industry has been here before and has always surpassed expectations in the years to follow. We are now 14 years into the experiment of using public blockchains to disrupt money, financial services and internet architectures. So what can we expect for 2023?
All in all, it has been a tough year for mainly all asset classes in a strongly correlated environment. Looking at S&P500 worst performers, tech stocks were not the only ones to be hurt!
On the macro side, inflation will probably continue to remain above the Fed’s 2% target for quite some time and the Fed Funds Rate can reach a ceiling of around 5%. A Fed pivot would definitely be the positive sign for risk assets.
Continued rate hikes will also likely bring rising unemployment & lower GDP expectations. This is what the yield curves currently suggested: a likelihood of recessionary conditions in 2023.
Consistent interest rate hikes and quantitative tightening granted us a tough year.
A quick review of 2022 would highlight :
Q1 - Macro, war and Luna
Q2 - Macro, Luna collapse and contagion
Q3 - Ethereum merge and contagion
Q4 - FTX and contagion
Fortune did not favour the brave with the Bitcoin decreasing by almost 65% in 2022. But on-chain evidence suggests users are moving assets into self-custody (of course!). BTC held by exchanges is at the lowest level in over 4 years and addresses containing at least 1 BTC are reaching 1 million.
Developers in the Bitcoin ecosystem are still building as Lightning Network adoption continues to increase.
Year over year, transaction volumes of digital assets have surpassed small payment processors and have begun to rival Visa and Matercard.
As the cryptocurrency valuation was declining through 2022, naturally, stablecoins became the winners of the year and increased their market dominance. Theter, USDC and BUSD , the 3 major stablecoins , have a combined market cap representing 41% of the Bitcoin’s market cap.
Much needed regulatory clarity in the US will pave the way for further institutional adoption.
The FTX proceedings may incentivize more rapid progress with regulations, and we observed both positive signals related to U.S. spot BTC ETF launches and more coherent classifications of tokens as a plausible outcome by the end of the year, with exchange tokens being particularly exposed for potential security classifications
Rome was not built in a day.
Bitcoin and other digital assets will continue building solutions in payments, banking, & investing which are cheaper, faster, & better than anything else currently available.
Below is a list of some of the more exciting things that happened in 2022 that I believe will increase adoption worldwide:
· Massive incumbents in traditional financial services
FIDELITY, BLACKROCK, GOLDMAN SACHS, BNY MELLON, JPM, FRANKLIN TEMPLETON, CITI, CME, PAYPAL, CBOE, NYSE, VISA, AMERICAN EXPRESS
· Traditional investment firms started to deploy resources and leverage public blockchains
KKR, HAMILTON LANE, CITADEL, APOLLO, BREVAN HOWARD, MILLENIUM
· Some of the largest public and private technology companies are leaning in WEB3
META, GOOGLE, STRIPE
· Some of the largest energy companies are figuring out mining may be a good thing for their operations
ConocoPhillips, EXXON, SHELL
· Other notable companies are entering the space
NIKE, Dolce&Gabbana, WALMART, CHIPOTLE; TICKETMASTER, REDDIT, STARBUCKS; GUCCI; PRADA; TIFFANY, ADIDAS ; REEBOK, BMW ;
It may be an interesting time to build gradual exposure in the new crypto asset class. As we advance into the next year, patience and long-term positioning will be key. Using volatility to generate yield can thus be an interesting strategy.
Criptonite-Wave can be your turnkey solution to navigate this new asset class. We would be glad to present you with our digital investment solutions.
Nobody said the road will not be a bumpy one!