2022 was a roller coaster year for crypto. In addition to the bear market, we also saw the fall of many famous crypto firms. From Voyager to FTX, the industry faced one blow after the other. However, with the onset of 2023, the horizon now looks a lot more hopeful. If there is one thing 2022 taught us, is that nothing can be predicted with 100 per cent assurance in today’s crypto market. But no matter what the consequence may be, it is indeed interesting to analyse some trends that could possibly take the industry by storm.
From the local bottom, BTC is up more than 50%. Some altcoins have had similar run. A lot of crypto investors are anticipating that we are already in the next bull run and some major trends are currently playing out. Cryptocurrency in 2023 could give positive returns to those who invest into these trends early.
In this article, we are going to take through these latest crypto trends that we believe you must look out for now.
Crypto Trends to look out for in 2023
China Narrative: China Unbanning Crypto trend (latest trend)
At the point, Chinese narrative is playing in the world of crypto.
The surge in prices of Chinese coins, such as Filecoin, VeChain, Neo, Conflux, and Qtum, is being driven by the China narrative, which has become increasingly popular among crypto market participants.
The recent announcement of Hong Kong legalizing crypto trading for its residents from June 1, 2023, has sparked a bullish sentiment, leading to substantial gains for these tokens. The contributions of Chinese content creators and progress in the respective crypto projects have further added to the momentum.
Additionally, analysts have observed significant liquidity injections by the People’s Bank of China, which have coincided with the rise in crypto market capitalization, supporting the notion of the China easing narrative being legitimate. Given these factors, traders and experts anticipate continued gains until June 2023 and believe the China narrative will remain influential.
Zero Knowledge Rollups
Zero-knowledge rollups (ZK-rollups) are a type of layer-2 solution that enhances the scalability of blockchains, accelerating the validation of transactions while keeping gas fees to a minimum. By integrating on-chain and off-chain mechanisms, ZK-rollups outperform traditional layer-1 blockchains.
Some of the most exciting upcoming projects in the ZK rollups space include zkSync, Starkware, Scroll, Aztec, and Polygon’s zkEVM.
Zero Knowledge Layer1
For years, ZK has been viewed as a powerful tool for safeguarding the privacy, security, and integrity of blockchain applications. While finding ZK-native coders for a ZK-focused chain may present a challenge, it is worth considering that when Ethereum was initially introduced, there were doubts about the need to learn a new language to write smart contracts.
However, due to the benefits of the new paradigm, many developers eventually embraced the change. It is expected that a similar pattern will unfold with a ZK layer 1. The substantial investments and progress made in zero-knowledge proofs suggest that the technology is maturing and becoming increasingly viable for widespread adoption.
Learn more: Best ZK projects to look out for in 2023
Even though AI has been around for a while now, it was only recently in the last couple of years that we saw the space boom. As we move forward, the industry is predicted to grow even further. According to a recent IDC report, the adoption of AI is expected to surge from $8 billion to $47 billion by 2023. Moreover, the report projects that by 2023, 90% of companies with revenues surpassing $25 million will have incorporated at least one AI-based initiative.
AI Narrative: Top AI based Cryptocurrencies to Keep an Eye Out in 2023
Liquid staking refers to the process of users locking up their tokens to help secure a proof-of-stake (PoS) blockchain network. This approach enables smaller crypto holders to make use of their holdings by contributing them to a liquid staking pool, thereby earning passive income. Recently even CoinDesk reported that “The sudden price uptick of governance tokens for the largest liquid staking protocols – Lido Finance, Rocket Pool and Frax Finance – was a counterweight to the decline of the broader crypto market.”
Some of the good Liquid Staking Crypto Tokens to look out for in 2023 include Lido DAO, Frax Shares, Rocket Pool, ANKR and many more.
Liquid Staking Narrative: Top LSD Protocols 2023
Similar to the past year, the upcoming year 2023 is likely to bring exciting developments in the world of crypto derivatives. The growth of new crypto primitives, such as structured vaults, everlasting options, and experimental derivatives, will continue to drive innovation in the space. The volume of crypto derivatives is expected to keep increasing due to the growth of DeFi applications and the entry of more professional and transparent intermediaries into the industry. These factors will contribute to making 2023 a notable year for crypto derivatives.
Options are a type of derivative contract, which can be implemented through smart contracts in the context of decentralized finance (DeFi). The value of an option is contingent upon the value of its underlying asset, which can include a range of assets such as stocks, cryptocurrencies, commodities, and more.
Even though it is an area that is still developing, projects like Premia and Opyn that fall under this category seem to have some potential in the future.
Next Generation Layer 1
Next Generation blockchains have been on the list of predicted trends for a few years now and will continue to do so even in the coming years until we find a highly scalable blockchain that is secure as well as decentralized. Previously networks like Solana, Avalanche, Phantom, etc did well in the last bull run and were positioning themselves even better than Ethereum. However for the upcoming year, protocols like Aptos, Sui and Celestia are the ones that could prospectively do very well. They have had massive funding rounds and bring with them reputable backing.
Layer 2 Blockchain
Layer 2 blockchains are a type of blockchain technology that functions on top of Layer 1 blockchains. These secondary blockchains are designed to enhance scalability and efficiency, addressing the limitations of Layer 1 blockchains. Due to their outdated and less effective algorithms, Layer 1 blockchains are generally slower in comparison to Layer 2 blockchains. However, by implementing Layer 2 blockchains, the speed and performance of blockchain technology can be greatly improved.
The Omnichain protocol is a platform that enables the hassle-free transfer of assets between different blockchain networks. The main objective of Omnichain is to offer a secure and efficient method for transmitting generic messages between any two smart contracts on separate blockchain networks, irrespective of their networking capabilities, token, consensus mechanism, or use case. With the Omnichain protocol, users can enjoy the ease of use in transferring assets across various blockchain networks, while maintaining the security, order, and integrity of their transactions.
The top names in this space include Cosmos, Polkadot, Layer Zero and Zetachain which are working towards creating an inter-chain blockchain network.
Although the idea of a metaverse has been in existence for some time, the term has recently become widely adopted in the tech industry, following Mark Zuckerberg’s decision to rename Facebook as Meta, in a bid to align the company’s branding with the future. With projections suggesting that the metaverse has the potential to contribute $5 trillion to the global economy by 2030, the stakes are high, and the coming year, 2023, is poised to play a crucial role in shaping its trajectory.
It’s no secret that Play 2 Earn games have taken the world by storm, dominating social media trends in recent times. These blockchain-powered games provide players with the unique opportunity to generate income through gameplay. By participating in various challenges or tournaments, players can earn digital cash or non-fungible tokens (NFTs) as rewards. However, in most cases, players must first make an initial investment before they can begin earning from these games. As players spend more time playing and succeeding in various aspects of the game, they can accumulate more tokens, further enhancing their earning potential
Iluvium, Gala and Nakamoto Games are some P2E games that does seem to have a good future ahead.
DeFi has been an ongoing trend for quite a few years now. However, it has been the Ethereum blockchain that has dominated the industry. Almost all projects have been built and created on top of Ethereum and until very recently it was very difficult for any other blockchain to enter the space.
However, with the new updates in the market, now blockchain has paved the way into DeFias well and is touted to be the next big thing in 2023. A major factor that encouraged this change was the huge demand for bitcoin users to be able to enjoy the benefits of DeFi. with the growth of Bitcoin DeFi, dApps and smart contracts will see a seamless and efficient development over Bitcoin.
The scalability issues that existed earlier have also been mitigated by reforms like the Taproot upgrade. Bitcoin DeFi is processing digital signatures faster and can support a great variety of DeFi projects. Some of the most popular Bitcoin Defi coins today are Stacks (STX), Threshold (T), RSK Infrastructure Framework (RIF), Sovryn (SOV), pNetwork (PNT)
- Metaverse may generate $5T in worth by 2030: McKinsey
- Top 5 Upcoming Public Sales on Arbitrum to Watch Out For in 2023
- Upcoming Crypto Airdrops: Blockchain Projects that could potentially Airdrop tokens in 2023
Assessing the crypto market and understanding more about what trends the future hold is indeed a great way to gain a better insight into the market. Currently I am most bullish on the Bitcoin Defi narrative.
If you can time the crypto trends well, and pick the right cryptocurrencies, you can make a lot of money. However, it is important to remember that nothing is ever guaranteed in crypto.
While Zero Knowledge, Artificial Intelligence, Metaverse, etc are promising trends, you must not forget to do plenty of research before entering into any space. This way not only will you be able to make an informed decision, but you will also contribute towards safeguarding your funds.
Warning: Crypto narratives may last for as short as a day or two to as long as months. Please trade the narrative wisely, and remember, narratives should not be used for long term investment. Risk only what you can afford to lose. DYOR and consult a financial investor before investing in any cryptocurrency.