Original Source: The Block
Original Translation: DeFi Way
The Block Research team recently released its 2023 crypto industry predictions, with 37 analysts sharing their outlooks for the year ahead. While some views aligned, others offered distinct perspectives.
Here are the key predictions they shared:
The broader macro environment will continue to weigh on high-risk assets like crypto, though a sideways market is more likely than a sharp downturn over the next year.
Many projects that failed to find product-market fit will be gradually abandoned due to a lack of funding and demand.
M&A activity will pick up as financially distressed companies look for buyers.
Venture capital investment will slow sharply in 2023, especially in the first half.
Crypto prices will remain tied to central bank monetary policy.
The market cap gap between BTC and ETH will continue to narrow, but no "flippening" will occur in 2023.
The dominant narrative will shift toward Ethereum Layer 2 (L2) scaling solutions. L2 TVL will grow (at least in ETH terms), with zk-rollups seeing stronger relative growth than optimistic rollups. Major L2s like StarkNet, zkSync, and Arbitrum will launch their native tokens.
Modular blockchains like Celestia will gain traction and could outperform the monolithic L1s from the last cycle.
Last year's collapse of centralized crypto entities will lead to tighter regulatory scrutiny of centralized players, with Binance in the spotlight. Coinbase may benefit from the FUD surrounding Binance.
Among DeFi use cases, DEXs will show the strongest fundamental growth metrics.
Decentralized social ecosystems on Web3 will grow rapidly as investment and activity increase.
Accelerated NFT adoption by traditional brands will onboard more users. NFTs will continue to bridge crypto, art, and culture.
OpenSea's market share will decline further, eroding its monopoly.
Here are more detailed predictions from individual analysts:
Larry Cermak
General-purpose zk-rollups will finally launch in 2023 and become nearly as usable as Ethereum itself. Arbitrum, Starknet, zkSync, and Scroll will all release native tokens this year, sparking repeated debates about L2 token value accrual versus ETH—especially as rollups successfully attract most smart contract activity away from the base layer. Fierce competition will emerge among Polygon zkEVM, Starknet, zkSync, and Scroll. While initial demand for these scaling protocols may be low, they will be crucial for the next wave of retail adoption. Polygon has a significant head start after successfully converting its PoS chain into a fully functional zkEVM chain.
Although substantial VC capital remains on the sidelines, due diligence will finally get the attention it deserves—for the first time in years—with a sharp focus on product-market fit. Seed-round valuations will revert to around $10 million. Many projects, especially those built on competitive L1s, will simply run out of money and shut down. We'll see numerous projects migrate from L1s to different L2s in search of traction—or just to extend their runway. Developers and operators will no longer automatically command salaries over $300,000, and the talent exodus of crypto "tourists" will continue.
Many projects will overhaul their tokenomics. With large-scale new demand failing to materialize, massive token incentives will no longer make sense. Projects like Axie and Stepn won't be able to rely on Ponzi-like economics to deliver value.
Ethereum's market cap won't surpass Bitcoin's—and no other token will overtake Ethereum's. However, ETH will outperform BTC in 2023. Crypto prices will continue to trade like tech stocks, remaining tightly correlated with central bank (primarily the Fed) monetary policy. The most violent surge will come at the first hint of short-term interest rate cuts—though that may not happen in 2023. Until then, major token prices will remain largely flat with low volatility. Gambling sentiment, fueled by multi-bagger tokens or NFTs, will lure many participants back.
OpenSea will continue to lose its monopoly, and its exploitative royalty practices will fail. Binance, due to its dominance in spot and futures trading, will become the global regulatory focal point—much like Libra once was. Coinbase and other U.S.-regulated exchanges may benefit. Genesis will file for Chapter 11 bankruptcy, while Gemini faces mounting pressure from its Earn product. GBTC and ETHE products will not be dissolved.
SBF will not spend a single day in prison in 2023 and will maintain his not-guilty plea. U.S. regulators will use the FTX collapse to reshape crypto industry governance—similar to how Lehman Brothers and Enron reshaped global policy. Lawmakers will draft new legislation akin to the Sarbanes-Oxley Act to prevent future FTX-style failures.
Steven Zheng
The macro environment will keep pressure on high-risk assets like crypto. However, if I could generate outsized returns by treating crypto as an uncorrelated asset class, I believe the market will find a bottom during a second NFT wave—one that peaks several times higher than the 2022 NFT peak. In 2023, we'll break the recent all-time NFT trading volume high of $5 billion. Volume will be driven primarily by gaming projects, as many top-tier crypto games—having raised funds and sold NFTs during the 2021–2022 bull market—finally open to the public. Crypto gaming tokens will break into the top 20 by market cap. The second wave of NFT PFP projects will be led by third- or lower-tier projects from the prior cycle, emphasizing entry-level luxury appeal (think Seiko vs. Rolex) rather than high-profile luxury. Polygon, having laid the groundwork for new retail users in the last bull market and hired top engineers for zk-scaling tech, may benefit most from this mass-appeal wave. By the end of 2023, Polygon could rank third among application layers by economic activity and market cap—behind only BNB Chain and Ethereum. I believe demand and ecosystem development for dYdX Chain are underestimated; dYdX may also launch on Cosmos.
On the downside, I expect L2 rollups to suffer exploits targeting centralized sequencers. Funds may not be lost, but users will get a stark reminder of the risks in still-centralized solutions. Another algorithmic stablecoin will fail.
John Dantoni
The macro environment will remain challenging for high-risk assets like digital assets. We may not have seen the final bottom for crypto prices yet. However, a sideways market is more likely than a severe downturn next year. 2023 will be a pivotal year for developers and builders as hype, narratives, and price action take a back seat. L2s will stay in the spotlight, with some—including Arbitrum and StarkNet—launching native tokens.
New narratives for the next cycle—including Web3 social networks—will begin to take shape. Investment and activity in this subsector will draw attention, with Lens Protocol and Farcaster showing early and rapid growth.
Venture capital investment in blockchain will slow dramatically in 2023, especially in the first half. We'll see months with less than $1 billion invested—a first for the industry since February 2021. By year-end, roughly $13.5 billion will have been invested in blockchain companies, a 58% year-over-year decline in private funding.
Crypto financial services, infrastructure, and trading/brokerage will be least affected by market volatility. As investors search for the next foundational companies, these categories will retain investor interest and funding.
Conversely, categories perceived as higher risk—particularly pre-product and/or seed-stage ventures in DeFi, NFTs/gaming, and Web3—will likely see continued repricing, with fundraising amounts and terms settling into the $10–15 million valuation range and terms increasingly favoring investors.
Mid- to late-stage companies will struggle to raise capital on favorable terms. We may see a wave of companies pursuing down rounds—raising funds at valuations lower than their previous rounds.
Another option for financially distressed firms will be seeking buyers via M&A. Similar to the post-2017 cycle, we'll see increased M&A activity and further consolidation among crypto companies.
The fallout from Alameda Research, FTX, FTX US, Voyager Digital, Celsius, BlockFi, and other potential lenders will make 2023 a critical year for companies building institutional infrastructure for digital assets.
New lenders and market makers will compete for market share. We'll also see a reversal of a notable 2021 trend—when every crypto financial firm aimed to build a full-service prime brokerage. Instead, 2022 demonstrated the need for service isolation and highlighted the risks of a single counterparty providing multiple services.
Lars Hoffmann
On the macro front, China's abrupt post-pandemic reopening, coupled with economic stimulus and a slowdown in the Federal Reserve's rate hikes, boosted global risk appetite over the summer, providing a significant tailwind for crypto. The autumn and winter proved more challenging as attention returned to Europe's unresolved energy crisis. However, optimism for the industry remained broadly supported by the approaching BTC halving in March 2024.
For much of the first half of the year, the fallout from the FTX and Alameda collapse continued to reverberate. Numerous smaller projects that held funds on FTX faded away and quietly shut down, while The Bahamas solidified its position as a primary jurisdiction for crypto firms. In the second half, Western lawmakers seized on the FTX bankruptcy to push for stricter reporting and de-anonymization rules—often sidestepping core issues like centralization—shifting the focus back to an impending regulatory wave. In Western jurisdictions, this is likely to negatively impact DeFi.
Privacy remains a passionately advocated ideal within the industry, though over time it has been deprioritized by the majority. Alternative privacy solutions built by crypto natives continue to develop and thrive within their specific niches.
Following the cautious and stringent regulatory approaches of 2017/2018, Asia continues to open further to cryptocurrencies. South Korea and Japan are leading the way with more serious, reasonable frameworks. The migration of industry builders to crypto-friendly jurisdictions remains an ongoing trend, with these developments being closely watched.
Eden Au
Arbitrum and StarkNet will launch their native tokens, with both entering the top 10 by Total Value Locked (TVL) by the end of 2023. Polygon will expand its NFT market share as more traditional brands join the ecosystem. Organic usage within the Cosmos ecosystem will grow, driven by new sidechains (like dYdX and Berachain), native stablecoin support (e.g., USDC, IST), and the launch of Celestia. At least one major rollup will implement upgrades to decentralize its sequencer.
ETH staking withdrawals will be enabled in the first half of 2023. Following this, Coinbase's cbETH will double its market share in Ethereum liquid staking and become widely accepted as collateral by major DeFi protocols. Structured products will gain momentum as crypto natives embrace the concept of "real yield," helping to bootstrap liquidity for on-chain derivatives. However, privacy-centric applications will struggle to gain meaningful traction amid rising regulatory pressure.
As the EU finalizes its MiCA legislation, adoption of euro-denominated stablecoins will grow steadily. USDC will surpass USDT to become the largest stablecoin by market cap, though Tether will remain important and will not collapse in 2023. While the tokenization of real-world assets (RWA) beyond stablecoins remains in its early stages, more protocols will lay the foundational groundwork.
The market cap gap between BTC and ETH will continue to narrow, but no "flippening" will occur in 2023, nor will a spot Bitcoin ETF be approved. Year-on-year token returns will be positive. A new group of crypto-friendly jurisdictions—including the UK and Hong Kong—will gradually emerge, seeking to establish more reasonable regulations to attract talent.
Andrew Cahill
By year-end, BTC will remain the largest asset by market cap, but ETH will outperform in price. SOL will outperform other alt-L1s but will not reclaim its all-time high. L2 scaling solutions will continue to see growing developer and user adoption, yet their native tokens will underperform relative to BTC and ETH.
Hacks targeting bridges and interoperability protocols will decline as teams learn from the vulnerabilities exposed in 2022. However, adoption rates for these protocols will remain low due to reduced activity on L1 networks.
Although DeFi operated smoothly throughout 2022's market turbulence, growth will remain muted in 2023. DEXs will post the strongest fundamental growth metrics among DeFi use cases. NFTs and gaming will attract the most venture capital funding for the year. Stablecoins will have another strong year, with circulation exceeding $250 billion. As transparency grows in importance, USDC will gain market share.
Greg Lim
With the era of easy money over, the ability to raise capital—both in crypto and broader markets—makes the outlook for 2023 quite challenging. Companies will need to scrutinize expenditures, and layoffs may continue. Regulatory tightening in the wake of the FTX fraud will intensify. As interest rates rise to combat inflation, investors may favor lending to the U.S. government and maintaining risk-off strategies. As established Wall Street firms build out their digital asset teams, the wide spreads seen in prior cycles may narrow. A broad correction in the U.S. real estate market around mid-2023 could trigger further liquidations as investors flee crypto amid falling traditional asset prices.
George Calle
In 2023, companies exposed to crypto will face persistent pressure. More miners will declare bankruptcy or restructure as debt servicing costs exceed the value of their mining rigs or the BTC pledged as collateral. Large energy suppliers—benefiting from natural synergies and balance sheets untouched by the crypto downturn—will become acquirers of this distressed equipment.
Volatility in 2023 will also be lower than in 2021–2022, reducing easy profit opportunities for traders. This new market paradigm will reward those who carefully track forced sellers or identify overleveraged parts of the ecosystem. Demand for crypto options may increase as traders seek event-driven positioning or general risk hedging. A significant portion of funds launched in 2021–2022 will shutter due to poor performance, triggering cascading liquidations in both halves of 2023—though less severe than in 2022. Seemingly "safe" strategies will be tested. For instance, discounts on certain liquid staking derivatives (LSDs) for ETH may fall below 90% due to on-chain deleveraging and a general demand for liquidity. Unlike closed-end products like GBTC, LSDs are expected to arbitrage back to a 1:1 peg as the Ethereum Shanghai upgrade approaches in 2023.
We should also expect more innovation and dramatic shifts in the stablecoin market, though development will stem from increasingly divergent domains. DeFi developers will build censorship-resistant products integrated into protocols, while policy-aware participants will explore compliant payment tools. Discussions around Fed-backed or deposit-insured stablecoins will occur in Congress but won't materialize into law. CBDC researchers will largely move away from the "direct CBDC" model tested from 2017–2022, proposing instead integrated solutions where commercial banks distribute CBDCs to retail customers. These stablecoins may share governance or oversight similarities with CBDCs. Amid concerns about competing monetary systems and global economic fragmentation, regulators will take a broader interest in stablecoins, viewing them as a digital version of the euro-dollar market. Tether's reserve backing will become a major topic on Capitol Hill—potentially triggering short-term minor depegs—but Tether itself will not collapse. However, at least one of the top 10 stablecoins by market cap (existing or new) will collapse in 2023.
Despite opportunities in a more regulated crypto-dollar market, regulatory pressure will largely act as a headwind. The current "regulation-by-enforcement" regime will persist, offering little clarity or guidance. Consequently, bank custody initiatives and other bank-led efforts will largely stall. However, amid market consolidation, at least one major traditional market maker is expected to announce a crypto trading desk.
Simon Cousaert
While competition among different L1s was fierce in 2021, user attraction has since declined sharply. Most non-Ethereum smart contract chains will continue losing ground in both user adoption and TVL.
Scalability technologies will boost adoption and user interest, similar to the growth seen with optimistic rollups like Optimism and Arbitrum. Alongside newer zk-rollups like zkSync and Starknet, L2s will reinforce the narrative of declining non-Ethereum L1s.
One exception could be emerging modular blockchain technologies like Celestia and Fuel. I expect increased experimentation with rollup technology, not only on Ethereum but also on these modular blockchains.
The Ethereum community will begin exploring staking and restaking mechanisms to enhance security for decentralized services, with Eigenlayer currently leading these efforts. If all goes well, Ethereum's Shanghai upgrade will occur in 2023, enabling users to withdraw staked ETH. The convergence of liquidity and staking dynamics will compel users to consider how their staked assets benefit the broader ecosystem.
Abraham Eid
In 2023, the focus will shift from infrastructure-driven development to application-driven development. This shift may help overcome existing UX barriers that have hampered user activity during peak periods. From a wallet operations perspective, EIPs supporting account abstraction (like EIP-4337) should deliver noticeably smoother user experiences, potentially stimulating long-term growth and addressing a key challenge for dapp mainstream adoption.
With expensive block space on L1s, focus will likely shift to use cases that truly leverage previously underutilized design spaces. Interoperability solutions across different L2s should also improve, partly because oracles can provide a messaging bus with stronger risk-mitigation capabilities than many existing bridges. Projects like LayerZero have already begun exploring this, and we expect this technical approach to mature further in 2023, paving the way for more robust cross-chain solutions.
Regulators are likely to scrutinize—and potentially draft new legislation around—certain practices within the crypto sector, particularly DeFi. Following the 2022 arrest of Tornado Cash developer Alexey Pertsev, we can expect clearer guidance on the use of mixers and the consequences for participating in such services. While the U.S. Treasury has already sanctioned the Tornado Cash protocol itself, a more comprehensive bill specifically regulating mixers could emerge. The existing MEV landscape may also face increased scrutiny, potentially prompting more dapps to integrate MEV-mitigating features.
On a macro level, while direct attention to quantitative tightening may wane in 2023, its second-order effects will linger throughout the year. This will likely keep crypto valuations below previous all-time highs and maintain subdued speculative activity compared to the period before the second half of 2022. This environment could, however, foster a greater focus on long-term, foundational architectural decisions within the industry.
Wendy Hirata
Trust in CEXs and CeFi lending services has plummeted to an all-time low following the events of 2022. Market participants are now prioritizing risk management, operational transparency, and expertise—factors often overlooked during bull markets. Until trust is rebuilt through concrete measures, institutional investors will remain cautious, sticking to defensive, low-risk capital allocation strategies. To meet this demand and sustain operations, crypto financial services will need to launch more principal-protected structured products. We also expect more institutions to view staking as a safer yield source, especially as more enterprise-grade liquid staking protocols launch in 2023. The rapid growth of cbETH and rETH this year signals ample room for expansion in liquid staking, with new entrants like Liquid Collective poised to capture market share from incumbents like Lido.
Kevin Peng
In 2023, L1 networks will continue adapting to market demands. As application-specific chains gain relevance, cross-chain technologies like bridges and IBC will mature further. In the race for mainstream adoption, blockchain-based applications will become more user-friendly than ever.
Amid the ongoing fallout from the collapses of FTX and others, many projects will be gradually abandoned as funding dries up and demand fails to materialize. This presents a prime opportunity for DeFi exchanges and lending protocols to capture market share by capitalizing on the eroded trust in centralized counterparts. NFTs will continue bridging crypto with art and culture, as will games exploring creative use cases for both NFTs and fungible tokens. While fully on-chain games are unlikely to rival top video games in popularity, the crypto gaming sector will grow, fostering several high-quality, engaged communities.
Meanwhile, rollup-based scaling solutions will gain adoption, challenging monolithic blockchains and their ecosystems. Ethereum will remain the de facto settlement layer for DeFi and NFTs, while L1s focused on execution optimization will need strong incentives to stay competitive. 2022 was a year of reckoning, but 2023 will be pivotal. Developers are refocusing on fundamental scalability and UX improvements, paving the way for broader institutional acceptance and a potential industry revitalization in 2024.
Erina Azmi
Here are four crypto predictions for 2023. First, Web3 social ecosystems will experience rapid growth—so secure your favorite usernames and domains early. Some platforms may introduce tokens to enhance user engagement.
Second, as crypto regulations mature, adoption of privacy coins is expected to rise, depending on whether they are viewed as progressive or regressive policy tools.
Third, on-chain games will catalyze new genres and revitalize the Web3 gaming market. While many current Web3 games lack innovation, on-chain games have the potential to attract forward-thinking developers and drive transformative change across both industries.
Lastly, keep an eye on GHO and crvUSD, as they could challenge DAI's market cap dominance. Such a shift would significantly impact investors and the broader market.
Saurabh Deshpande
During the economic downturn, the correlation between TradFi and crypto will remain high due to growing participant overlap, though crypto may find a bottom before traditional markets. While equities could dip on weak earnings, crypto prices may stabilize. A less hawkish Fed, likely in H1 2023, would benefit crypto.
ETH will not flip BTC in 2023, and no other L1 will overtake ETH. Arbitrum and Starknet will launch tokens and rank among the top L2s by TVL. Total L2 TVL will surpass $20 billion. The Solana ecosystem could see a revival.
Binance will gain legitimacy from non-U.S. regulators. The DEX/CEX trading volume ratio could rise to ~25%. OpenSea's market share will decline to ~25%. We'll see one to three high-quality, genuinely enjoyable blockchain-based games launch.
As account abstraction takes shape, MetaMask will lose market share to wallets like Phantom and Argent.
Rebecca Stevens
In 2023, Coinbase will capitalize on the tailwind from FTX's collapse to gain market share, though it will still trail Binance. DEX trading volumes will grow significantly, especially before major regulatory headwinds hit. Meaningful U.S. regulatory developments are unlikely this year, but the threat alone may suppress activity. The concentration of volume on a few CEXs further fuels the narrative favoring DEXs. Concerns highlighted by the FTX debacle will lend traction to DEXs as a viable alternative.
As traditional markets embrace crypto, the spot-to-derivatives trading volume ratio will decline throughout the year, though risks in spot markets deter some participation. Trading volumes and open interest in futures and options will increase, particularly on traditional venues like the CME.
Experiments with NFTs by well-known brands and celebrities have attracted some retail users, but most of these projects won't last. More meaningful adoption will come from crypto-native teams building with purpose. Well-designed projects will appeal to existing users, but to trigger a retail surge, they'll need exceptional UX that minimizes crypto-native friction, similar to Reddit's NFT approach.
Edvinas Rupkus
H1 2023 will see limited volatility as the ripple effects of FTX's collapse spread, forcing some funds to shut down or restructure. It will also bring a stricter tone to Western crypto legislation, though no major bills will pass.
The dominant narrative will pivot to ETH L2 scaling solutions. One L2 will capture significant market share, while another grapples with technical shortcomings. However, the real-world necessity of L2s remains untested, as Ethereum can still handle its current traffic.
Non-BTC/ETH chains will continue losing relevance as markets seek safety amid global instability and inflation. Signs of renewed vitality in these areas may emerge by H2 2023 or year-end, driven by rising risk appetite and leading to a more dynamic market.
Long-awaited NFT games and innovative SocialFi apps will launch. However, the macroeconomic climate of fiscal prudence will subject them to "pump-and-dump" dynamics, tying their appeal too closely to underlying token price action.
Afif Bandak
As more applications launch as Cosmos and Ethereum L2 chains, the appchain thesis will strengthen. ZK chains will scale up and gain traction. Rollups will deliver major improvements in scalability and performance, though sequencer centralization remains a challenge.
Neither proto-danksharding nor ETH staking withdrawals will arrive in 2023.
Macroeconomic headwinds will persist, though ease somewhat in the second half. Industry consolidation will continue as projects run out of funding and momentum. Coinbase stock (COIN) will outperform most cryptocurrencies. BTC will outperform most peers in 2023, while gold may catch a tailwind.
Regulatory responses to last year’s events will bring volatility, but clarity will ultimately lean bullish as productive dialogues emerge. On-chain exchanges will fill the void left by FTX. New institutional participants will reinvigorate stablecoin and payments use cases.
Arnold Toh
Ethereum’s market cap will surpass Bitcoin’s in 2023, driven by growing Layer 2 adoption and demand for its deflationary model—even if both ETH and BTC prices decline.
The L2 ecosystem will expand, fueled largely by potential airdrops from Arbitrum, StarkNet, and zkSync. Polygon may also see correlated TVL growth depending on the success of its zkEVM initiative.
GameFi and Play-to-Earn (P2E) will gradually phase out games lacking real blockchain utility. Trading card games like Gods Unchained (and its potential mobile version) or Parallel Alpha, which has released substantial lore, could emerge as contenders.
SocialFi will enter a pump-and-dump hype cycle, with several protocols emerging as decentralized alternatives to existing social media. Notable projects include Lens and Farcaster, though heavily promoted ones like So-Col could also become strong contenders.
Jae Oh Song
Regulators will intensify oversight of centralized entities following recent market events. This may push users toward self-custody until sufficient trust is re-established, accelerating growth for DEXs like dYdX and Uniswap. Governments may draft frameworks targeting decentralized entities, but lengthy regulatory processes will prevent immediate impact.
Web3 social protocols like Lens and Bluesky will evolve to capture market share from legacy networks. Initial user participation will be speculative, driven by token airdrop expectations—likely not until Q4 2023 or later. These protocols must develop crypto-native features to attract non-crypto users, who remain willing to switch platforms.
Options markets may expand as demand for hedging crypto risk rises amid uncertainty. Beyond institutions, retail demand could grow as asset volatility declines. Existing options vault protocols may launch strategy-specific vaults to meet this demand.
Hiroki Kotabe
L2s will continue gaining attention. Arbitrum will launch its token, ranking above Optimism’s and outperforming the broader crypto market. L2 TVL will generally rise (at least in ETH terms), with ZK rollups outpacing optimistic rollups in growth. Major ZK rollups like StarkNet and zkSync will also launch tokens, likely outperforming the market. Polygon will benefit indirectly.
Confidence in Ethereum’s scalability via L2s will strengthen, improving UX with cheaper, faster transactions. Ethereum dapps integrating L2 tech will see user and activity growth. While this may boost ETH’s price, the shift of activity from Ethereum to scaling solutions could pressure it downward. Increased attention on scaling may also attract bad actors exploiting design weaknesses like sequencer centralization.
Other predictions: Ethereum will delay sharding to 2024, focusing on MEV this year. Celestia will launch its token, making modularity a hotter topic. Wintermute will launch a derivatives exchange that outsources client fund custody to trusted custodians.
Hayden Booms
BTC will bottom in Q1 2023 below $12,000 as public sentiment sours on excessive Fed tightening. Despite macro worries, the four-year market cycle remains intact. The BTC low will be retested later in the cycle, with at least a 75% retracement.
The Ethereum Shanghai upgrade, enabling staked ETH withdrawals, will be delayed to Q4 2023 and act as a “sell the rumor” liquidity event. As staked ETH unlocks, fears of selling pressure will push ETH down during the upgrade. Afterward, ETH will begin an uptrend as those fears fade, marking its retest of the cycle bottom.
Fidelity’s launch of BTC and ETH trading in Q4 2022 will bolster consumer confidence, helping it capture significant U.S. trading volume in 2023. New investors will feel comfortable using Fidelity’s trusted platform and intuitive UI, avoiding self-custody anxiety. Fidelity will also enable BTC and ETH withdrawals in H2 2023.
The relaunch of Arbitrum Odyssey and its token airdrop will kick off another “airdrop season,” as projects that waited through the bear market finally execute plans. Major airdrops will include Arbitrum, Celestia, LayerZero, StarkNet, zkSync, and nftperp.
CoinGecko will let users purchase airdrop allocations for partner projects like Access Protocol and continue offering micro-allocations in 2023. CoinMarketCap will follow, offering allocations to users collecting Diamonds. For diligent “candy” and Diamond collectors, these micro-allocations could pay off handsomely.
Carlos Guzman
Overall crypto prices will remain tied to macro conditions and correlated with risk assets. A weak earnings season could drag down equities—and crypto would likely follow. Crypto-specific headwinds will also weigh on prices in H1 2023 as bearish sentiment and credit contagion from FTX/Alameda spread. If inflation eases in H2, we may see sharp price gains.
Given tougher fundraising and lack of product-market fit, many projects funded in the 2020–2021 bull market may shut down. Well-capitalized VCs will continue deploying capital to support quality projects. Overall private funding in 2023 will fall short of 2021–2022 levels but exceed those of 2020 and prior years.
Driven by global inflation—especially in weaker currencies—demand for USD-pegged stablecoins will surge, particularly in developing countries. Projects offering easy-to-use savings products for stablecoins should see broad adoption.
The U.S. Congress may move more actively and stringently on crypto legislation, potentially resulting in regulations less industry-friendly than anticipated.
Driven by reduced issuance, fee burning, and the “ultra-sound money” narrative, ETH will gain market-cap dominance over BTC—though not flip it in 2023. ETH will accrue enhanced “moneyness,” partly by becoming the de facto reserve asset across L2s. The “ETH killer” narrative will fade, with L2 competition taking center stage.
As activity migrates from EVM-compatible L1s, optimistic rollups will gain more users and transactions. ZK rollups will adopt more slowly, but momentum will build in H2 as zkEVMs power popular apps. Application-specific rollups (L2s/L3s) will challenge L1 appchains and attract institutional interest.
2023 will kick off a Cambrian explosion of zk-powered applications in privacy, identity, and bridging. As privacy-focused apps face tighter regulatory scrutiny, the industry will focus on building reliable, compliant zk solutions.
We also expect the "Real World Assets" (RWA) sector in DeFi to grow significantly this year. With crypto-native yields staying low due to falling prices, fading interest in liquidity mining, and the collapse of major market makers, RWAs will become an attractive source of yield, especially against the backdrop of high interest rates in traditional fixed-income markets.
Thomas Bialek
Driven by traditional brands embracing NFTs, 2023 will bring more new users into the NFT space than all previous years combined. To make this happen, NFTs will be presented as seamlessly integrated digital collectibles, helping to overcome the technology's current image problem.
Despite growing adoption, a broad NFT bull market remains unlikely, even if certain niches see a revival. Dynamic crypto art, in particular, will flourish as artists create increasingly sophisticated works that leverage blockchain's unique capabilities.
The "holy grail" of generative art will decouple from the broader NFT market's price movements. In the blue-chip PFP space, many surviving projects will fade, with market power concentrating in fewer hands.
The gaming vertical will regain momentum as the fusion of gaming and NFTs deepens and new narratives take shape, rekindling user interest.
As the limitations of simple token incentives become clear, NFT projects and marketplaces will experiment with new systems to attract and retain users. The ongoing battle over creator royalties will also spark widespread testing of new (and old) revenue models.
NFT-native brands will expand their reach by activating more in the physical world, bridging the gap between digital and physical. Meanwhile, web3 social platforms will reach a tipping point and see broader adoption.
Mohamed Ayadi
With the U.S. facing a mild recession and Europe a deeper one, the crypto winter—along with the chill in traditional markets—will persist through the first half of 2023.
Fear and uncertainty around holding crypto on centralized exchanges will remain high until a major exchange undergoes a proper audit from a top-tier firm. This will fuel continued adoption of DEXs and perpetual futures/options protocols like GMX, while new protocols roll out innovative features. That said, trading futures in DeFi will likely remain an "advanced" user activity.
In the second half of the year, Ethereum L2s will battle for market share as zk-rollups go live. This will shift attention away from Ethereum itself—and ETH in particular—likely causing Ethereum to lose value relative to Bitcoin (the ETH/BTC pair), especially as the unlock of staked ETH approaches.
The L2 competition will heat up with the launch of the Arbitrum token and a wave of new initiatives aimed at user acquisition. This will reveal how far ahead some L2s are in development, particularly regarding decentralization—which will become the decisive factor in the market-share war (at least until centralized L2s prioritize decentralization more). From here, the industry will fully embrace a multi-chain future with multiple L2s and even L3s, and no new L1 will gain meaningful traction at launch.
In the latter half of 2023, markets will start to recover, inflation will fall significantly (though not yet to 2%), and the Federal Reserve will pause rate hikes, holding rates near 5% through 2024.
U.S. courts will aggressively pursue crypto-related crimes, leading to more enforcement actions in DeFi. While this is ultimately good for the industry, it will dampen DeFi activity in the short term. In the long run, it comes at the cost of tighter regulation and less privacy. New privacy-focused projects will emerge in the second half of the year, signaling to regulators that the crypto community is ready to push back against overreach, excessive surveillance, and the erosion of privacy.
By year-end, the SEC will likely file another lawsuit against a major crypto project (similar to XRP), demanding that non-decentralized projects register as securities to trade on U.S. exchanges. This will force protocols to get creative in pursuing greater decentralization. The SEC, however, will remain unclear on what actually qualifies as a security versus a commodity.
Finally, by the end of the year, NFTs will unlock new use cases, and more traditional brands will enter the space. Polygon will be a major beneficiary and could break into the top 10 by market cap. The focus will shift toward NFTs as core components of larger ecosystems, not just as standalone collections.
Michael McNelly
Several factors are currently holding back widespread crypto adoption and public interest. The collapses of LUNA and FTX severely damaged the industry's reputation. Add to that a tight global macroeconomic environment aimed at fighting high inflation, and these issues won't be solved overnight. Restoring confidence in crypto will take time, but holding bad actors accountable and implementing sensible regulations to prevent future disasters is essential.
That said, I'm confident we'll see continued innovation in scalability, NFTs, user experience, custody, and other unique use cases. Ethereum rollups—including Polygon, Arbitrum, StarkNet, and Optimism—will see sustained growth as new products launch. These platforms will host dApps with better, more beginner-friendly interfaces. A recent example is the rise of GMX, the popular Arbitrum-based trading platform. Beyond DeFi improvements, institutional adoption will continue focusing on data management. Companies like Home Depot, Walmart, and Coca-Cola are already using blockchain to track their supply chains—a trend that will only strengthen.
The energy sector, in particular, is ripe for blockchain experimentation and adoption. Companies like General Motors are exploring how to use blockchain to manage virtual power plants on the grid, especially those using green energy. This has given rise to peer-to-peer energy markets where everyone can be both a producer and a consumer. Though still in early R&D, several pilot projects have already launched successfully in small cities. Combining electric vehicles with solar power could usher in a new era where every home becomes a micro-power plant, with batteries connected to the grid.
Meanwhile, oil and gas giants like ExxonMobil are using natural gas to generate electricity for Bitcoin mining. This reinforces the narrative that Bitcoin is backed by energy itself, boosting its perceived value. As resources grow scarcer, the energy dedicated to Bitcoin mining will command more respect, gradually strengthening confidence in Bitcoin as a currency.
In short, I don't expect a bull market in 2023. Instead, we'll see institutions experiment with private blockchains for internal infrastructure. DeFi will advance steadily, NFTs will find more creative applications, and regulatory pressure will stay relatively low. But until we have regulatory clarity and restored market confidence, don't expect a surge in activity or adoption, no matter how innovative the technology.
Marcel Bluhm
Privacy will be a major theme. Fully private coins will struggle under regulatory pressure, but solutions like zk.money—which strike a balance between privacy, censorship resistance, and regulatory compliance—could find a product-market fit.
The U.S. will introduce a national legal framework for stablecoins. If well-designed, this could significantly grow the stablecoin market cap over time and cement the dollar's dominance across the digital asset ecosystem. Globally, some CBDCs may launch, but unless they operate on public rails or actively incentivize use, adoption will be limited.
Blockchains will become more "mobile": most use cases—and users—are in developing countries, where mobile access is central to daily life.
As for markets, cryptocurrencies will likely continue consolidating or declining unless central banks change course.
Jason Michelson
With recessions unfolding in the U.S. and Europe, the first half of 2023 is likely to remain broadly bearish. Weak corporate earnings could drag equity markets lower, pulling crypto markets down with them. During this period, volatility and interest in digital assets may wane, leading to a largely sideways-trading crypto market. Rebuilding public trust in cryptocurrencies after the FTX fraud will take years, and many institutions will keep their distance until memories fade and improving macroeconomic conditions make risk assets attractive again. However, the core value proposition of distributed ledger technology—enabling more efficient, trustless value transfer—remains strong. Institutional experimentation will continue, exemplified by initiatives like Singapore's Project Guardian with JPMorgan and HSBC, which aims to advance asset tokenization and institutional DeFi protocols. New use cases in this space will keep emerging.
ETH won't overtake BTC in 2023, but it will make significant strides in market cap. Most existing non-EVM-compatible Layer 1s will underperform ETH and gradually lose mindshare, though Polygon could be an exception due to its zkEVM launch and strong product-market fit in retail and tokenization. Avalanche's cross-subnet communication via Warp Messaging will make bridging more efficient, potentially attracting more projects and developers. GMX will continue to grow but remains vulnerable to future exploits as long as it offers minimal spreads and low price impact. The broader erosion of trust in centralized exchanges will keep driving users and volume toward decentralized options and perpetual futures protocols.
Funding will drop significantly from the 2020-2021 highs, but venture funds with deployment mandates will keep investing. The next bull cycle will bring a new wave of projects and tokens designed to surpass their predecessors. Modular blockchains like Celestia will gain traction and may outperform the monolithic L1s of the last cycle. Arbitrum could launch its token in 2023, potentially sparking a mini-altcoin season within its ecosystem. Total Value Locked (TVL) in Ethereum L2s will gain a substantial edge over non-Ethereum L1s and might even surpass them. While ZK-rollup technology will see major advances, most projects won't launch or gain meaningful traction this year.
Atharv Deshpande
With crypto market cap fluctuating between $0.65 trillion and $1 trillion, a bearish market structure will bring heightened uncertainty over the next three quarters. More companies will face insolvency, and bad actors will continue to be purged. The collapse of FTX and the FUD surrounding Binance have intensified calls for better regulation, but a major breakthrough is unlikely. That said, the failures of centralized entities in 2022 will boost DEX adoption more than ever.
ETH's market cap will close in on BTC's, but a flip isn't imminent. L2 adoption will grow with the launches of Starknet and Arbitrum, and more NFT gaming projects will migrate to L2s. Polygon will continue partnering with traditional brands, cementing its position in the NFT space. These partnerships will drive user onboarding, creating ripple effects across the industry and leading to record NFT adoption and trading volumes. Most play-to-earn games will fade as the market moves beyond the "earn-only" phase and grapples with a lack of genuine entertainment. Decentralized social networks will grow, and their native tokens will outperform other decentralized entities hindered by exchange listings.
Since funding is a lagging indicator of industry health, venture capital will slow in the first three quarters in response to late-2022 events. Infrastructure and crypto financial services firms will be the least affected by capital pullbacks.
Ian Devendorf
Decentralized identity solutions will grow in importance, building the infrastructure for self-sovereign identity and enabling compliant institutional onboarding once regulations clarify. While the market awaits clearer guidance, market share will consolidate around established players with strong transparency and track records, making it hard for newcomers to compete. Until centralized exchanges can provide reliable, audited proof-of-reserves and reduce reliance on their own tokens as collateral, more users will opt for self-custody. As Optimistic and ZK rollups expand their capabilities, EVM-compatible chains will continue to dominate TVL.
Dipankar Dutta
In 2023, we'll see renewed interest in blockchain technologies focused on privacy and censorship resistance. Other general predictions include enabling ETH staking withdrawals in the second half of the year and no spot Bitcoin ETF approval. The SEC will bring more regulatory challenges, classifying tokens as securities and establishing case law by 2024 or later. The U.S. Congress will also introduce new legislation, some of which will test the crypto community's unity, lobbying power, and resolve.
Healthy adoption of L2 and sidechain scaling solutions will continue through 2023, easing blockspace scarcity but potentially exposing issues related to complexity and reduced decentralization. User adoption and investment will meaningfully shift toward innovative applications built on these layers, rather than the technical specs of base Layer 1 blockchains (like TPS or finality time). Revenue-generating platforms will be a key vertical. Application-specific blockchains and interoperable ecosystems like Cosmos will see rising development activity.
This application-centric growth means L1 foundations and ecosystem funds will increasingly cater to developers' needs, incentivizing them to build within specific ecosystems rather than for competitors.
Edvin Memet
DeFi TVL, normalized by total crypto market cap, will grow at least 50% from the start to the end of the year. ETH will return to net deflation by year-end (with H2 activity making up for a weak H1), reinforcing its "ultra sound money" narrative and gradually eroding BTC's dominance—though not flipping it yet.
The future remains multi-chain, so the embattled Solana will steadily slide out of the top 10, settling around 13th. At least one L2 token will launch in Q4. Total losses from cross-chain bridge attacks will drop significantly from 2022, staying below $500 million.
NFT trading volume will grow at least 4x year-over-year, driven by new use cases, resurgent old ones, and gradual UX improvements. Twitter's turmoil will push more brands toward the metaverse and Web3 loyalty programs. Web3 social networks will gain gradual traction. The metaverse will become more interconnected and easier to navigate, with land prices rising at least 2–3x.
High-quality builders in DeFi and GameFi will increasingly explore incentive programs designed to attract loyal capital and users, consciously moving away from inflationary rewards toward slower, organic growth. At least one blockchain game will again reach 400,000 monthly active users, though surpassing Axie's peak of 2.8 million won't happen until 2024.
A DAO will execute a buy/sell transaction exceeding $100 million, potentially acquiring a mid-tier sports team. Venture capital will continue flowing at a robust pace—less than in 2021 or 2022, but still crossing the $15 billion threshold. The GBTC discount will narrow significantly by year-end to no more than 15%.
Florence Kuria
In 2023, adoption of Ethereum L2 solutions like Optimism will continue rising steadily as they address Ethereum's scalability challenges. We may also see fewer interest rate hikes and declining inflation, which could spark renewed interest in crypto and bring retail investors back.
As confidence in centralized exchanges wanes, decentralized exchanges like dYdX will start outperforming their centralized counterparts. DeFi protocols backed by real-world assets will also gain popularity among investors.
Jaiden Percheson
For market participants, 2023 will remain challenging. Given the macroeconomic backdrop, a large influx of new participants is unlikely, making broad-based volatility across crypto hard to find. Markets will stay volatile and short-term oriented, with Bitcoin failing to set new highs. As participants sell other assets and seek "value," Bitcoin and Ethereum will continue gaining dominance. NFTs will lead traditional company adoption, with trading volume multiplying as people search for volatility within crypto. As the industry gains legitimacy, most NFT volume will concentrate in just a few projects.
A handful of tokens will outperform ETH and BTC this year. Binance will continue expanding its exchange dominance, while BNB stays strong. Arbitrum will launch its token around mid-2023, becoming another market standout. The launch will fuel speculation around its dApps, and the momentum will last longer than most expect, pushing the chain's TVL above $4 billion. Shibarium will launch in Q2 2023, surpassing Dogechain in key metrics and attracting more participants.
Further regulatory actions will target DeFi, NFTs, and other crypto applications. Authorities will also make more arrests and bring charges against influencers and other participants. While I expect heightened regulation, if these actions gain traction in 2023, I foresee no major privacy breakthroughs—except modest outperformance by Monero and other privacy tokens.
Imran Khan
The launch of numerous new DeFi + privacy projects will drive development activity on ZK rollups like Starknet and Aztec. However, DeFi's total value locked (TVL) will likely remain subdued overall, as yields continue to lag behind other opportunities.
Web3 applications built for mobile will significantly improve the user experience. We'll also see USDC enable more subtle crypto integrations, powering Cash App–style applications.
As interest rate hikes slow, risk appetite will return, heralding a new phase for crypto. This time, however, I expect a more value-oriented market, leading to a significant decline in the number of tokens.
Zak Abdi
The digital asset market faced broad headwinds in 2023, constrained by macro policy. With relatively high risk-free yields available, there's little incentive to buy risky, complex assets.
DeFi tokens that function primarily as governance rights will continue to decline. While the narrative around DeFi integrating with real-world assets (RWA) will gain traction—as the market accepts that most DeFi remains circular—networks like Centrifuge won't see widespread adoption. Resources will concentrate on major chains like Ethereum, benefiting protocols such as Aave or Maker that bring RWAs on-chain.
Binance will navigate significant challenges and regulatory scrutiny but will ultimately be fine. NFT trading volume will stay low, and BTC will maintain its dominance.
Brandon Kae
Markets will stay bearish and unlikely to reclaim all-time highs until the Fed genuinely pivots to easing. Initially, most participants will resist an obvious bear-market rally, potentially pushing it higher than expected (though still far from ATHs). This could create a period of "mini-excitement" before further downside or sideways boredom sets in.
Most L1s won't recover their peak valuations, TVLs, or usage levels, and 90% of new L1 launches will be dead on arrival. Optimistic rollups will continue to thrive, while zk-rollups remain relatively quiet at least through the second half of 2023. L3s will draw some attention away from Cosmos appchains, and validation will start attracting greater focus.
ETH will not flip BTC. We'll see the commencement of CBDC testing and trials.
Shamel Tejani
A Fed pivot near year-end will help Bitcoin find a bottom and begin its recovery. As liquidity dries up further, most NFT projects and tokens will continue to bleed, with the market realizing that a good project doesn't guarantee token appreciation. ETH will briefly flip BTC in market cap. The fallout from FTX and 3AC will lead to more regulatory proposals, large-scale layoffs, and shutdowns across the industry. Narrative-driven tokens in sectors like AI and Game-Fi could trigger echo bubbles. A new NFT project on Ethereum may emerge to challenge Bored Apes and Punks for the top spot. Finally, a new blockchain-powered sports betting platform—with solid volume, low fees, and audited smart contracts—could capture significant market share.