“Market recovery is U-shaped, not V-shaped” Bitwise predicts the cryptocurrency industry in 2023
Predict market recovery
US crypto asset (virtual currency) investment company Bitwise released its 10 major forecasts for the cryptocurrency market in 2023 in a letter to investors on the 11th.
It is not easy for the market to recover after one of the largest bear markets in history, but in the end it will show a “U-shaped” recovery, not a “V-shaped” like the one seen during the corona shock, and the next bull market will be He said it would be the biggest ever.
Bitwise points out that the cryptocurrency market has historically moved in a four-year cycle with a three-year upturn and a one-year adjustment period, and 2022 will match that pattern. In 2023, he believes the market will head towards recovery. Bitcoin halving is exactly once every four years.
The company cites steady advances in technology, such as the merging of Ethereum and improvements in scaling technology, as the basis for the market recovery, while also selling a large amount of bitcoin (127,000 BTC) as part of Mt.Gox's repayment. ) and the mining industry's predicament. The market recovery is expected to follow a “U-shaped” pattern that will remain flat for a period of time until the next bullish phase.
What is Mount Gox
A Tokyo-based cryptocurrency exchange that operated from 2010 to 2014. It was closed due to hacking damage, and this triggered the custom of “GOXing” when the exchange was hacked or the virtual currency was lost due to erroneous transmission.
Relation:Mt. Gox extends creditors' due dates and more
Realizing high-speed and low-cost transactions
Bitwise predicts that “faster and cheaper transactions” expected from the beginning of cryptocurrencies will become a reality in 2023. We believe that the planned Ethereum upgrade (EIP4844) and advances in Layer 2 solutions will reduce Ethereum's low gold transaction costs by more than 1,000%.
Layer 2 (L2) (second layer)
Layer 2 is the “second layer” of the blockchain. By writing part of the transaction history in the off-chain or side-chain, it is possible to reduce the load on the main chain and improve the processing speed.
Bitwise points out that it is very significant that the transaction cost reaches the level of 0.1 yen or less. It is said that not only will the virtual currency network become superior to payments such as Visa, but also applications other than financial transactions such as games and social networks will expand. For example, if posting costs are almost free, a safe, fair, and fair “decentralized Twitter” may be realized.
Bitwise points out that some platforms are already working on this concept, but the market has yet to recognize its importance. He argued that in 2023, he would innovate the cryptocurrency market and reshape the world in the coming years.
Ethereum related predictions
Bitwise made two predictions about Ethereum:
- After “Shanghai Upgrade”, the amount of ETH staked increases by more than 50%
- The total amount of ETH in circulation will decrease by 1%, leading to deflation
Withdrawal of staked ETH will be possible in Ethereum's seasonal upgrade “Shanghai” (Shanghai), which is expected to be implemented around March this year. Bitwise predicts that by enabling staking to be released, investors who have been hesitantly watching the indefinite lockup period will start staking to earn yields at once. He claims that the percentage will increase “explosively.”
Relation:What impact will the Shanghai upgrade scheduled for March have on the Ethereum market?
Also, since the PoS (Proof of Stake), the circulating supply of ETH has remained almost flat with an annual growth rate of 0.011%, but Bitwise predicts that access to the Ethereum network will increase significantly this year. He claimed that the total amount of ETH in circulation would decrease by more than 1% as more ETH would be burned.
A burn is a mechanism that reduces the supply of cryptocurrencies, analogous to stock buybacks.
Bitwise also announced the following predictions:
- Market capitalization (stock price) of crashing US cryptocurrency exchange Coinbase more than doubles from end-2022 level
- Positive correlation between cryptocurrencies and equities plummets below +0.5 (macro factors weaken)
- At least one cryptocurrency bill passed in the US
- USDC Market Share Exceeds USDT: Investors Focus on Transparency and Sound Regulation
- Decentralized exchange Uniswap's trading volume surpassed Coinbase's in Q4 (breaking away from centralized exchanges)
- Bankruptcy of cryptocurrency unicorn companies is also possible
Furthermore, Bitwise added that blockchain will play a new role in 2023 as a “solution to big tech related problems.”
Big tech companies such as Meta, Apple and Twitter now have “monopoly power” and user interests are not prioritized, the company said. On the other hand, he argues that blockchain technology will enable the creation of networks that benefit users rather than businesses.
For example, the Ethereum network could be considered “the first public computer” because it is accessible to everyone, but no individual, company, or even nation can change the way it works. He explained that the mechanism is similar to the Internet in contrast to Facebook and others.
Bitwise stressed the importance of pushing forward with such positive aspects to create new stories that crypto skeptics would want to root for.