My prediction for the near future of cryptocurrency is simple. The cryptocurrency market will shrink but prices for Bitcoin (BTC), Ethereum (ETH), and Tether (USDT) will rise.
To explain, when markets collapse. People stop speculating and invest in what they think is simple and reliable. For example, many people buy government bonds, widow and orphans stocks, precious metals, and real estate during bear markets.
Hence, cryptocurrency investors will turn to the old reliable Bitcoin (BTC) during the Crypto Winter. Moreover, crypto speculators will avoid new assets such as DAOs and DeFi during the Crypto Winter.
For instance, CoinMarketCap estimates Bitcoin comprised 39.36% of the Global Cryptocurrency Market Cap on 13 December 2022. Moreover, Bitcoin’s portion of the Global Market Cap grew by 0.47% on 13 December 2022.
Stablecoins are the Most Popular Digital Asset
Conversely, DeFi assets comprised just 5.44% of the global cryptocurrency 24- Hour Market Volume on 13 December 2022. However, Stablecoins comprised 99.46% of the Global Cryptocurrency 24 Hour Market Volume on 13 December 2022.
Hence, stablecoins are the most popular blockchain asset but Bitcoin is the most popular stablecoin. For example, Bitcoin had a $341.757 million Market Cap on 13 December 2022. However, Tether (USDT) had a $65.794 million Market Cap on 13 December 2022.
In contrast, Tether had larger 24-Hour Market Volume ($37.698 billion) than Bitcoin ($26.881 billion) on 13 December 2022. I think Tether is more popular than Bitcoin because it pays in the world’s reserve currency the US Dollar. To explain, a reserve currency is the fiat currency financial institutions and corporations use for international transactions.
Stablecoins will Grow in 2023
Stablecoins such as Tether and Binance USD (BUSD) are popular because of the strong dollar. Some people stablecoins for trade. Others purchase stablecoins out of the erroneous belief that stablecoins contain US Dollars. In reality, stablecoins pay in US Dollars held in a bank account or a defi ecosystem.
I think the strong dollar will continue driving up the price of stablecoins. Notably, market strategists polled by Reuters on 7 December 2022 think the US dollar will rebound and gain strength as “a safe-haven” currency in 2023. To elaborate, a safe-haven currency is where speculators stash money in chaotic times.
Consequently, stablecoins speculators view as safe will keep gaining value in 2023. I think this will benefit the big US Dollar stablecoins; Tether (USDT), BinanceUSD (BUSD), and USD Coin (USDC) which keep growing in 2023.
The Crypto Winter will Continue
I think the Crypto Winter will continue and could get worse because of the hysteria catastrophes such as the FTX meltdown generate.
The Total Global Cryptocurrency Market Cap shrank from $2.113 trillion on 13 December 2021 to $872.104 billion on 103December 2022. Similarly, the Total Global Cryptocurrency Market Volume shrank from $93.47 billion on 13 December 2021 to $51.769 billion on 13 December 2022.
However, I think the Global Cryptocurrency Market Cap and 24-hour Market Volume will grow over the next year as people realize some blockchain assets are safe. Yet that growth will be well below the $2.218 trillion in 2023.
One trend I predict is that money will flow into established cryptocurrencies led by Bitcoin (BTC). I think the other big gainers will be Binance USD, Tether, USD Coin, Binance (BNC), and Ethereum.
Some Cryptocurrency Growth
Notably, Bitcoin, Ethereum, USD Coin, and Binance are experiencing small amounts of growth. For example, Bitcoin’s 24 Hour price grew by 0.124% on 13 December 2022.Plus, Bitcoin grew by 14.46% in the seven-days ending on 13 December 2022. Conversely, Binance grew by 0.26% on 13 December 2022 but shrank by 6.76% in the seven days ending on 13 December 2022.
Similarly, Ethereum grew by 0.26% in the 24 hours ending on 13 December 2022 and 5.22% in the seven days ending on 12 December 2022. In the same period, Tether and USD Coin showed no growth.
Overall, CoinMarketCap gave Ethereum (ETH) a $161.373 billion Market Cap, Tether a $65.794 billion Market Cap, Binance a $43.177 billion Market Cap, and USD Coin a $43.756 billion Market Cap on 13 December 2022. Conversely, Binance USD had a $19.505 billion Market Cap on 16 December 2022.
I think these numbers show crypto will grow slowly but surely. I predict we won’t see $100,000 Bitcoin in 2023, but we could see $35,000 or $50,000 Bitcoin. For the record, CoinmarketCap gave Bitcoin a $17,747.61 Coin Price on 13 December 2022.
The Near Future of Crypto
However, outside events could drive the market. For instance, the collapse of a major fiat currency such as the Chinese Yuan or the British Pound. Notably, the British economy almost collapsed in October 2022. Such a collapse could drive up stablecoin and Bitcoin prices as people scramble to put their money into something they view as safe.
Another event that could drive up Bitcoin or stablecoin prices is reports of Bitcoin or stablecoin purchases by a major central bank. For example, the Bank of England. To explain, central bankers could start buying Bitcoin or Tether if they fear their fiat currency could collapse. Central banks could also buy Tether for international transactions.
My prediction is that the global cryptocurrency market will grow to around $1 trillion in 2024 and stay there for a few years. Similarly, I predict Bitcoin will rise to $25,000 to $30,000 and remain at that level for a long time.
Conversely, I think the stablecoin market could grow dramatically in 2023. Particularly, if speculators accept Tether (USDT), BinanceUSD (BUSD) and USD Coin (USDC) as safe investments and dollar substitutes.
Cryptocurrency will not disappear, but the days of wild growth are over for now.
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