Tough year for cryptocurrencies. Zonda summarizes and predicts the trends of 2023

2022 has not been easy for the cryptocurrency sector. The market was dominated by bearish moods and an atmosphere of uncertainty, but there were also several breakthrough events for the development of the industry. Exchange experts Zonda comment on the most important events of the past year and forecast what we can expect in the near future.

Cryptocurrency adoption is progressing

The cryptocurrency market, which is currently struggling with a slump, proves that digital assets are still in demand and interest of investors - including institutional ones. The proof is even the partnership between the Coinbase exchange and BlackRock – the largest investment entity in the world. As part of the cooperation, BlackRock created a private Bitcoin Spot trust fund for the company's US-based institutional clients.

“Digital assets are entering the mainstream and awareness of more and more people. Investments by giants such as BlackRock and Brevan Howard, which has raised over $1 billion from institutional investors, show that big players believe in the industry. This is a good omen for individual investors - he comments Stanislav Havryliuk, COO Zonda exchanges.

Market regulations

At the end of 2022, Brazil put the "dot over the i" on the regulation of cryptocurrencies. Outgoing President Jair Bolsonaro has signed a law regulating the digital coin sector. As a result of the introduction of new regulations, a licensing system has been established for companies that provide cryptocurrency services. Moreover, a new criminal law framework for cryptocurrency fraud has been defined.

On our continent, the legislative process is also progressing. A very important event this year was the adoption by the European Parliament of the law on digital assets called "Markets in Crypto-Assets", in short MiCA. The regulation increases consumer protection by tightening the requirements for entities providing services in the field of cryptocurrencies. MiCA imposes e.g. the obligation to obtain a permit and to publish a special information document approved by the designated authorities.

Last year also confirmed that the blockchain and digital asset industries need more oversight. Fall of FTX (the second largest cryptocurrency exchange in the world) or the collapse of the Terra ecosystem (as a result of which such cryptocurrency companies as Celsius, Three Arrows Capital and BlockFi declared their bankruptcy) prove that there is no place for the "Wild West" in this sector ".

– We expect that many of the issues caused by the lack of appropriate regulations will be resolved in 2023, which will improve customer safety and reduce the burden on operators - comments Stanislav Havryliuk. – Not everyone agrees with the regulations, but after the catastrophic events of 2022, there is no doubt that some issues need improvement. Zonda intends to continue working with regulators and legislators to put customer safety first without imposing limits on innovation. We will also continue our expansion on foreign markets - last year we obtained a Canadian license and entered the Italian market. We're not going to stop.

The institution's increased work on regulating the cryptocurrency market is largely the result of millions of losses suffered by investors as a result of the collapse of the FTX cryptocurrency exchange and Terraform Labs. Therefore, regulators are working in this direction.

– Stricter regulations on the activities of cryptocurrency operators is good news for investors, especially those who still feel last year's losses this year. Unfortunately, in many countries the rules were introduced in haste and lack coherence and clarity. This can result in transaction delays and additional checks that many users find unnecessary - adds Havryluk.

The return of the bull market

Cryptocurrency investors will not associate last year with easy profits. Bitcoin (BTC) ended the year below 20. USD, stopping around 17 thousand. USD. In a year, BTC has lost more than 65% since its record high in November 2021. Other digital assets followed Bitcoin's decline. The second largest digital coin in terms of market capitalization, Ethereum (ETH), was slightly above 1,1 thousand at the end of the year. dollars. Just like BTC, ETH fell by more than 65% in one year. The capitalization of the entire market fell from USD 2 trillion to just over USD 830 billion.

However, every winter comes to an end, and many analysts and industry experts predict that the crypto market will end in the second half of 2023. It is expected that the cryptocurrency sector, after healing several severe wounds it suffered in 2022, will recover and return even stronger to the path of growth.

Market regulations can definitely contribute to improving its security, and thus, to greater trust of institutions in digital assets. As a result, this may result in the return of investors to the market and the entry of new, large corporations. Ultimately, this will lead to an influx of new capital and an increase in the rates of key cryptocurrencies.

“The events of the past few months have had a devastating impact on the cryptocurrency industry, but the market has survived and now looks poised to come back stronger and better than ever. In 2022, the number of bitcoins held by Zonda exchange customers increased by 11%, and 11 new coins appeared on the platform. Many analysts are predicting record prices for major coins, but we prefer to be more cautious on this issue - he comments Stanislav Havryliuk.

Of course, nothing is certain, especially in such a relatively young and volatile market. What's more, this is not the first bear market and certainly not the last. As such, Zonda is prepared for a variety of scenarios.

“The previous bear market lasted for at least two years, so there is no strong evidence to support new highs in 2023. However, as confidence returns to the market and regulations improve, we expect year-end ratios to be higher than at the beginning. In 2022, our monthly turnover was over EUR 150 million. We hope that this year it will be even more – adds Przemysław Kral, CEO of Zonda.

Development of the DeFi sector

In September 2022, the most important technological event in the world of cryptocurrencies took place. Of course, we are talking about the transition of the Ethereum blockchain to a new ETH mining model via the Proof-of-Stake algorithm. This update, called The Merge, made the transactions made in this blockchain much faster, and the network itself became more stable and safer.

It's on that blockchainie most processes related to DeFi, i.e. the decentralized finance market, take place. This ecosystem is primarily associated with cryptocurrency lenders and platforms trading digital assets.

“With the development of DeFi, we expect a significant increase in cross-chain interoperability – that is, bridging protocols that allow coins to flow between distributed DeFi platforms. While still a relatively new concept - the roughly 30 existing bridging protocols have only $10 billion in Total Locked Value (TVL) - the next bull market is likely to see an increase in demand for cross-chain interoperability - predict Havryluk.