In their latest annual report, Arcane Research says it expects diminishing trading volumes and volatility to be a key feature of the crypto market in the new year, which will make 2023 a significantly more boring market than previous years.
Referring to 2022 as a “yearlong hangover” the report says the catastrophic events during the year led crypto markets to witness a financial crisis with seemingly no end.
“While the blockchain is transparent, a lot of the most influential activity originates off-chain, through backdoor agreements, on exchanges, and in the largely unregulated global markets,” explained Arcane. “This is primarily possible due to crypto being purely borderless and will likely cause headaches and hangovers also in the future.”
Although the lessons learned from the crisis will help the crypto players and the participants in the future, Arcane doesn’t expect the FTX bankruptcy case to reach any sort of conclusion even by the end of 2023. In fact, it believes it’ll be a long-lasting scar that the crypto verse will have to wear, similar to the still ongoing Mt. Gox bankruptcy proceedings.
Read more: The FTX saga continues
That said the report expects the FTX contagion to likely play out in early 2023, which leads Arcane to believe that the majority of 2023 will be “less frantic and borderline uneventful” compared to the last three years.
The declining NFT volumes have also been a concern in 2022, with OpenSea witnessing a 95% decrease in volumes from January to November. However, Arcane expects a strengthening crypto market down the line will likely help rejuvenate the NFT market as well.
Betting on BTC
Bitcoin (BTC), the largest crypto by market cap, ended the year down 65%, which was its second-worst yearly performance since 2011. Arcane expects Bitcoin to trade in a predominantly flat range during the majority of 2023, though it predicts the crypto will end the year at a higher price than the yearly open.
“While the tightening macro landscape and BTC’s correlated relationship to macro complicate analogies to previous bear markets, we firmly believe that this is an excellent area to build gradual BTC exposure,” predicted Arcane.
It’s also gung-ho about the potential of stablecoins, hailing them as one of the highlights of the year, with Tether, USDC, and Binance USD (BUSD), all increasing their market share substantially in 2022.
According to the report, the three aforementioned stablecoins currently have a combined market cap that’s 41% of BTC’s market cap, up from 15% at the start of the year. Similarly, the trio accounted for 6% of the total crypto market cap at the start of 2022 and ended the year at 17%. This leads Arcane to believe that stablecoins will maintain their dominance throughout 2023 as well.
