Bored Apes and Bank Rates: A Look at Cryptocurrency and NFTs in 2023
Cryptocurrency became the talk of the town in 2017 when bitcoin reached a never-before-seen value of US$19,000 (A$28,154).
A year later, bitcoin had dropped to just over $4000.
Over the next three years, the poster coin for the crypto world would soar up and then trade largely sideways, until it suddenly broke above $70,000 in February 2021. By May of that year, it was back at $45,000. as of September, over $65,000; As of November, about $90,000.
Nevertheless, by November 2022, bitcoin was back at $25,000.
The point is that cryptocurrencies have always been a high-risk and extremely volatile asset.
Crypto refers to digital assets such as cryptocurrencies, coins, or tokens that represent ownership of value or rights to something.
A major appeal of crypto assets is the fact that they operate independently of any central authority and are not controlled by governments or financial institutions.
They are stored on a decentralized digital ledger, called a blockchain. They have no legal value and are simply worth what people are willing to pay for them in the market.
According to the Australian Securities and Investments Commission (ASIC), the surge in crypto prices in 2021 was, for the first time, driven by institutional investors rather than individuals. Banks and firms were suddenly snatching up these virtual assets, and this helped propel not only crypto prices but crypto’s reputation.
With high-profile investors jumping on the crypto train, many are wondering whether digital assets are the way forward. Some governments also joined in, with El Salvador in 2021 becoming the first country to adopt bitcoin as legal tender.
And, of course, along with the cryptocurrency boom has come a rise in popularity for non-fungible tokens, or NFTs.
From sports clips to artwork to short videos, some of these digital collectibles have exchanged (virtually) hundreds of millions of dollars. It is a new, uncertain niche in trading and collecting, but of great value to those who get it right.
So, with so much volatility and unpredictable movements in the crypto market, what should investors be watching in 2023?
Code, credibility and currency
Cryptocurrency is classified into various groups, such as trading, gaming, government banking, healthcare, retail, eCommerce and more.
Market researcher Grand View said that after generating a massive US$40 billion ($59.8 billion) in 2021, the cryptocurrency market was predicted to post a compound annual growth rate (CAGR) of 26.8 percent through 2030.
Grandview said that one of the key elements driving blockchain development was the growing need for improved transparency and operational efficiency in digital payment systems.
Over 2023, and especially in Australia, many crypto players are expecting new regulation to start making their way through parliament – at least according to crypto exchange The Independent Reserve, which has been running the Australian Blockchain Ledger since 2013. working in space.
The company aims to transform cryptocurrency technology into a secure, robust and regulated financial service.
Adrian Przelozny, CEO of Independent Reserve, said that despite its popularity, the crypto industry was in dire need of a “well-thought-out regulatory framework”.
“I firmly believe that the industry needs a well-thought-out regulatory framework. This includes onshore custody, which is the foundation for all other operations,” said Mr. Przelozny.
“Ultimately, we want to see a regulatory framework that protects consumers and encourages responsible growth in industry to create jobs and bring in foreign investment.”
Mr Przelozny said the recent recommendations of the Australian Government’s ‘Select Committee on Australia as a Technology and Financial Centre’ report, called the Bragg Report, were a step in the right direction.
“They will provide better consumer protection, clearer taxation rules and operational clarity for businesses in the space,” Mr Przelozny said.
“It is encouraging to see the Australian Government engaging with industry during this process, and we expect legislation to be drafted this year and passed through Parliament in 2024.”
According to ASIC, over the past few years, many institutional and individual investors have been seen buying counterfeit crypto assets – an issue unable to be resolved without the precise legal and regulatory status of digital assets.
ASIC’s approach to regulation in this area has always been to encourage new technology as well as protect retail investors.
Meanwhile, cryptocurrencies are being explored by countries with emerging economies such as Argentina, Zimbabwe and Iran, which suffer from devalued currencies.
Increases in data security and adoption of digital currency by major corporations such as Mastercard and Tesla are expected to boost the industry.
Crypto assets such as Binance, Bit Fury, Ripple and Intel Corporation are some of the major players planning to capitalize on the big moves in the crypto sector this year.
Where do NFTs fit in?
Research by Grand View in April 2022 predicted that the non-fungible token or NFT market would reach US$211.72 billion (AU$315.75 billion) by 2030 – a CAGR of 34.2 percent over 2023.
It is clear that interest in the space is only growing as digital tokens are seen more and more as real, worthwhile investment assets.
In February, Paris hosted one of the largest NFT conventions of the year, with over 10,000 attendees over two days.
According to NFT Evening, the two-day conference was classified as the biggest Europe NFT event ever.
The conference explored the potential of Web 3 and the roles NFTs can and will play within platforms such as the metaverse.
Industry leaders also used the platform to voice some of their concerns, including the possible removal of royalties on the NFT marketplace.
While royalties have been a trending topic in the NFT space, Yat Siu, founder of Animoca Brands, said that removing royalties on the marketplace was dangerous for the NFT industry.
When an NFT is sold, the original creator may receive a percentage of the sale price, known as a royalty fee.
Yat Siu compared royalties to “gas” that fueled the creators’ economy.
Siu said, “If you eliminate royalties, you also eliminate the industry that feeds you, so it must be protected.”
He added that the removal of NFT royalties may discourage manufacturers from producing high-quality NFTs.
And without high-quality NFTs, potential buyers may not be as interested in making a purchase, driving down the value of the entire market.
So, which coins are currently at the top of the charts?
OpenSea, one of the largest NFT marketplaces, reveals the current trending NFTs and those that are selling the most.
For example, the Azuki NFT was released in January 2022 and has become one of the most popular tokens on the OpenSea platform. The total volume of tokens is more than 448,500 Ethereum. For context, one Ethereum is currently trading around $2700.
This anime art NFT is one of many digital art NFTs that generate millions of dollars in sales daily.
2023 is shaping up to be an interesting year for digital assets and investment decisions.
Coinmarketcap says that the cryptocurrency has become the 8th largest economy in the world as of February last year.
While the volatile nature of the market means that investors should take all predictions with a grain of salt, early signs point to a positive year ahead for the cryptocurrency and NFT space – especially after the recent bank collapse in the US. In the light
While regulation and certification in the crypto space remain a major concern for investors, the adoption of cryptocurrencies by governments and institutions points to ongoing value in the space.
In regards to this year’s crypto trends, the CEO of Independent Reserve said that sometimes it was not about timing the market but timing the market.
“Seventy-eight percent of users who invested in crypto for five years or more reported making a profit, while only five percent of investors reported losses,” Mr. Przelozny said.
Tracking future trends of the NFT market, such as changes in the average selling price or new record-breaking sales, will help provide valuable insight for investors into how the market develops.