Top 5 Cryptocurrency Trends (2023 & 2024)
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The past year or so has been a wild ride in the cryptocurrency space.
Ripe with fraud and falling prices, many analysts have questioned crypto’s ability to survive and endure.
However, the cryptocurrency market still maintains a $1.17 trillion market cap.
And 320 million people across the globe use cryptocurrency.
In this report, we'll share the biggest trends in the crypto space happening right now (in 2023).
And those that are likely to continue through 2024 and beyond.
1. Bear Market Takes Hold
With asset prices down considerably and investors fleeing, the cryptocurrency market clearly sits in a bear market in early 2023.
Some refer to it as “crypto winter”.
Searches for “crypto winter” show growth over the past few years.
The market has faced similar bear markets three times, each lasting longer than 20 months and resulting in declines of more than 70%.
The current bear market (now sitting at 350+ days) was fueled by the fall of the Terra ecosystem, the collapse of FTX, massive withdrawals by users, and significant FUD.
In recent months, the market cap has been at levels that are down 65% from all-time highs set in 2021.
Cryptocurrency’s market cap has fallen dramatically in recent months.
However, there are positive trends emerging.
In mid-January, Bitcoin was just 10% off of its 200-day moving average.
Bitcoin climbed back above $22,700 in mid-January.
Certain analysts say that climbing above the 200-day moving average signals the end of the bear market.
In fact, CoinWire’s survey from December 2022 shows 64% of investors believe the market is close to reaching rock bottom.
Some even suggest that Bitcoin will recover in 2023 and hit $35,000 by the end of the year.
Regulatory action, the pausing of Fed rate hikes, and user sentiment could all play a part in Bitcoin’s near-term value.
Another interesting correlation exists between BTC halvings and bull markets.
In the past, Bitcoin halvings have been followed by a bull market.
BTC halving happens every four years, cutting the rate at which bitcoins are released. History from the last two halvings (2016 and 2020) shows that when this happens, the market is in the early stages of a bull market and a significant run occurs one year later.
The next BTC halving won’t occur until 2024.
2. Resurging and Expanding Use Cases for NFTs
The pending resurgence of non-fungible tokens (NFTs) is another trend that crypto experts say they see on the horizon.
Search interest in "non-fungible tokens" has grown by over 1,000% during the last 5 years.
In March 2021, an NFT sold for $69 million.
Fast forward to November 2022, and the market had collapsed by 97%.
The bear market in cryptocurrency, high inflation, the prevalence of scams, and a lack of trust in blockchain-related products are all to blame.
However, many believe that NFTs will recover soon.
The founder of Outlier Ventures predicts this sector will be one of the first crypto-related markets to recover in 2023.
In addition, a report from Verified Market Research predicts the NFT market will reach $231 billion by 2030.
The NFT market is predicted to reach nearly $232 billion by 2030.
Gaming is one sector in which NFTs haven’t lost much ground.
Players use NFT-linked digital cards to earn and trade in-game perks.
ImmutableX is one of the most popular video game firms to go all-in on NFTs and Web3.
Search volume for “ImmutableX” is up 1,000% in the past two years.
In 2022, their platform brought in $87 million in NFT trading volume, which was a 250% increase over 2021.
There are more than 1.5 million wallets in the ImmutableX NFT marketplace today.
In addition, the company recently announced a partnership to launch the GameStop NFT marketplace.
Big names in fashion continue to dive into the NFT marketplace, as well.
The sector has already brought in $245 million.
Nike has been a stand-out so far and showed even more commitment to the market as they launched “dotSwoosh,” a branded NFT-based platform in late 2022.
Prada continues to release NFT collections in the luxury fashion space.
In January 2023, the brand released 50 limited-edition shirts that were available only to those holding a specific NFT. The NFT also gave customers access to a Milan fashion show.
As NFTs continue to grow in fashion, art, and gaming, we may see their use grow in other unsuspected areas in the coming years.
Take real estate, for example.
Search volume for “real estate NFT” jumped in 2022.
For the first time ever, a home in the US was sold as an NFT in October 2022.
NFTs could potentially make home buying a much easier and quicker process.
Mattereum is a UK company that’s tokenizing several types of physical assets like homes, musical instruments, and vintage wine.
Mattereum’s Asset Passport provides owners with a trustable NFT that’s legally enforceable in 170 jurisdictions globally.
They partnered with IG Wines in 2022 to tokenize high-priced wine and whisky.
They were also the tech partner in the UK’s first NFT home sale.
3. Continuing Fallout from FTX Collapse
In mid-2021, FTX was one of the world’s largest crypto exchanges, valued at $32 billion.
However, as the company filed for bankruptcy in November 2022 and the founder was arrested in December 2022, details of an alleged Ponzi scheme and millions of dollars of losses emerged.
The fall of FTX triggered a domino effect throughout the industry.
As recently as January 2023, the US federal government seized more than $600 million in assets from Sam Bankman-Fried, the founder of FTX.
The 1 million people who are creditors of FTX are eager to know if they’ll ever get their money back, a total of $8 billion in all.
The US government has set up a website to help facilitate the process, but bankruptcy experts say this process will take years and creditors are highly unlikely to get all of their money back.
The fall of FTX has highlighted the importance of cold wallets, an offline storage solution for cryptocurrency.
Search volume for “cold wallet” started climbing in 2021.
Cold wallets are considered the best option for keeping crypto safe from hackers or companies that go bankrupt, but many crypto users choose not to use them.
The alternative is hot wallets, those which store crypto online. These solutions are more convenient and they’re usually free.
Search volume for “hot wallet” has posted a 81% increase in recent years.
The market is showing growing interest in cold wallets, also referred to as hardware wallets.
Mordor Intelligence predicts a CAGR of more than 28% through 2028.
Beyond impacting trends among individual consumers, the fall of FTX has the potential to dramatically change how investors and companies function in the space.
Several companies were directly affected by FTX’s bankruptcy.
BlockFi, a cryptocurrency lender, filed for bankruptcy in late November 2022.
Genesis Global Capital stopped customer withdrawals and new loans and eventually filed for bankruptcy in January 2023.
Crypto experts say this consolidation of the market will continue in the coming years.
Many companies are already scaling down their workforces. More than 4,600 employees at crypto firms were laid off in 2022.
As for funding, VC investments totalled $25 billion in 2021, but fell in 2022.
Even before the FTX collapse, funding was cooling. Data from 2022 Q3 shows a 35% quarter-over-quarter loss.
Funding in the second half of 2022 took a serious hit.
Pitchbook reports that funding in Q4 took an even bigger hit, dropping 75% quarter-over-quarter.
Instead of funding cryptocurrency directly, some industry experts say CV funding will pivot to things like Web3, DeFi, and other digital platforms in 2023.
This was already playing out in early January as CyberX, a digital asset trading company, secured $15 million in funding with the goal of integrating DeFi protocols into its network and strengthening its infrastructure.
CyberX has posted a cumulative trading volume of $180 billion in the past six years.
4. Increasing Regulation of Cryptocurrency and Exchanges
In the wake of the FTX implosion, regulatory scrutiny of the crypto market is at an all-time high.
So far, the US government has very few laws and regulations surrounding cryptocurrency.
Search volume for “crypto regulation” is up more than 280% in the past 5 years.
Cryptocurrency is covered by things such as the Bank Secrecy Act and anti-money laundering act, but the government leaves much of the lawmaking up to the states.
The number of crypto-related bills introduced peaked in 2021.
The first time cryptocurrency was mentioned in federal law happened in late 2021 as part of the Infrastructure Investment and Jobs Act.
That law was mainly referring to the tax implications of crypto exchanges, but it doesn’t go into effect until 2024.
However, calls for more legislation are emerging.
In 2022, President Biden released an executive order and a proposed framework for regulating cryptocurrency.
Much of the solution is aimed at stopping criminal activity in the crypto industry, which is much-needed considering there’s been more than $1 billion lost via cryptocurrency scams since 2021.
The Financial Stability Oversight Council (FSOC) has also called on Congress to pass laws regulating crypto and specifically called out stablecoins, crypto spot markets, and regulatory arbitrage.
One possibility is that the US will set up a central bank digital currency (CBDC).
Search volume for “CBDC” has grown exponentially in recent months.
According to the Brookings Institution, this would create a virtual currency that is centralized and managed by central banks as opposed to decentralized blockchains.
There is hope that this type of currency would offer the benefits of crypto without the risk.
China is currently testing a digital yuan, called e-CNY, and so far it’s been used in transactions totaling $13.9 billion.
Several countries around the world are researching or developing CBDC.
5. Crypto’s Growing Climate Impact
A lesser-known but potentially pressing trend for the crypto industry is the sector’s energy and climate change implications.
According to a White House news release, the production of crypto assets uses between 120 and 240 billion kW hours of electricity per year—more than the total annual electricity usage of Argentina or Australia.
The problem lies in a step within the cryptocurrency mining process called proof of work. This is a process that requires miners to solve complex mathematical problems via high levels of computing power before they can submit new blocks to the network.
In 2022, Ethereum launched The Merge, a software upgrade that drastically cut energy use by crypto miners by getting rid of proof of work and replacing it with proof of stake, a verification method that utilizes cryptocurrency holdings.
An analysis from the Crypto Carbon Ratings Institute said this upgrade will take Ethereum’s electricity use from 23 million MW-hours per year to 2,600 MW-hours per year.
As for Bitcoin, a single transaction uses the same amount of energy as an average US household over the course of nearly 26 days.
Energy consumption from the Bitcoin network is nearly half that of gold mining.
Still, the network of miners has no current intentions of changing to proof of stake.
The main reason is that proof of work is the only way to truly ensure a decentralized network.
The environmental problem has only gotten worse for the US as other countries have banned crypto mining.
The Columbia Climate School reports that up to 75% of mining used to take place in China. The country banned all activities related to cryptocurrency in 2021.
The organization now estimates 35% of Bitcoin’s required computational power now occurs in the US.
This state-by-state look shows Bitcoin’s hashrate, a term that refers to the amount of total power required to process transactions and mine Bitcoin.
States are increasingly taking action to limit the energy usage and pollution created by crypto mining.
In July 2022, New York denied an air permit that was requested by Greenidge Generation, a natural gas-powered Bitcoin mining operation.
Other states and members of the US Congress have proposed laws in recent months that would increase EPA regulation of the industry and curb the use of fossil fuels.
In Oregon, lawmakers are lumping crypto miners together with data centers when it comes to environmental regulations. They will potentially be required to comply with the climate goals or pay a fine of $12,000 per MW-hour per day.
Conclusion
That concludes our list of the top crypto trends to watch right now.
The cryptocurrency market has been almost completely unpredictable over the last several years. Although the bear market has been in control for the past few months, the bull market may take over again soon.
But with increasing fraud and climate impacts, it seems nearly inevitable that stricter regulations will go into effect in the coming years.
One thing that is certain, however, is that innovation in this space will continue.
