Ethereum and Bitcoin have started 2023 in the green – what crypto holders should expect next?

The biggest digital currencies by market cap have climbed slightly over the last few days, and specialists are optimistic they’ll perform better in 2023 than in 2022. 

Bitcoin has entered the new year registering modest gains, but even if it barely moved over the last months, it’s crucial to note that it grew by 1% in the first week of January. A look at exchange platforms shows that the oldest cryptocurrency is trading at over $16,500, slowly increasing in value. In January 2022, Bitcoin was trading over 60% higher than it’s now, but let’s stay positive and remember that it remained the biggest digital coin in the sector, despite the bear market. 

Ethereum was also up at the end of 2022 and entered 2023 with a growth of 1,9%. The second-largest cryptocurrency by market cap had some terrible periods before and after the Merge. Let’s remember that in November, it plunged to around $1,100 due to the shift from the proof-of-work to the proof-of-stake protocol. But in December, it registered an increase in value and remained almost flat over the first week of January 2023. 

Investors interested to buy Ethereum online should have a quick look at Binance to have a clear picture of the coin’s evolution in 2022 and the first month of 2023. According to the Ethereum Foundation, ETH holders will have an interesting 2023 because the blockchain will introduce Proto Danksharding in the following period, and it won’t be the only update of the ecosystem. The introduction of withdrawals will definitely make waves in the sector. Testing for the feature starts in January, but stakeholders will benefit from it by the end of March. 

However, even if cryptocurrencies had some catastrophic months, experts believe they’ll bounce back. Here’s why. 

It’s no secret that digital currencies have been in a freefall over the last few months due to the negative events in the worldwide economy. The average value of cryptocurrencies dropped, based on statistics from exchange platforms. Then came the implosion of FTX, which also had a negative impact on the sector. Crypto investors have several reasons to be pessimistic about digital coins’ evolution in 2023, but analysts believe it’s important to keep their faith. Despite the events from last year, the overall crypto ecosystem has potential because its decentralised nature allows it to bounce back. The sector has good survival instincts, to say so. 

The crypto market seems to always bounce back

2022 wasn’t the first time the market entered a bear phase. Bitcoin registered some dramatic drops in price in 2014, when the returns decreased by 58%, and its value remained depressed until 2017. Then in 2018, it plunged in value for over 18 months. And we all remember that it survived crypto winters and came back stronger every time. 

Ethereum also went through similar stages over the years, experiencing some steep declines, followed by sharp spikes in price. Crypto specialists often compare Bitcoin and Ethereum with cockroaches that just don’t want to die. They continue to survive the most challenging instances because they’re largely decentralised systems. Besides, the collapse of FTX has triggered an increased adoption of DeFi, which is powered by cryptocurrencies and is predicted to become a bright spot for the sector. 

DeFi’s rise

The crash of FTX had no impact on DeFi’s evolution, and finance experts believe that investors will most likely shift towards digital currencies like Ethereum and Bitcoin to benefit from their application-based ecosystems. 

The Ethereum blockchain houses several crypto applications like commerce, decentralised social media, and NFT-based gaming. Applications use the Ethereum blockchain because it enables them to use or build ETH currencies and complete transactions. Even if at the moment, only 5% of the overall number of internet users take advantage of crypto, it’s expected their number to grow due to these applications. 

It also seems like value in the market will move from speculative digital assets to application-driven and utility ecosystems like Ethereum. 

Market regulation

As the news announced for some time, the market will face regulation in the near future, which isn’t a bad thing because it could benefit it in the long term. Investors usually deride moves to regulate the space. The blockchain and the first cryptocurrency (Bitcoin) came to life as a response to the 2008 financial crisis. Crypto enthusiasts have visions of switching from controlled traditional finance to a more decentralised one. However, not that digital currencies are moving into the mainstream, and more and more people demand regulation. The fall of FTX also triggered an increase in the number of investors requiring a formal framework. 

Finance analysts state that regulation will definitely bring some adjustments in the industry, but the policies aim to create a more sustainable ecosystem and attract more institutional investors. 

Considering the above, it’s reasonable to believe that the crypto market has strong potential to grow, especially as people consider digital currencies as speculative assets they can add to their portfolios to gain income. 

What does 2023 bring for Ethereum and Bitcoin’s competitors?

2022 was a bad year not only for Ethereum and Bitcoin but for all the other altcoins. The bear market caused drops in prices for all cryptocurrencies, and few disappeared completely from the market. 

Crypto enthusiasts bet on projects linked to scalability on the Ethereum blockchain, like Arbitrum and Polygon, to trigger market growth. However, it doesn’t mean that other altcoins won’t have their place in the spotlight in 2023. Even if they still have some challenges to overcome, Cardano, Avalanche, and Solana are expected to perform well in 2023. 

Cardano passed the 4,000 smart contracts mark and has one of the best-developed networks in the sector, so investors will maintain their interest in it. 

Solana registered growth in the NFT sector, despite the bear market and remained a leader in the market due to its low fees and fast network. 

Avalanche continued to invest in upgrading the network despite the crypto winter and made some important partnerships with Ethereum’s competitors.