The recent decline of FTX, along with the chaotic macroeconomic scenario and the cryptocurrency price drop, make it difficult to think of a next bullish cycle. But at some point, that cycle will come. In a news release published Monday (26), the Bankless collective shared three areas that could lead to a new bull market.
Catalysts of all time
For a new high, it is imperative that Bitcoin (BTC) and Ethereum (ETH) open the way, the post highlights. The two largest cryptocurrencies together account for 55% of the total market cap.
In the case of Bitcoin, Bankless believes the case for its use as a hedge against geopolitical risks and central bank decisions remains strong. “The world remains threatened by geopolitical risks such as the war in Ukraine, tensions between China and the United States, and political polarization in many countries around the world.”
In addition, the publication also notes that the credibility of central banks, such as the Federal Reserve, remains low after the decisions taken in the past two years. These uncertainties, according to the group, create a strong scenario for BTC, as investors look for alternative assets to store their savings.
In the same vein, ETH can also benefit from the renewed interest in alternative assets to fiat currencies. “In addition to owning stored-value real estate, with the expectation that its issuance will become deflationary, ETH offers investors a form of income after it transitions to proof of stake.”
Ethereum is also an “indicator of the blockchain economy,” Bankless adds, referring to decentralized finance, a feature that was boosted after the crashes of 2022.
Freshen breath in DeFi
Speaking of decentralized finance (DeFi), the publication points to 2022 as the year central finance was exposed as “opaque and fragile.” This paves the way for DeFi to go into 2023 and beyond, even stronger.
“Despite the faltering of centralized exchanges, loan applications, and hedge funds, DeFi protocols continued without a hitch, as they continued their operations as scheduled, without interruption.”
In addition, while centralized platforms have collapsed, several decentralized finance sectors have continued to evolve, offering innovative products, Bankless notes. Most notable is net staking, whose usage is expected to grow following the Shanghai upgrade of Ethereum.
Another point that may cause DeFi to get another rise in popularity and value allocated is decentralized perpetual contracts. The publication notes that protocols such as GMX, dYdX, Gains Network, and others, continue to grow as 2023 approaches.
Applications outside of finance
Although speculative use continues to be the largest use case for cryptocurrency, Bankless notes that there are other applications without a financial bias that show promise. Decentralized social networking, music on NFT, and gaming on Web3 are some of these areas, and they have the potential to spark a new boom in the cryptocurrency market.
The post highlights the growth of social networks like Lens and Farcaster, in contrast to the recent controversy seen on Twitter about censorship. Although NFTs related to the music industry are, technically, apps with a financial bias, the post highlights that the sector has room for growth.
“It’s a new form of monetization for artists, who earn much more from selling NFT to some fans than they do with streaming platforms, like Spotify, where the medium takes most of the value created.”
Meanwhile, Web3 gaming remains an exciting area in the cryptocurrency market, the group assesses. “The intersection of blockchain, NFTs and games has great potential, with hundreds of millions of dollars in capital coming from the funds that have entered the sector in the past year.” The publication acknowledges that there were no major launches in this sector in 2022. However, the influx of capital makes the game’s premise of Web3 becoming “successful” a matter of “when”, not “if”. .