✔️ Information reviewed and updated in December 2023 by Reliable Forex Brokers
Analytics firm Kaiko has shared its predictions for the cryptocurrency market in 2023, based on the main events of the past year.
According to his report, the FTX collapse was the biggest event of 2022 for the industry, and probably the most covered in the history of cryptocurrencies. This was due to concerns surrounding FTX's FTT token, which led to a large exit from the exchange and a halt in withdrawals before FTX declared bankruptcy.
Kaiko points out that the FTX collapse was a massive scam involving the embezzlement of client funds and a lack of liquidity of $8.000 billion. Furthermore, he notes that FTT turned out to be a huge vulnerability due to its lack of utility, liquidity, and demand. Kaiko sees this situation as an opportunity to learn and suggests that the industry should question business models and balance sheets, as well as demand transparency from the centralized places it uses. He also advises investors that be careful when choosing a platform to invest, due to the lack of liquidity demonstrated by FTX. Additionally, the firm stresses that the industry needs to understand that market capitalization and fully diluted valuation are theoretical numbers that do not accurately reflect a token's value, especially if a large holder is looking to sell.
In this sense, the firm points out that asset valuations were questioned after the collapses of FTX and Terra. Kaiko also mentions that the bankruptcy of lender Celsius in 2022 demonstrated the risks of centralized platforms that invest customer balances.
Therefore, he suggests being wary of investment products that offer returns that are too high, as they are probably not real. Finally, the report estimates that the Federal Reserve could alleviate the situation of the cryptocurrencies in 2023 due to the change in the monetary policy regime to reduce global inflation, which has slowed traditional and cryptocurrency investment.