Crypto Outlook: 3 things to expect for the second half of 2023

future crypto trends - Crypto Outlook: 3 things to expect for the second half of 2023

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The crypto winter has thawed and last year’s recession seems to be over. So what future crypto trends can investors expect to see in the future? The cryptocurrency market remains volatile and predicting the future is never easy. However, there are some clear signs of things to come that are likely to affect the price of Bitcoin (BTC USD), Ethereum (ETH USD) and other digital coins and tokens.

Markets, regulators and analysts have all been clear on the current state of crypto and the industry’s likely future. The good news for investors is that things are not as bleak as they seemed six months ago, when the global industry was in chaos and BTC was trading for less than $16,000. In any case, cryptocurrencies have proven to be resilient in the face of adversity. Here are three future crypto trends to expect in the second half of 2023.

Regulations are coming

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Like it or not, regulation is one of the upcoming crypto changes for the industry. In mid-May, the European Union passed the world’s first comprehensive set of crypto regulations. Going forward, all companies wishing to issue, trade or hold cryptocurrency assets or stablecoins in the 27 member states will need to obtain a license to do so. European regulators say they are now focusing on developing rules for cross-border cryptocurrency activity with their counterparts in the US and UK

Pressure on governments around the world has increased to regulate crypto following last November’s $8 billion collapse of the FTX cryptocurrency exchange. Regulators in the UK have outlined a phased approach to crypto regulation, starting with stablecoins and expanding to other digital assets. In the US, several pieces of crypto legislation are before Congress, while the US Securities and Exchange Commission has said it is trying to determine what oversight role it will ultimately play in the crypto sector.

Private investors are making a comeback

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With potential debt redemption now off the table and the US Federal Reserve expected to halt rate hikes, risk appetite is beginning to return and retail investors are starting to re-enter the market after spending much of the past year on the sidelines . Evidence is everywhere. Powered by hype surrounding artificial intelligence, the Nasdaq index is up 26% this year and is in the midst of what appears to be a bull run. The benchmark S&P 500 index is also on the rise, up 12% year-on-year.

Cryptocurrencies have also benefited from retail investors making a comeback after being shocked by the implosion of multiple stablecoins and crypto companies last summer and fall. Bitcoin, the largest cryptocurrency by market capitalization, is up more than 60% this year and has traded above $30,000 at several points. If market conditions continue to improve and retail investors become more optimistic, future crypto trends could push prices higher.

The rise of privacy coins

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With regulation all but assured, many crypto bulls are moving money into so-called “privacy coins.” These are cryptocurrencies that hide the sender, receiver and amount of a transaction from view. Many crypto analysts say the growing threat of regulation is driving more people towards the anonymity of privacy coins. This helps explain the rise in value of cryptos such as Monero (XMR USD), one of the more popular new varieties of privacy coins.

The price of Monero has recently retreated from the wider crypto sector, but had risen as much as 25% in recent months. Other privacy coins have also enjoyed rallies this year. However, regulators are trying to crack down on privacy coins as they say these cryptocurrencies are abecause they are anonymous and untraceable, they are popular with criminals, many of whom use them to launder money money. In the short term, it appears that privacy coins will continue to grow in popularity, especially with new ones regulations expected in the coming months.

At the date of publication, Joel Baglole had no (direct or indirect) positions in the securities referred to in this article. The opinions expressed in this article are those of the author, subject to Publishing Guidelines.

Joel Baglole has been a corporate journalist for 20 years. He worked as a staff reporter for The Wall Street Journal for five years and also wrote for The Washington Post and Toronto Star newspapers, and for financial websites such as The Motley Fool and Investopedia.

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