Korbit Research Center "Expect Cryptocurrency Market Cap Rebound Next Year"…Published Outlook Report

[Asia Economy Reporter Lee Jung-yoon] On the 5th, Korbit Research Center, under the domestic virtual asset exchange Korbit, announced the publication of a report forecasting the virtual asset market in 2023.

The Korbit Research Center predicted next year's virtual asset market trends from four perspectives: ▲Rebound of virtual asset market capitalization (Jung Seok-moon, Head of Korbit Center) ▲Expansion of virtual asset institutionalization (Choi Yoon-young, Researcher) ▲Enhancement of credibility and value creation (Jung Joon-young, Researcher) ▲Synergy among stablecoins, DeFi (decentralized finance), and traditional financial institutions (Kim Min-seung, Researcher).

Head Jung expected the virtual asset market capitalization to rebound next year. This year, due to the Federal Reserve's (Fed) monetary tightening policy and the risk asset avoidance phenomenon, along with the collapse of centralized finance (CeFi) companies such as Terra-Luna, Celsius, 3AC, and FTX, the virtual asset market capitalization, which once approached $3 trillion, has now shrunk to about $800 billion.

However, he analyzed that investments, research and development, and hiring in the virtual asset industry are steadily increasing, which can be seen as an improvement in the industry's fundamentals as the number of people who understood the value of virtual assets increased during last year's bull market.

Furthermore, Head Jung predicted that due to the Fed's prolonged tightening policy, inflation figures will stabilize in the first half of next year, leading to a recovery in demand for risk assets overall. He said, "If this scenario unfolds, 2023 is likely to resemble 2019." He added, "Many believe that the impact of the 2018 virtual asset crash continued into 2019, but in fact, Bitcoin's return in 2019 was as high as 92%. In early 2019, the Fed froze the interest rate hikes it had implemented several times before and shifted its policy direction by stopping bond holdings reduction in September of that year." He also added, "Considering these aspects comprehensively, it is expected that next year's virtual asset market capitalization could recover from the current $800 billion to between $1 trillion and up to $1.5 trillion."

Researcher Choi focused on the expansion of virtual asset institutionalization. In particular, she expected institutions to show increased interest not only in Bitcoin but also in Ethereum. In the second half of this year, Fidelity launched an Ethereum index fund, and JP Morgan succeeded in the first DeFi transaction using the Ethereum network. Researcher Choi stated that three companies?Bank of New York Mellon, Goldman Sachs, and ING?which have shown interest in DeFi, might engage in DeFi transactions next year.

Researcher Jung analyzed that due to various internal control failures in virtual asset-related companies this year, virtual asset-related regulations will become more concrete next year, potentially increasing market volatility. He said, "It is necessary to pay attention to the outcome of the lawsuit between the U.S. Securities and Exchange Commission (SEC) and Ripple regarding the determination of whether certain assets are securities, as well as the passage of the Responsible Financial Innovation Act (RFIA) proposed by Senators Lummis and Gillibrand in June." He also predicted that, regardless of securities law application, investor protection aspects will be further emphasized in various bills.

He added, "In the case of stablecoins, the requirements for issuers are expected to be strengthened, which will reduce the position of algorithmic stablecoins or virtual asset-collateralized stablecoins." Researcher Jung said, "For the virtual asset market situation to improve, trust recovery and actual value creation must be prerequisites rather than price increases driven by expectations."

Researcher Kim said, "We need to look at the potential synergy among stablecoins, DeFi, and traditional financial institutions." Considering that virtual assets with volatile prices compared to fiat currencies are difficult to use for general commerce or small payments, he believed that blockchain and virtual assets are likely to enter the public sphere in the form of stablecoins issued by countries or large institutions. In that sense, to dominate the stablecoin market, three companies?the issuer of Tether, Circle (issuer of USDC), and Binance (issuer of BUSD)?are expected to compete fiercely, increasing stablecoin usage.

Regarding DeFi, Researcher Kim predicted that concerns over centralized exchanges increased due to the FTX issue, leading to a rise in the number of users and trading volume on decentralized exchanges (DEX), and that the DeFi market could mature further next year.

This content was produced with the assistance of AI translation services.