Crypto Outlook: 3 Things to Expect for the Second Half of 2023


  • Here are three crypto market predictions for the second half of 2023.
  • Regulation: The European Union has taken the lead, but the U.S. is also considering regulations for digital coins and tokens.
  • Retail Investors: Markets are rallying as retail investors move off the sidelines and take on risk again.
  • Privacy Coins: Cryptocurrencies that offer anonymity are growing in popularity, especially with the threat of regulation rising.
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 downturn appears to be over. So what future crypto trends can investors expect going forward? The cryptocurrency market remains volatile and predicting the future is never easy. However, there are some clear signals of what’s to come and likely to influence the price of Bitcoin (BTC-USD), Ethereum (ETH-USD) and other digital coins and tokens.

Markets, regulators and analysts have all been clear regarding the current state of crypto and the sector’s likely future. The good news for investors is that things are not as bleak as they seemed even six months ago, when the global industry was in chaos and BTC was trading for less than $16,000. If anything, 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.

Regulation Is Coming

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Like it or not, regulation is one of the upcoming crypto changes for the sector. In mid-May, the European Union approved the world’s first comprehensive set of crypto regulations. Going forward, any firms that want 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’re now focused on developing rules for cross-border cryptocurrency activities with their counterparts in the U.S. and U.K.

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

Retail Investors Stage A Comeback

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With a potential debt default now off the table and the U.S. Federal Reserve expected to pause interest rate hikes, risk appetite is starting to return and retail investors are beginning to wade back into the market after sitting on the sidelines for much of the past year. Evidence is everywhere. Powered by hype surrounding artificial intelligence, the Nasdaq index is up 26% this year and in the midst of what looks to be a bull run. The benchmark S&P 500 index is also on the rise, having gained 12% on the year.

Cryptocurrencies have also benefited from retail investors staging a comeback after being shellshocked by the implosion of multiple stablecoins and crypto firms last summer and autumn. Bitcoin, the biggest cryptocurrency by market capitalization, has risen over 60% this year and has traded above $30,000 at several points, defying skeptics who forecast that the price was headed below $10,000. Should market conditions continue improving and retail investors feel more bullish, future crypto trends may cause prices to rise further.

The Rise Of Privacy Coins

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

Monero’s price has pulled back with the broader crypto sector lately, but it had been up as much as much as 25% in recent months. Other privacy coins have also enjoyed rallies this year. However, regulators are looking to crackdown on privacy coins as they say the fact that these cryptocurrencies are anonymous and untraceable makes them popular with criminals, many of whom use them to launder money. In the near-term, privacy coins look likely to continue growing in popularity, especially with new regulations expected in coming months.

On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

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

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