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My 🔑 Notes on Blockworks' Predictions for Crypto in 2023 - in 3 minutes

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Milica Vulić
December 29th, 2022 · 4 min read

Crypto’s 2022 wrapped

Compared to prior cycles, we started to see real use cases.

ATM, there is a global financial crisis in the blockchain mostly due to translating TradFi into DeFi, and the lack of transparency.

This is the first bear market in history where people have not thought that the industry is done.

The positivity of technology has been acknowledged. The flight of talent into the industry is here to stay.

1st QRT is gonna be a wipeout due to seasonality, poor vortexes, and global growth slowing.

The bottom is in for crypto, not for equities

Crypto is moving off of the back of the interest rates.

Figure 1: Correlation between crypto and S&P500 and NASDAQ

BTC looks like a pretty similar chart compared to SP500 and NASDAQ.

Crypto front runs expectations around liquidity a couple of months beforehand, which is driven by interest rates.

Dynamic correlation is broken post-May in crypto due to:

Crypto is being driven by fundamental dynamics in our space more than liquidity.

Macro holders base of crypto which was enforcing this relationship between liquidity and interest rates in crypto largely exited the space.

Now: retail kind of holder base in crypto.

Figure 2: Coinmetrics MVRV - Market Value vs Realised Value

High MVRV - an indication that speculators are in control, probably marking a top.

Low MVRV - holders controlling the market, probably marking the bottom.

ATM - historically low MVRV. The last time MVRV bottomed was late 2018/early 2019. BTC was only up from that point till the next bull market

Figure 3: 12 months predicted to look similar to this chart

The worst is basically in for crypto.

Crypto winter ended in June, we’re in spring till April next year and then we get to the crypto summer. The angle of crypto summer is correlated with the ability of the masses to have adoption.

The kings of Spot & NFT trading will lose market share

1st prediction: Uniswap passes Coinbase in volume in 2023 - driven by Uniswap’s push into NFTs.

2nd prediction: self-custody wallets. DeFi summer: 15-16% was the high, today: 8-10%, 2023: 25%

3rd prediction: OpenSea ends up falling in market share. Uniswap is launching NFTs. Pseudoswap for AMM style floor-trading NFTs. Multiple kinds of NFTs will set their own exchanges (e.g. music, fashion) and therefore steal market share from OpenSea.

Stablecoins, DeFi’s resurgence and Permissioned Protocols

The reason why stablecoin did not grow up to a trillion:

  • Recursive leverage dried up
  • TerraUSD (UST) wiped out 20 billion
  • Stablecoins will continue to be the primary driver for growth in the industry and usability. Next year will be largely guided by regulation.

Regulators are coming, and the CBDC debate

Regulators are going to fight 2022-2027.

Transition to web3 is going to happen. CBDC is not positive.

CBDC is going to happen and that is good for adoption.

MEV will be the business model for DeFi and Exchanges

MEV is going to be the dominant business model for DeFi and that’s going to lead to exchanges vertically integrate and extracting profits from MEV.

Uniswap is going to do to monetise by arranging orders of transaction through validators.

App chains end up winning. The logical step for Coinbase of Kraken is to launch its chain.

Transitioning to private chains and private transactions in 2023.

No industry takes off without insurance

Insurance should be off-chain due to the correlation risk. ATM DeFi yields are lower than treasuries. DeFi yields should be higher than each staking yield.

Crypto winter can’t end until DOGE and SHIB are zero.


BTC replaces gold as the base layer of money.

Miner capitulation, wallet wars and gaming

BTC miners are not only they’re liquidating their entire supply of newly mined coins, but now they have to dip into their own BTC reserves.

Next war - wallet wars (Phantom, Argent, Brave).

A big trend - the beginning of the end of hot wallets.

The next cycle will be gaming. ⅔ startups are going to die. Coinbase gets acquired.

It’s bottom for miners already.

Vertical integrations, privacy and payments

dYdX departing from ETH and trying to build their own.

Every brand is going to launch a digital collectable - the next era of the NFT space.

NFT will become a way to own everything.

The rise of professional guilds

The rise of professional guilds of skilled labour that organise themselves into distinct sections. What we’ll ultimately be going to see is either DAOs or these big associations of people who do this sort of thing.


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