In December 2020, the SEC accused Ripple and two of its executives of selling what it claimed was and is an unregistered stock, XRP. Since then, the two sides have been embroiled in a legal battle, which experienced observers suggest should be concluded by March this year.
When it ends, there’s a good chance Ripple could get a favorable rating, one that rejects the SEC’s accusation that XRP is an unregistered security, thus allowing crypto exchanges within the SEC’s jurisdiction (e.g.
American exchanges) to relist the altcoin.
In support of this optimism, it’s worth pointing out a string of minor wins that Ripple has achieved en route to the likely conclusion of the case by March.
For example, in October 2021 Judge Sarah Netburn challenged the SEC to show that Ripple explicitly created a profit expectation (from holding XRP). Then, in January 2022, the same judge also upheld Ripple’s motion to view emails and documents related to a major 2018 speech by William Hinman, in which the then-SEC chairman declared that Ethereum (as well as Bitcoin) was not a security. This speech and its related documents likely have a significant impact on how the securities regulator viewed XRP at that time.
Along with other positive reviews, this suggests that Ripple has more than a good chance of prevailing, something that would increase not only XRP but the broader market. On the other hand, it should be remembered that LBRY lost a similar lawsuit against the SEC in November, increasing the possibility that Ripple could also lose.
Twitter integrates cryptocurrency payments and Dogecoin
One of the biggest events of 2022 was Elon Musk’s completion of his $44 billion Twitter takeover bid. Given its long-time supporter of Bitcoin and Dogecoin, this was understandably considered a highly bullish development for cryptocurrencies.
Well, there’s no doubt that Twitter is working on some sort of cryptocurrency integration, as the social media company has a dedicated cryptocurrency unit that has been working on NFT and tipping over for several months. Interestingly, Binance was a co-investor in Musk’s takeover bid, with the world’s largest exchange helping Twitter develop strategies related to how it might work with crypto.
Therefore, there is no doubt that Twitter will do more with crypto at some point, with major tokens such as bitcoin, ethereum, and dogecoin likely to be the main beneficiaries. However, the last few weeks have led to speculation – based on leaks – that the social network could be working on its own currency, which may or may not remove the need to supplement existing cryptocurrencies.
Bitcoin dominance increases
The ongoing bear market is likely to continue through 2023. This is largely due to the fact that the war in Ukraine still shows no obvious signs of ending in the near future, something that prevents the global economy from fully recovering.
For this reason, bitcoin’s dominance – its share – of the cryptocurrency market (i.e. its market capitalization as a percentage of the total market limit) is likely to increase in the coming months. In fact, it has already increased in the last two months, going from 37.6% at the beginning of September to 40% at the time of writing.
This is because, in
a period of instability, investors tend to gravitate towards the “safest” option, and in cryptocurrency that option is invariably bitcoin, the oldest cryptocurrency with the most secure network. This also means that, when the market becomes more bullish, bitcoin will almost certainly lead the charge, as it has done with all previous bull markets.
Solana “dies”, mining other layers and increasing Ethereum
In addition to depressing the market in general, the FTX crash also had the remarkable effect of severely weakening Solana, and perhaps fatally.
In early November, the price of SOL was $38, but the disappearance of FTX caused a drop to just under $13 in a matter of days, and actually fell below $9 at the end of December. This is largely due to the fact that FTX and its CEO Sam Bankman-Fried had been a big supporter of Solana and its ecosystem, with the Solana Foundation itself having around $200 million in cryptocurrencies on the exchange when it collapsed.
In fact, Solana’s DeFi ecosystem is virtually dead compared to its previous levels, with only $211 million in total value locked in (up from $10 billion in early November). Combined with a series of high-profile outages in recent months, only a very “brave” investor would bet on Solana as Ethereum’s rival.
As it happens, Solana’s disappearance probably undermines the case of other similar “Ethereum killers,” such as Avalance, Polkadot, and Cardano. And with Ethereum completing its historic merger last year, it’s on track to go from strength to strength and stronger.
The United States introduces comprehensive legislation on cryptocurrencies
2023 will likely be the year when, after a lot of back and forth, the US will finally pass a comprehensive legislative package for the cryptocurrency market and industry. This is supported by the number of such bills introduced in Congress last year, including the Lummis-Gillibrand Responsible Financial Innovation Act and the Stabenow-Boozman Digital Commodities Consumer Protection Act.
The latter act would classify the vast majority of cryptocurrencies as commodities under US law, saving them from the clutches of the (often overzealous) SEC. This would be a big gain for the cryptocurrency industry, and combined with regulatory moves in the EU and UK, it looks like 2023 will provide the certainty and clarity the market needs to move into another bullish and expansionary phase.
As always the cryptocurrency market is unpredictable and this article represents just some of our best guesses about where things could go in 2023.