News Updates January 01, 2023
1. Bitcoin Price to Consolidate or Retrace Even Further in 2023: Analysis. Bitcoin whales have become net sellers recently, which Santiment believes is an indicator of more price drops.
The price of bitcoin took a massive hit in 2022, dropping by more than 50% in 12 months. However, the crypto analytics platform Santiment believes there’s more bad news incoming in the new year.
The company based its rather bearish prediction on the BTC whales’ activity.
BTC Whales Are Net Sellers
Santiment began its 2023 prediction analysis by highlighting the significance of BTC whales’ behavior for the asset’s price movements. This is somewhat expected since these types of investors – who own between 1,000 and 100,000 BTC in a single wallet – could have a bigger impact if they decide to sell or buy in bulk.
They were quite active on the buying front during the bull market in 2021, but most have changed their strategy in the totally different environment of 2022. The analytics resource confirmed this, asserting that bitcoin whales have become “net sellers” recently, “and the price has been following suit.”
“It is with confidence that we can predict sideways or even lower prices for BTC in the next 6-12 months.” – Santiment said.
The analysis added that BTC bottoms are typically found once the whales’ activity has declined substantially. However, this is not the case now as there’re over 10,000 transactions from such investors daily at the moment, while the count was down to 1,200-2,500 during previous bottoms.
Santiment predicted that a price drop to as low as $12,200 is not out of the question since there’re two notable volume gaps between that level and $14,600 that whales might be paying attention to.
Retail Investors Differ
There’s a big difference between what retail and whales were doing during previous bear cycles and this one. Historically, the former used to get scared more easily and sell their bags, while the latter went on an accumulation spree.
However, the 2022 bear market has seen a wildly different landscape. Whales have been disposing of their assets, as mentioned above, while retail investors (holding between 0.1 and 10 BTC) refused to sell and actually kept buying.
As such, their cumulative holdings reached an all-time high of 15.9% of bitcoin’s total available supply in mid-October, as CryptoPotato reported at the time.
2. 2023 will see the death of play-to-earn gaming
Developers have been focusing more on tokens than on making fun games. As a result, GameFi has been dying.
Play-to-earn gaming enabled by blockchain technology has grown exponentially over the few years.
Gamers have embraced the opportunity to collect cryptocurrencies or nonfungible tokens (NFTs) that have been produced in blockchain-based games.
Through the advent of this new technology, players have been able to generate income by selling in-game NFTs or earning cryptocurrency rewards, both of which can be exchanged for fiat cash.
Because of this, according to data from Absolute Reports, the estimated value of the GameFi industry will grow to $2.8 billion by 2028, with a compound annual growth rate of 20.4% over the same period. But such predictions may well prove to be unfounded.
Given the rate of exponential growth over recent years, one might think that there was absolutely no reason to believe the trend would not continue well into 2023 and beyond. Right? Wrong.
As we have seen with the ignominious case of former crypto king Sam Bankman-Fried and the implosion of FTX, a castle built on a flimsy foundation of sand can be easily washed away when the tide comes in and goes back out again.
Or, as legendary investor Warren Buffett liked to put it: “Only when the tide goes out do you discover who’s been swimming naked.”
We may be about to learn who these people are. The fact of the matter is the play-to-earn gaming industry is not built on firm foundations. The foundations are fragile and flimsy, and this could well spell trouble in 2023. The whole edifice looks set to come crashing down.
The structure of the current GameFi market is token-centric and this can create a number of issues. Project owners issue their tokens which are listed on exchanges first before they announce that they are going to build games. Games are a utility of tokens they issue. So tokens come first, and contents later. This is why the quality and design of games in the blockchain space are so underrated.
Those who have planned to secure funds by listing their tokens will have to reassess. Many will be forced to close their projects due to insufficient funds. The situation is becoming so acute that even hitherto bullish crypto venture capitalists (VCs) are also pausing new investments.
So, who is going to survive this investment drought? It looks unlikely that GameFi will. However, other blockchain gamings might do so.
One example is the Ethereum-powered, NFT-based fantasy football league operator Sorare has become a Web3 unicorn. While many of its competitors struggle, Sorare keeps on increasing its users and revenue during the darkest period. Their daily auction volume is impressive, at around 300-400 Ether (
ETH($1,200), and the number of users keeps increasing.
Though its back end relies on blockchain, users do not perceive it as a GameFi project. They do not provide their native tokens, but they do provide their content first on Ethereum, which very much looks like the way to go for the industry at large.
So GameFi may well die in 2023, but that does not mean that all is lost. Death is a necessary part of evolution. From it, new life may already be beginning to emerge.
3. UK Enforces Crypto Tax Break for Foreigners Using Local Brokers
The measures now in effect are part of the government's plans to turn the country into a crypto hub.
The U.K. is enforcing a tax exemption for foreign investors purchasing crypto through local investment managers or brokers starting Sunday.
The tax break, announced in December, is a part of Prime Minister Rishi Sunak’s plans to turn the U.K. into a crypto hub.
“This exemption is an important factor in attracting global investors, meaning foreign investors won’t be brought into U.K. tax simply by appointing U.K.-based investment managers,” the government's tax arm, the HM Revenue and Customs, said in an email to CoinDesk. “To build upon the U.K.’s position as an investment management hub, this exemption has been extended to include crypto assets, so that funds which include them aren’t put off from appointing U.K. managers.”
The country already has a tax guide for resident crypto traders. In July, the HM Revenue and Customs published a consultation to gather views from investors and professionals on how it should tax decentralized finance (DeFi).
Parliament is debating the wide ranging Financial Services and Markets Bill that would give local financial regulators more powers over crypto if passed into law. The U.K. Treasury also plans to kick-start a consultation in the coming weeks on how the crypto sector can be regulated.
4. Bitcoin, Ethereum Starts 2023 Flat as Analysts Hold Bullish Views For the Year.
The top two digital assets, Bitcoin and Ethereum, started 2023 essentially unchanged as the crypto space tries to recover from the record-high bear market of 2022.
CoinMarketCap data showed that Bitcoin and Ethereum traded flat during the first 24 hours of the new year. According to the data, BTC gained 0.05% to trade at $16,586 as of press time, while ETH increased by 0.06% to $1,200 over the same timeframe.
The current price action continues a weeklong market movement that saw both assets shed less than 2% of their values in the last seven days. BTC fell by 1.5%, while ETH dropped by 1.6%. Coinglass data shows that $12.58 million was liquidated in 24 hours.
What Does The Year Hold For Bitcoin?
Based on the four-year-cycle theory, crypto trader and analyst Rekt posited that Bitcoin could bottom this year. According to the analyst, BTC’s price action tends to bottom out during the third year during its four-year cycles. He added that BTC reaches its bull market peak in the first year, slides into a bear market in the second year while it recovers, and begins a new trend in the fourth year.
Rekt said while it was possible for BTC’s price to still drop to new lows, there is still the possibility of the value of the flagship digital asset doubling. He continued that past BTC candle threes have enjoyed 234% and 316% rallies. However, it is technically unlikely for the asset to rally that high this year.
Meanwhile, several stakeholders also pointed out Bitcoin miners’ record-high capitulation in 2022. Reports have highlighted how miners have struggled in the current market situation and how mining machines are becoming increasingly unprofitable.
5. Australia overtakes El Salvador to become 4th largest crypto ATM hub
El Salvador’s position as the fourth-largest crypto ATM hub was short-lived as Australia stepped up its game over the following months.
El Salvador, the first country to legalize Bitcoin
BTC $16,598, has been pushed down yet another spot in total crypto ATM installations as Australia records 216 ATMs stepping into the year 2023.
As part of El Salvador’s drive to establish Bitcoin as a legal tender, President Nayib Bukele decided to install over 200 crypto ATMs across the country. While this move made El Salvador the third-largest crypto ATM hub at the time after the United States and Canada in September 2021, Spain and Australia overtook the Central American country’s ATM count in 2022.
On October 2022, Cointelegraph reported that Spain became the third-largest crypto ATM hub after installing 215 crypto ATMs. However, Spain continued its installation drive and is home to 226 crypto ATMs at the time of writing. El Salvador’s position as the fourth-largest crypto ATM hub was short-lived as Australia stepped up its game over the following months.
In the last three months of 2022, Australia deployed 99 crypto ATMs, confirms data from CoinATMRadar. As of Jan. 1, 2023, Australia recorded 219 active crypto ATMs, overshadowing El Salvador by 7 ATMs at the time of writing.
Australia represents 0.6% of global crypto ATM installations and, at this rate, is well-positioned to take over Asia’s crypto ATM numbers, which stand at 312 ATMs. The total number of crypto ATMs worldwide is 38,602, out of which 6,071 ATMs were installed in 2022 alone.
