Happy New Year everyone, I hope 2023 is your best year yet!
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I read this great thread from Cory during the holidays on living like a monk for 6 months. Some truly fascinating insights for us all to live by.
What are your goals for 2023, I’d love to hear them. Shoot me a DM or reply to my post.
I’ve seen a lot of predictions come across my timeline over the last week. As news flow is thin and people speculate for the year ahead I thought it would be fun to throw my hat into the ring as I did in 2022.
2023 Predictions
#1- Fed continues hawkish stance but pivots eventually
J Powell has been consistently hawkish throughout the year much to the continued frustration of the market. My belief is that his view is very much shaped by the Volcker years of the 70’s and the double pump inflation drama. I think the Fed maintains a firm stance until they are comfortable inflation is under control, something breaks or deflation becomes the more likely scenario. I believe the ‘pivot’ in whatever form comes sometime in the summer. Much to the disappointment of the fractal lovers, I think once inflation is under control it stays as such and we move to a ‘normal’ interest rate environment.
#2- Macro leads, crypto follows
Quite simply I believe we are tied to our older siblings in TradFi for some time. As a higher beta risk asset, crypto is simply not attractive enough on a risk adjusted basis to warrant enough fresh capital to see it dislocate to the upside. If we see the Fed funds rate shift into the 2 or 3% range in H2 2023 we likely see crypto outperform to the upside on higher beta but I think it will take some time for risk sentiment to repair the carnage of 2022 and overall value will outperform growth.
#3- Institutions continue to ‘arrive’
While 2022 saw Fidelity grant access to their clients to buy/sell crypto, Blackrock partnered with Coinbase and Goldman and JP Morgan increasingly experimenting with DeFi and crypto company acquisitions, I see 2023 continuing this trend.
#4- Regulation is bullish
My belief (hope) is that FTX speeds up regulation for the sector which ultimately is bullish if done correctly. I don’t know if this happens in 2023 in the US given the stage and state of the US political cycle but we’ve had positive developments come out of the UK recently. In December, Jeremy Hunt released the “Edinburgh Reforms” of UK financial services — over 30 regulatory reforms to unlock investment and turbocharge growth in towns and cities across the UK.
“The reforms build on the UK’s desire to harness the benefits of emerging technologies, including committing to shortly publish a consultation on proposals to establish a UK Central Bank Digital Currency– which could one day see Brits using a digital pound. Other measures will see the Investment Management Exemption extended to cryptoassets, ensuring more overseas investment can flow into the sector — and the government has recommitted to establishing the Financial Markets Infrastructure Sandbox in 2023, allowing firms and regulators to safely test, adopt and scale new technologies that could transform financial markets.”
#5- Solana survives
While I’m less optimistic about Aptos, Sui and many competing L1’s, I believe Solana ultimately weathers the SBF association and ends up building a credible blockchain niche. I’m excited about Solana mobile.
#6- Ethereum continues dominance and L2’s flourish
Despite there being room for more than one layer 1 blockchain, I can’t look past Ethereum as the ‘winning’ base layer. As L2’s such as starkware, arbitrum etc continue to gain users, the argument for faster L1’s becomes redundant in a world re-focused on decentralisation.
#7- Airdrops evolve
The days of 5 and 6 figure airdrops may be a thing of the past as protocols continue to experiment with new models rewarding actual users (sorry sybil attackers). Regulatory uncertainty also plays a large role in this prediction.
#8- Web3 social begins to evolve past web2 copy paste and establishes unique use cases
While the early days of the internet saw newspapers put online in digital format, much of the early web3 applications in the social space has been in a similar vein i.e. take what works in web2 and make a decentralised version of it web3 style. While there is nothing wrong with this, it’s not exciting or game changing and I think much like Facebook, WhatsApp, Uber etc were made possible by web2 architectures, web3 will see unique applications only possible leveraging a immutable blockchain stack.
#9- NFT’s continue to evolve
2022 saw notable developments in NFTs crossing the chasm to mainstream adoption with projects like Reddit and Starbucks. I believe brands across various industries will continue to experiment with NFTs in an effort to understand how they can better collaborate with fans/customers and monetise their products/services.
As well as corporates experimenting, I think we will see how projects like pudgy penguins begin to tie crypto native projects with real world IP in 2023.
#10 Commodities + ‘boring’ businesses become sexy again. Benjamin Graham simps reunite.
Even if interest rates do come down slightly in H2 2023, I think the focus on free cash flow generative businesses with strong moats and stable demand (think Coca Cola) will come back into the limelight and tech and growth may lag for much of 2023.
What’s your predictions for 2023?
Peace out and have an amazing 2023 all!
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