Will 2023 be the year of recovery for DeFI?
2023 has been the year everybody in DeFI space is looking forward to, after the wreckage we experienced in 2022. Finally, we have a new year filled with positive sentiments. With an increasing GDP and the population keen on technology, it seems like this year we can see a rebound that has been expected for quite some time. But can 2023 be a recovery year for DeFI and how optimistic can we be for this year?
A Year of New Hope…..
A lot has been said about DeFI in 2022 with some calling it the worst year while other enthusiasts still believe that recovery is just around the counter. One thing for certain is that 2022 had been an unexpected year as 2021 Predictions went out the window and reality started to sink in for the DeFI Space. 2022 might not be the best year but it’s a tough medicine we all need to become better in the years to come. However, with 2022 now gone, is the worst really behind us?
On the surface, a lot of the expectations this year seem to point to the negative side as tighter monetary policy imposed in 2022 will continue in 2023. Fed’s interest rates continue to increase in February 2023 with a 25 bps hike to 4.75% and are expected to rise again in the coming months. The US Interest rate has never been higher since 2007 and while it has effectively reduced the unemployment rate to 3.6%, inflation continues to climb.
All these factors contribute to creating a cautious economy as borrowing and spending becomes more costly while the appetite for investment diminishes. This severely hurts many investment instruments such as Stocks and Digital Assets, with the all-time high figure in November 2021 in a distant benchmark that has never been achieved again throughout the year.
The sentiments tossed out around by for and investors alike were 2023 will be a year to focus on survival instead of recovery. With high interest rates firms that struggle on liquidity will struggle to obtain the required finances for survival. This was certainly proven as 2022 ends with FTX taking more risk than it could have and doesn’t have the required liquidity to keep itself afloat when tough times come along.
The Tech sector, which is the jewel of stock pickers everywhere, also has resorted to mass layoffs to keep its liquidity in check which in the first quarter of this year amounted to 121,205 layoffs. This problem was further compounded by the fall of a few major American banks such as Silicon Valley Banks which has been the lifeblood of this particular industry. The fall of these Major Banks further depletes consumer trust and pushes the economy further into a cautionary state.
Will Recovery Happen for DeFI?
If we look back at the idea behind the creation of Bitcoin, it was made to tackle the problems that are faced in the traditional economy, and throughout the years the sentiments have changed as DeFI is viewed as a more speculative space. This trust that people once had in Bitcoin and other Digital Assets will take time to recover due to the major crashes that happened in 2022 and recovery will highly depend on the level of confidence people still have in the DeFI Space.
Despite all this, positive sentiments are still high for people who look towards DeFI as a solution to the economy and the number behind the scenes does back it up. At the time of writing, the global cryptocurrency market cap has risen by over than 50% on a Year to Date basis with its two market leaders — Bitcoin and Ethereum, mounting a spectacular rebound from their performance in 2022. The NFT market also registered an increase of 38 and 42% from its December figures at $946 million in trading volume and 9.5 million in sales count.
We can also take some positive notes on the growing number of Users within the Crypto Space which is at 320 Million so far and expected to reach the 1 billion mark within a couple of years. This growth is also fueled by the rising global crypto adoption index around Asia and Southeast Asia region as countries like Vietnam, India, and China are amongst the top 10. This growing user base should be a good indicator for recovery to take place this year.
With all this in mind, recovery towards the DeFI has been moving at a great progressing pace throughout the first quarter of 2023 but it will all depend on how every stakeholder in the space performs throughout the rest of the year. With interest rates that are at an all-time high, 2023 should act as an eliminating factor for companies that do not have sufficient liquidity and risk management structure to navigate through this year.
This year should also provide a lesson for all Users within the DeFi space to protect their savings and put their trust only in the right project that has a long-term sustainable business model. This is why it is even more important for us this year to learn and do our research as education is the easiest way we can ensure a better recovery for the DeFI Space in the time to come. With this, we will wait and see how the space performs throughout the year but all the stars are aligned for it to mount a huge comeback in 2023.
We in Nagaya Technologies Pte. Ltd would like to begin the first phase of our 2023 journey by saying thank you to all our readers, subscribers, and holders who have loved our content. We hope that 2023 will be a year of massive recovery for everybody as we always strive to provide massive value through Nagaya for all of you. For more information regarding the latest updates on Nagaya and our whitepaper, you can visit us at nagaya.co
Or you can talk to us at t.me/nagayaofficial
