An ever-changing landscape that promises high returns and is fraught with risk, the crypto markets have gone through a turbulent time during the past year. While 2021 saw a rapid growth of the market and attracted a lot of attention, 2022 has been much more about scrutiny and skepticism, which has also led investors to rethink their strategies when it comes to making potential new investments. Now the question is on everyone’s lips: what will happen to crypto in 2023?
The recent crisis in the FTX bankruptcy case is a good example of how venture capital in such cases can go wrong. However, there are still many crypto projects that are attracting investment from VCs in the long-term, such as Cardano and EOS for example.
Therefore, while there has been a lot of volatility in the crypto market, this still isn’t going to deter investors from putting their money in future projects, regional and international VC funds argue. Continue reading to get the experts’ opinion on crypto 2023 developments.
The potential that hides in the bear market
For most investors making 2023 crypto predictions these days what matters first and foremost is the quality of up and coming projects and especially the effects that a potential bear market would have on the industry.
“The potential opportunity after such a bull market, hides in a bear market. Currently, we believe that as it has gotten more complicated to raise funds, either way, better and more serious founders and projects are coming to life. The current market conditions allow for founders to get enough financing, in order to prove a concept or an idea, before moving to the next stage, rather than raising too much funds and lacking the knowledge of how to operate them. We welcome the current market and hope to see great crypto projects over the next 12-18 months,” Bulgaria-based Vitosha Venture Partners tells The Recursive.
What is also important when making 2023 crypto predictions is to make the difference between blockchain and crypto projects.
“When it comes to blockchain projects, we can compare the approach to other verticals that we are tackling with our fund. The most important points are that a strong team (with technical expertise) has identified an opportunity to solve a problem through distributed ledger technology. Currently the most interesting use cases here lie in tooling, security, and customer-focused products. We would like to see potential projects to focus on building and proving their product, through equity financing, either through angels or VCs, starting to on-board customers/users and finally generating revenues,” the Bulgarian VC fund points out, adding that however, so far there have only been a handful of such projects.
Focusing on crypto 2023 projects with real-world impact
The Cardano Foundation is one of the organizations that is advocating for the adoption of the Cardano blockchain as a baselayer for current and future financial and social systems.
According to Frederik Gregaard, the CEO of the Cardano Foundation, any new technology or systemic change, such as blockchain, will have growing pains and that has been evident over the past months.
“Meanwhile, more and more people are using blockchain technology in new and innovative ways – the wide range of fresh and cutting-edge ideas on display at the recent Cardano Summit was truly remarkable. Of course, every project involves an element of risk, but it’s crucial that we continue to support projects that have a real-world impact and contribute to the improvement of the world around us,” Gregaard tells The Recursive.
As Gregaard explains, the Cardano Foundation has recently started a partnership with Switzerland for UNHCR that will see the launch of a charity stake pool that directly supports forcibly displaced people.
“This is just one example of what can be achieved when blockchain technology is used to support meaningful, real-world projects that bring positive change to society. This is the kind of innovative deployment of blockchain technology that will drive the future of adoption, not only in terms of blockchain, but also open source principles and financial decentralization. In the wake of all of the turmoil, the industry wants to show the good that can come from blockchain, and I expect we will see more activity in the ‘blockchain for good’ space,” Gregaard tells The Recursive.
Such and similar projects can definitely become appealing for VCs looking to diversify their portfolios in the industry. And SEE-based South Central Ventures (SCV) is one of them.
“When assessing crypto projects, we focus on their real-world implications. We are interested in projects that seek to tackle tangible issues and leverage blockchain technology to amplify their effect on efficiency, transparency, and other metrics. These projects often use the blockchain as a tool, but they are not entirely centered on the blockchain. Investing in these types of projects can be a great way to diversify your portfolio and make an impact on the world,” Vedran Blagus, investment manager at SCV, tells The Recursive.
Backing the long-term development of the industry
While the sentiment in the crypto investing market is at a multi-year low, and there is a lot of uncertainty surrounding established projects, when it comes to crypto in 2023, there is also the opportunity to focus on new trends that could benefit the industry in the long term.
“However, this creates an opportunity for new projects that are focused on decentralization as a way to gain market share. The trend is moving away from potential gains via token sales towards the actual utility of projects and their future use cases, which is good for the industry in the long term,” Roman Nováček, partner at Prague-based Presto Ventures, tells The Recursive.
What matters most for the Czech VC at the moment is backing early projects that can have an impact on the long-term potential of the industry.
“We believe in the long-term potential of the industry, and treat this situation as one of its bear cycles. We are looking for very early projects with strong technical teams who can develop truly unique solutions. It is a bet more on the team than the product. Often, they have a time-to-market of one year or longer; therefore, we do not mind if a pivot is needed should the idea become obsolete,” Nováček concludes.