2022 was certainly a newsworthy year for crypto – not just in Australia but worldwide. Arguably some of the biggest news only happened as the year was coming to a close, but it is not all doom and gloom in the crypto world. Like the share market, there will always be ups and downs for long-term investors.
Here is our outlook for crypto in Australia for 2023.
How has the Australian crypto market fared in 2022?
After a tumultuous 2021, the following 12 months were not so kind to crypto investors in Australia. The crypto market, especially Bitcoin, declined in the first half of 2022 before finding a much-needed plateau.
Another major event in the world of crypto was the sudden rise and fall of many NFT projects. During the ‘crypto winter’, when Bitcoin was down 70% from its all-time high and altcoins were also affected, the NFT market quickly followed suit. Unfortunately for many investors, the hope that NFTs would become a mainstream investment channel in the same way as popular cryptocurrencies failed to eventuate.
Cutting through all these developments were the ever-present conversations around crypto regulation. Unlike the crypto market, things move slowly in the bureaucratic world, so while we haven’t seen any significant changes to how crypto is managed in Australia, we expect regulation to be a talking point in 2023.
What might 2023 hold for crypto in Australia?
Much like predicting how specific stocks will rise or fall over the next year, we can only envision how 2023 will pan out for crypto. Plenty has happened in crypto recently – much of it making negative headlines – but that does not mean we should expect more pain on the horizon.
Here are three predictions for what may come to pass in the year ahead.
Expect firmer crypto regulation in Australia
It has been a long time coming, but 2023 looks to be the year that regulatory bodies set their sights firmly on the crypto market in Australia. Treasury has already started seeking advice on how to start building a framework for regulating crypto service providers.
Confidence in Bitcoin will see prices surge again
While the effects of wild swings in crypto during 2022 will likely seep into the start of 2023, there is confidence that economic conditions will improve in the second half of the year. So for investors who believe in Bitcoin and are keen to take advantage of a generous price point, now may be the time to grow your investment – so long as it aligns with your long-term crypto strategy and risk tolerance.
Many experts are of the mind that lower inflation, easing energy concerns and a variety of other global factors will all contribute to the start of a new bull market in 2023, with the price of Bitcoin set to rise to US$30,000, according to VanEck analysts.
2023 is shaping up to be a bull market
Past performance is no indicator of future success, and even though the traditional markets are regarded as cyclical over the long term, crypto is different. It is hard to predict a bullish or bearish market with any real confidence; however, the past year’s events can indicate potential positive market shifts for 2023 and beyond.
While 2022 has been a difficult year for many crypto investors, there is excitement around renewed confidence in Bitcoin and Ethereum and a much brighter focus on Web3. That is leading some experts to predict that while 2022 saw a bottoming out of the crypto market, it has set the stage for a bull run in 2023.
What should you consider when building your 2023 crypto strategy?
So, how should you approach 2023 as a crypto investor? Everyone’s strategy will be unique to their situation – including your appetite for risk and your knowledge of popular cryptocurrencies and altcoins.
To help you formulate a plan for the year ahead, here are some considerations for building your crypto strategy in 2023:
Consider altcoins
In the past, it was common for those unfamiliar with crypto to simply invest in the ‘big’ coins like Bitcoin and Ethereum, but there is much more to this world than just the big players. Much like trading small-cap stocks, it can be a high-risk, high-reward venture if you know what you are doing with altcoins.
Find the right platform
There are a wealth of crypto trading platforms out there, but as we’ve seen over 2022, they aren’t always secure, and some can be detrimental to your investment strategy. Make sure you choose a platform like eToro that understands the intricacies of cryptocurrency and can help you manage your investments securely.
Diversify your investments
Putting all your eggs in one basket is rarely a wise decision – especially when it comes to investing. Crypto offers opportunities to grow your portfolio, but it can also come with risks, especially for those trading large volumes or investing solely in crypto. Instead, spreading your investments across multiple asset classes can help you manage the impact of market turbulence in 2023.
2022 was a tough year for crypto in Australia and overseas. But much like the share market, if you believe in the value of your investments and you have a solid strategy in place, 2023 could be the perfect time to dive into crypto.
This communication is for information and education purposes only and should not be taken as investment advice, a personal recommendation, or an offer of, or solicitation to, buy or sell any financial instruments. This material has been prepared without taking any particular recipient’s investment objectives or financial situation into account, and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Any references to past or future performance of a financial instrument, index or a packaged investment product are not, and should not be taken as, a reliable indicator of future results. eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication.