Review and Outlook of the Crypto Assets Industry in the First Half of 2023

In the first half of the year, the Crypto Assets industry experienced a series of significant events, but looking back, there are not many events that have a long-term impact. This article will sort through these key events and look ahead to the development trends in the second half of the year.

Major Events in the First Half of the Year

The collapse of American digital banks

In March, the collapse of digital banks in the United States had a huge impact on the Crypto Assets industry. This event led to a sudden interruption of the main trading channel between Crypto Assets and fiat currency, which previously accounted for over 70% of market trading volume.

Ethereum Shanghai Upgrade

In April, Ethereum completed the Shanghai upgrade, marking a significant technological update. After the upgrade, the Crypto Assets market welcomed secure and reliable underlying yield-generating assets. Currently, nearly 20% of Ethereum has been locked in nodes. At the same time, many traditional enterprises have also begun to build new strategies based on this.

Hong Kong Crypto Assets policy changes

In April, Hong Kong adjusted its Crypto Assets policy, triggering a surge of activity. However, whether Hong Kong can replace the United States as a key channel between the Crypto Assets and fiat currency world remains to be seen. On June 1, Hong Kong's new Crypto Assets policy officially took effect, but the market response has been relatively muted so far.

U.S. regulatory tightening

In June, the U.S. Securities and Exchange Commission filed lawsuits against several cryptocurrency exchanges, leading to significant market volatility. However, as many traditional financial companies began applying for cryptocurrency ETFs, market sentiment quickly reversed.

Industry Exploration

Move Public Chain and NFT Market

In March, the launch of the Move public chain brought a brief market boom. At the same time, the airdrop of Blur triggered a liquidity feast in the NFT market, but the market quickly cooled down afterward. In the future, the NFT market needs to find new narrative logic and application scenarios, such as combining with offline activities, fan economy, or membership rights.

MEME coin and BTC chain innovation

From late April to early May, the MEME coin market experienced a wave of speculation. At the same time, the Ordinals NFTs and BRC20 tokens on the Bitcoin blockchain also boosted this market trend. This reflects the current lack of a strong narrative logic in the industry, forcing investors to turn to more speculative assets.

Focus Areas for the Second Half of the Year

1. Ethereum Performance Upgrade: An important upgrade for Ethereum is expected in the second half of the year, significantly enhancing network performance. At the same time, several Layer 2 solutions are anticipated to launch on the mainnet within the next 6 months. This may address the long-standing performance issues that have plagued the blockchain industry.

2. Keyless wallets and smart wallets: Keyless wallets based on MPC technology and on-chain AA smart wallets may form a unified standard with the development of Layer 2, lowering the usage threshold for users.

3. Traditional Financial Institutions ETF Applications: Several traditional financial institutions have begun applying for Crypto Assets spot ETFs, and the first batch of approved ETFs is expected to launch by the end of the first quarter of next year, which will reopen the compliant funding channels in North America.

Overall, the current Crypto Assets industry is in a stage of redefining its narrative logic. With technology upgrades, improvements in user experience, and the involvement of traditional finance, the industry is expected to usher in new development opportunities after the second quarter of next year. However, which specific applications will successfully land still needs further market validation.