The Crystal Ball: VCs, private equity investors, and tech founders predict what will happen in crypto in 2023

January 4, 2023, 3:00 AM UTC

It’s 2023, where we ask Term Sheet readers—a slew of VCs, founders, private equity investors, and bankers—to look into their Crystal Ball and tell us what to expect in the year ahead.

For this year’s issue, we dug through more than 100 predictions, ranging from quick takes on whether venture capitalists would run for office to thoughtful analysis on whether philosophy majors will be at the top of the hire list in an artificial intelligence-powered world. And of course, speculation as to how many unicorns may lose their status, and intel as to which sectors are most poised for M&A deals. What about for crypto? Here is what readers said 2023 would have in store specifically for tokens, NFTs, or DeFi, in your words:

(Note: Some answers have been shortened for clarity and/or brevity)

“Dubai will become the crypto capital of the world. ” —Edith Yeung, general partner, Race Capital

“In Q1 2023, we will see further pain and cascading failures of centralized entities in the crypto and blockchain ecosystem, but it will ultimately be a healthy cleansing that puts the industry on a more sustainable trajectory and accelerates the pace of common sense regulation. Blockchains applications offering utility, like stablecoins and tokenized assets, will remain ascendant, while monetary tightening will slow faster than expected and Bitcoin will outperform.” —Anthony Scaramucci, founder and managing partner, SkyBridge Capital

“Web3 will seemingly go nowhere. However, under the surface, some of the most important enabling infrastructure will be delivered in 2023.” —Richard Dulude, co-founder and partner, Underscore VC

“VC firms with dedicated crypto funds will reallocate to climate.” —Lauren Salz, co-founder and CEO, Sealed

“SWIFT will continue to experiment with central bank digital currencies (CBDCs) while more banks will join the USDF Consortium to facilitate compliant transfer of value over blockchains via bank-minted tokenized deposit stablecoins.” —Charles Birnbaum, partner, Bessemer Venture Partners

“Crypto will be licking its wounds in 2023, but I expect a next generation of crypto app companies to be built that will emerge in 2024.” —Russ Wilcox, partner, Pillar VC

“2022 saw the collapse of numerous centralized crypto institutions including FTX, Celsius, and Voyager. In 2023, I believe the broader market will begin to see centralized crypto institutions for what they are: traditional, poorly regulated  fintech businesses. As such, founders building truly decentralized products will strengthen their resolve and bring forward a new generation of on-chain businesses that will drive a resurgence in the space. Despite the claim that ‘crypto is dead,’ I believe the next wave of transformational projects will be founded in 2023.” —Andy Kangpan, principal, Two Sigma Ventures

“[About] 80% of all coins in circulation will go out of business. However, this will be good for the industry as far too many projects have been speculative at best. While the industry will feel the liquidity crunch through 2023, only top projects will be able to keep raising funds to remain well capitalized and companies that overleveraged or locked themselves into big costs will suffer.” —John Wu, president, Ava Labs

You can read all of this year’s Crystal Ball predictions in Term Sheet here.

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