A review of major cryptocurrency events in the first half of 2023

Summary

Cobo co-founder and CEO Shenyu recently reviewed the major industry events and impacts in the first half of 2023 at an internal event, and analyzed the events worthy of attention in the second half of the year. The following is a partial summary of Shenyu's speech, which is hereby published to share with Cobo users and partners.

A lot happened in the first half of the year. However, from today's point of view, there are actually not many major events.

macro event

First of all, the collapse of the U.S. digital bank in March had a very significant impact. A very core channel from Crypto to legal currency and from legal currency to Crypto that had been established in the past few years disappeared, and this channel accounted for about 70% of the entire market. above traffic.

In April, Ethereum completed the Shanghai upgrade. This is a major market upgrade, and a core change is that the entire cryptocurrency has ushered in a very safe underlying interest-bearing asset. After the upgrade, a large amount of Ethereum began to be locked, and now about 20% of the Ethereum has been locked in the node. At the same time, many traditional enterprises have also begun to build strategies based on this.

For a long time in the past, traditional funds entering the cryptocurrency world can only do one thing, which is to buy mining machines for physical mining. Now, some traditional institutions are starting to build funds, buy Ethereum, and increase their income through staking. This will become a very important original source of funds for cryptocurrencies for a long time in the future. In the past ten years, there have been two things in the cryptocurrency circle: the first thing is to issue assets, and the second thing is to trade assets. This is a very important change in the way of issuing assets.

The change in Hong Kong’s cryptocurrency policy in April ushered in a wave of activities in Hong Kong, bringing a lot of traffic. However, we are still watching to see if Hong Kong can replace the US as an important conduit between the crypto and fiat worlds. On June 1st, Hong Kong’s new cryptocurrency policy came into effect. We have seen some movement, but the movement is still very small.

In June, the United States tightened compliance, and the SEC sued Binance, Coinbase and other exchanges, which led to a period of extreme sentiment in the market and a sharp drop. However, the market sentiment soon reversed as a large number of traditional financial companies began to apply for cryptocurrency ETFs.

ETF is also a very important narrative logic of cryptocurrency. In 2013, during the process of Bitcoin rising from RMB 1,000 to RMB 8,000, a big driving force was the holding of ETF hearings in the United States. So the ETF story has been around for 10 years.

Behind the rise in currency prices in 2021 and 2022, a core driving force is actually Grayscale. Grayscale is a very interesting innovation. It uses a very good arbitrage model to lock a lot of coins into the Grayscale Fund, but it can only enter but not exit, so it brings a large inflow of US dollars, leading to a round of Bitcoin rise . And ETF may be a big gray scale.

Next, it is worth observing when a large number of ETFs will be passed. From the perspective of asset allocation and risk aversion, buying ETFs directly at these brokerage banks means that a large amount of funds will flow into Bitcoin. Large-scale assets such as currency and Ethereum. This will also be a very pivotal event.

Industry Exploration

At the level of industry development, there are several things worthy of attention.

One is in February and March, because of the launch of the Move public chain, there was a small wave of hype, but the bubble soon burst. The second is Blur’s airdrop, which brought a wave of NFT liquidity feasts, leading to the rise of NFTs in January and February, especially blue-chip NFTs. However, soon as blue-chip projects such as Ape and Azuki failed to meet expectations, the price plummeted. At present, NFT is in a state of bubble bursting and narrative logic reorganization.

In the next step, NFT needs to find new narrative logic and landing scenarios other than the concept of PFP. Perhaps the combination of NFT with offline, such as personal fans and membership rights, should bring a large number of new users. I'm personally very bullish.

From late April to early May, there was a wave of MEME currency hype, which caused many garbage coins to rise many times. In addition, the combination of Ordinals NFT and BRC20 on the BTC chain is also fueling this wave of MEME coins. This also shows that the narrative logic of the industry has reached a stage where there is almost no narrative logic. Everyone has nothing else to speculate, so they have to speculate on MEME coins.

The above are the major events that happened in the cryptocurrency industry in the past six months. The basic conclusion drawn from the above analysis: ** is currently a stage where the industry lacks narrative logic, and at the same time, the industry is greatly affected by the macro and regulatory aspects. **

Focus on three things in the second half of the year

**Now the entire cryptocurrency industry is still in a state of re-finding narrative logic. **However, there are still several major events in the industry that deserve attention. As for what the narrative logic of the cryptocurrency will eventually become, which applications can run, and what kind of scenarios will be implemented, we will be able to see everything very clearly in the second quarter of next year. These are the results of trial and error in the end, and everything is determined by the market.

First of all, Ethereum will have an upgrade in the second half of the year to improve performance; secondly, L2 will launch its mainnet in the next 6-12 months—with a high probability of 6 months—including Scroll, ZKS and a series of second-tier Networks are striving to be the first to gain a better first-mover advantage. Once the upgrade of Ethereum is completed, the performance problems that have plagued the entire blockchain industry in the past ten years may be gradually resolved, and there may be a performance improvement of about 10 times. In the future, through hardware acceleration and other methods, it can reach the order of 10,000 TPS, which will bring a wave of relatively large performance improvements. At that time, some high-daily active applications and some low-cost transactions will finally be able to run on the blockchain.

The second consensus is that the private keyless wallet based on MPC technology and the AA smart wallet on the chain may gradually form a unified standard with the launch of L2, which will lead to large-scale promotion and application. In fact, the second-tier network originally gave users an AA wallet from day 1. This may become the default configuration for users in the future, which will greatly reduce the threshold for users.

Once the blockchain performance is initially solved and the user threshold is further lowered, there may be a large wave of application attempts and outbreaks, and a large influx of users. This is what we hope to see. I predict that the approximate time point should be after the second quarter of next year.

The third important issue is the application of traditional institution ETF. Since June this year, many traditional financial institutions have applied for cryptocurrency spot ETFs, and it seems that the possibility of passing is very high. A hard timeline is in Q1 next year, around the end of March, the SEC must answer whether to approve ETF. We expect that at the end of Q1 next year, we will see one or two ETFs with large-scale liquidity applied by traditional financial institutions go online, re-opening the compliant funding channels in North America.

These are the three core things that I think will drive the industry in the next six months to one year.