Macro

The Fed continues to implement and maintain its policy of increasing interest rates. High interest rates over an extended period of time will be a death blow to individuals and organizations with high levels of debt. The increase in interest rates will suck money from the market, causing many businesses to go bankrupt and people to become unemployed. Therefore, 2023 will still be a difficult year for the stock market, real estate, crypto, etc.

Interest rates have not yet reached their peak. Assuming that the Fed has 2 more interest rate hikes and maintains the current rate, based on historical data, a Lehman Brothers-like event could occur in Q3, 2023. This black swan event will result in a chaotic market and asset liquidation.

But bad times come with good times, after each crisis there is a long-term growth market. In a high-interest rate environment, the market is unlikely to have significant growth and will sideway for months. I will use a small percentage of my income to accumulate potential tokens monthly. If the black swan event does occur, the majority will be deployed.

Investment niches

The current cryptocurrency market has changed greatly compared to previous cycles. In the past, when the market was stagnant, only a few developers, and users were involved. Currently, despite the sharp decrease in the prices of many assets, development is still actively taking place in various ecosystems.

The uncertain macroeconomic situation is a challenge, but it is also an opportunity. Investors have more time to learn about cryptocurrencies and can participate in a better position. Developers have more time to develop their products before entering the market.

Below are some potential investment niches to follow:

Ethereum (ETH) and layer 2 solutions

Ethereum is obvious. With its strong network effect, Ethereum is gradually resolving its own problems to become the infrastructure for many new breakthroughs.

The transition to the PoS and the implementation of the EIP-1559 proposal has greatly increased Ethereum economy. Currently, ETH is the only token with a decreasing emission rate. With the development of layer 2 solutions, the emission rate may increase even further. The short-term decrease in ETH's supply is unclear, but in the medium and long term, the market will feel the difference between ETH with other assets that still have a high emission rate.

With the presence of several Layer 2s among the top 10 highest valued assets in the network such as Arbitrum, Optimism, and a large number of Layer 2s being developed, it is clear that Layer 2s are truly meeting the needs of users and have great potential.

In 2023, many new Layer 2s will be launched, including already announced names such as Aztec, StarkNet, Polygon Zk, ZkEVM of ZkSync... and many other projects are quietly developing. The money stream will likely flow to Layer 2s due to low costs, fast processing speeds, and high-profit potential.

The Ethereum ecosystem is in a favorable position. With a strong network effect, the market focus is likely to continue to shift here. Applications surrounding Ethereum will also be more favorable compared to other ecosystems, such as the liquid staking trend with projects like Lido, Rocket Pool,...

Other layer 1s

Ethereum currently dominates the smart contract platform market and is ahead of its competitors. However, this does not mean that other layer 1s are not worth paying attention to. In 2022, the emergence of many new layer 1s such as Sui Network, Aptos, Sei Network... was observed and could continue in 2023.

However, unlike 2021, which was a golden age for layer 1s because the scalability issues of Ethereum had not yet been resolved, currently layer 2 solutions have been and are being developed strongly, not to mention existing layer 1s are improving daily such as BNB chain, Solana,...

New layer 1s will have to have unique selling points if they want to grow their market share sustainably.

Multi-chain trend and cross-chain demand

Demand for multichain & cross-chain value transfer will increase as the number of new layer 1 and layer 2s and app-chain grow. Connecting between chains and optimizing the user experience will not only be a problem in 2023 but also in the coming years.

NFT

NFT has proven to be a gateway that attracts users to the crypto market.  NFT has been used in many aspects such as: Using as a reward to replace tokens, implementing in the desocial space, privacy, identity... In the future, NFT will be widely used and play an important role in the development of the blockchain industry.

Unlike in 2021 when most of the funds were concentrated on PFP NFTs, NFTs with more innovative and practical applications will have more opportunities in the future.

Other notable niches

In addition to the investment branches mentioned above, many potential niches are being developed.

GameFi: GameFi helps users to access crypto easier. However, developing a good game requires a lot of resources and time. Therefore, it is difficult to see a truly attractive gaming wave in the near future. However, there are already many popular games developed over a long period of time, such as Axie Land, Illuvium, Aurory.... These high-quality games are the first elements to bring players back to the GameFi field.

Privacy: Blockchain with openness and transparency is a major breakthrough in technology. But the fact that anyone can follow on-chain transactions has created many difficulties. Blockchains with privacy elements like Zcash or Monero emerged to solve this problem. However, their weakness is that they are not widely applied. The emergence of new privacy solutions supporting smart contracts, such as the Aztec Network, may be the gateway to many new privacy applications.

Decentralized social network: The recent development of the Lens ecosystem and other decentralized social network applications like Farcaster has attracted a significant number of participants. Although it still requires improvement, we can see the amazing features that blockchain can bring to social networks, such as the donate feature in the Lens ecosystem.

Decentralized Autonomous Organization (DAO): DAO is a crucial component for achieving decentralization. However, current DAOs are limited by the lack of tools for organizing and operating DAOs effectively. In the future, when more tools are available, we will see more efficient DAOs that optimize the power of the masses.

“Fine art is the beauty of that single fleeting moment of explosion.” Hope you’ll be ready

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