The US crypto exchange says in its 2023 Crypto Market Outlook report that one of the key themes for next year will be institutional investors seeking quality amid a worsening macroeconomic picture.
According to Coinbase, Bitcoin (BTC) and Ethereum (ETH) will be favored by investors based on among other things the fact that they are tried and tested.
“Within crypto, we expect digital asset selection will transition towards higher quality names like bitcoin and ether based on factors like sustainable tokenomics, the maturity of respective ecosystems, and relative market liquidity.
Moreover, many traditional risk assets still seem rich, and the investment theses for cryptocurrencies like BTC and ETH have not fundamentally changed in our view, which could eventually open up some key value opportunities.”
The US digital asset exchange says that the prices of cryptocurrencies will likely continue to correlate to other risk assets.
“We assign a low probability that crypto performance will decouple from traditional risk assets in the first few months of 2023, particularly without a differentiated catalyst.”
On the competition among smart contract-enabled blockchains, Coinbase says that Ethereum’s successful transition to a proof-of-stake consensus mechanism has reinforced its ability to continue being a leader among layer-1 blockchains.
“Ethereum’s successful Merge of its consensus and execution layers in September 2022 has also strengthened the case for ambitious future upgrades, despite the trend towards long-term core protocol ossification.
In our view, this supports the fundamental narrative for Ethereum as a leader in a multichain world, particularly since nearly all networks are competing for the same pool of users and capital.”