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Sentinel Digital: Digital Asset Winter Forecast 2022-2023


We evaluate recent industry activity and explore the key indicators behind digital asset adoption rates for 2023.

Digital assets are more prevalent and accessible than ever before, but, right now, the industry is locked within a state of winter, particularly following the collapse of FTX and Alameda. While a period of sustained lower costs may be of concern to some, to others, it represents a major opportunity for financial growth and market penetration. 

Assessing the digital asset landscape

With collapsing stablecoins TerraUSD and LUNA causing heavy market volatility, and both Celsius Network and Three Arrows Capital (3AC) filing for bankruptcy, 2022 has proved to be a challenging year for digital assets. Alongside a downturn in global economic conditions, the collapse of FTX in November has added further pressure to the industry—resulting in a ‘crypto winter’.

A ‘crypto winter’, unlike a ‘bear market’ or ‘market correction,’ has no definitive meaning. What can be said is that the industry has been rocked by a widespread drop in value and the fact that this downturn remains ongoing. Bitcoin briefly fell to its lowest value in two years and Ethereum is down 60 percent during the current fiscal period. Yet, it’s not all doom and gloom. The fall of FTX doesn’t stifle innovation, likewise, the desire to revolutionise financial systems is undeterred. Digital assets have faced and bounced back from a similar threat before, as recently as 2018, and there’s plenty to be optimistic about.

Asset adoption set to increase through institutional backing

Given the progression towards Web3, supported by advancing blockchain technologies, appetite for digital assets remains strong. Fidelity International recently published findings that confirm 74 percent of surveyed institutions plan to purchase digital assets in the future, with 1052 investors queried across the US, Asia, and Europe.

As part of the same report, digital asset ownership was found to be 6 percent higher than at the same time in 2021, with hedge funds, venture capital funds, and pensions leading the way. In addition to rising adoption forecasts, international progress towards CBDCs (Central Bank Digital Currency) is further proof that digital assets remain the future of money.

“Ninety-five percent of global GDP evaluating CBDC opportunities”

A further 75 countries have now committed to exploring a CBDC since May 2020, taking the total number to 105. This figure accounts for 95 percent of the world’s total GDP, with a record 50 countries now at an advanced stage of development, pilot, or launch. In fact, 10 countries have already fully integrated a CBDC into their financial ecosystem.

China has recently confirmed that their digital yuan pilot is set to expand in 2023, following a successful demonstration in October. With a similarly well-received wholesale pilot, India’s retail CBDC, the digital rupee, led by the Reserve Bank of India, is also progressing towards a live rollout before the turn of the year.

Furthermore, cross-border projects, such as mBridge (Thailand, China, Hong Kong, and the UAE), Dunbar (Australia, Malaysia, and South Africa), and Jasper (Canada, UK, and Singapore), are driving digital asset adoption rates forward, with the European Central Bank also having committed to delivering a digital euro by 2025.

Deploying advanced digital finance solutions to your infrastructure

At Sentinel Digital, we provide transformational digital finance solutions to our partners. Built upon existing client infrastructure, our robust platform technology means faster services, a wider product portfolio, consumer ease of access, and innovation. Together, we’re bridging the gap between traditional and digital finance.

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Download the factsheet here