Here are 3 obstacles facing crypto in 2023 as the market looks to move on from the FTX disaster

• Crypto markets have erased losses since FTX's fallout last year, but new potential headwinds are looming.
• Forthcoming regulation, a harsh macro environment, and more contagion could impact token prices.

Nearly three months after FTX filed for Chapter 11 bankruptcy, the crypto industry is attempting to move forward from founder Sam Bankman-Fried's mess, but new potential headwinds are looming.

For now, crypto markets are continuing to claw back losses since FTX's liquidity crisis, with the industry regaining a $1 trillion market cap. Bitcoin and ethereum rallied 34% and 28% in the past month, but are still over 66% off from record highs in November of 2021.

Insider asked four crypto execs about the biggest roadblocks facing the nascent space in 2023.

"I'm cautiously optimistic about the crypto markets this year," Timothy Shan, COO at decentralized exchange Dexalot, said. "Last year was eye opening and definitely a hard lesson for everyone - a lesson that I feel had to be learned."

Shan added: "Given what happened with the failures of some big centralized crypto entities, I'm very excited about [decentralized finance] and expect a refocus on what blockchain technology is really about."

Regulation, inflation, and more crypto contagion

After the fallout of major players, the biggest question on everyone's mind seems to be how regulation will unfold this year.

"Well-written, thoughtful legislation from informed policy makers will help the market long-term," Eric Parker, CEO of crypto wallet developer Giddy, said. "But bad decisions from regulators who don't understand what happened will stifle innovation and could send markets the wrong direction."

Shan added that he's also optimistic about regulation, but there could "certainly be mistakes made that could severely handicap and curtail further innovation" of blockchain tech.

Elsewhere, the Federal Reserve continues to deliver interest rate hikes to combat inflation. Economic data indicate that inflation may have peaked, however, giving the central bank leeway to slow tightening. The Fed announced last week its smallest hike in nearly a year.

As a result of a seemingly more dovish stance, there's been a broad rally in risk assets like crypto.

Crypto performance is still correlated with macro trends, and any resurgence in high inflation in 2023 would influence prices of "long-duration assets" like crypto, said David Wells, CEO of digital asset trading platform Enclave Markets.

"That said, crypto as an asset class is also a long-term hedge on inflation in many markets around the world, so this will likely continue to drive fundamental adoption," he predicted.

But persistently high or rising inflation would force the Fed to be more hawkish, potentially hammering risk assets, said Jam Sammut, VP of Marketing at decentralized finance platform Origin Protocol.

High Treasury yields would also be a significant headwind as they would make volatile assets such as crypto unattractive, Sammut added.

Finally, there's been a slew of crypto company bankruptcies in the past year. In addition to FTX, there's hedge fund Three Arrows, digital asset brokerage Voyager, and centralized lender Celsius, to name a few.

Another shoe could drop, which could cause a downtrend in markets yet again.

"As the dust is still settling from the collapse of large crypto infrastructure providers, any other subsequent contagion of credit losses affecting larger exchanges, custodians or institutions in the space could be a setback to the recovery we've seen over the past month," Wells said.