It’s been a difficult experience for the crypto market in 2022. In November, the market had dipped by 70 percent from its previous high at the end of November. Just when the market was getting worse, the FTX crash turned them even worse. What is the likelihood that the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin, has seen its fair share of dips in the past. And every time, it’s bounced back with a huge rally.
For instance, in 2013, Bitcoin reached a peak of $1,160. Then it fell for over a year before reaching a bottom of $150. In 2017, it broke the record, and hit a new record high of $19,600. In 2018, it was trading at $3,100. And in the year 2020 it struck through the resistance, and reached a record high of $68,000 in November 2021. And just like that, we’ve had another dip. However, the past has proven that following each dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed previously, dips are usually followed by a long bull run, which eventually breaks through the resistance created by the market’s previous highest price. This pattern is evident in more than Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have come a long way in the last few years. With more and more businesses and industries embracing it, its usage and acceptance is rising. From gaming to finance the use of crypto is increasing in a myriad of ways. The growing popularity of crypto could result in increasing participation in the market, which in turn could drive the prices up.
A rise in the interest of institutions for cryptocurrency
In recent times we’ve witnessed a rising demand from investors of institutional scale in crypto. From hedge funds to banks, many large institutions are now exploring the possibilities in crypto currencies. The increased interest of institutions can bring stability to the crypto market and could lead to greater prices.
Government regulations
As the market for crypto is maturing, governments around the world are starting to create more favorable rules for crypto. This will help draw more investors and boost the mainstream adoption of crypto.
A broader range of blockchain applications
The underlying technology behind many cryptocurrency, blockchain, has a wide range of applications that go beyond the realm of financial transactions. For example, from supply chain management and voting, many industries are beginning to look at ways they can utilize blockchain technology, which could drive more investment and interest in crypto.
Technology advancements
Blockchain technology and cryptography are still in the beginning stages of development. As advancements continue to be made in areas like scalability and security, the potential of crypto assets will expand. This could lead to more use and increase in prices.
Global economic uncertainty is growing
With the ongoing economic uncertainty caused through the COVID-19 pandemic and other factors, more and more investors are starting to look for safe haven investments like cryptocurrency and gold. Since the economic outlook for the world is uncertain it could result in more demand for crypto as well as increased prices.
Retail investors are able to earn interest
The institutional investors aren’t alone in one who’s showing an interest in cryptocurrency. Retail investors, also known as individual investors, are also starting to invest in the market for crypto. As more and more people become aware of crypto and how to invest in it this could result in increased demand and higher prices.
The growing awareness and acceptance of crypto
As the market for crypto continues to mature as more and more people are beginning to become aware about and understand it. As understanding and acceptance of cryptocurrency grows, this could lead to more people buying or holding cryptocurrency, and this could increase prices.
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Financial decentralization (DeFi) is a rapidly growing area of the crypto market, which allows the provision of financial services created upon blockchain technology. As DeFi grows and more projects and platforms become available, this could lead to increased adoption and higher prices for crypto.
Advances in crypto-based payment methods
As the crypto market grows as more and more businesses are beginning accepting crypto payments as a method of payment. This could result in increased use of crypto in regular transactions and an increase in the cost of transactions.
More investment from sovereign wealth funds
These funds are state-owned investment vehicles, are beginning to explore cryptocurrency as a possible asset class. As more of these funds dedicate a part of their assets to digital currencies, this could increase demand and increased prices.
Cryptocurrency is used for cross-border payments
One of the biggest benefits of crypto is its ability to make fast and cheap cross-border payments. As more and more people and businesses are beginning to make use of crypto for international transactions, this can lead to a rise in the demand for it and a rise in prices.
The number of ATMs that accept crypto is increasing.
As the number of ATMs for crypto increase it will be easier for consumers to purchase and keep cryptocurrency, which can drive up demand and prices.
Security tokens are developed for development
Security tokens, which are digital assets that represent ownership in an asset like stock or real estate, are a rapidly growing area of the crypto market. With the increasing number of security tokens being issued and traded, it could result in a rise in demand and higher prices for crypto.
More adoption by merchants
In the event that more merchants accept crypto as a form of payment, it will make it easier for people to hold and use cryptocurrency, which will boost demand and increase prices.
So, is crypto likely to rise in 2023? Only time will tell. With these things in mind, it’s possible that the cryptocurrency market will see a recovery in 2023. And for those who are in it for the long run, being patient and disciplined is crucial.