It’s been a rough journey for the cryptocurrency market until 2022. By November the market had dropped by more than 70% from its previous peak on November 20, 2021. Just when the market was getting worse, the FTX crash made them look even more dire. So, will the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has had its fair share of dips in the past. Each time, it’s rebounded by a massive rally.
For example, in 2013, Bitcoin reached a peak of $1,160, then fell for a full year before hitting a low of $150. In 2017, it broke the record and hit a record record high of $19,600. In 2018, and it was trading at $3,100. And in the year 2020 it struck through the resistance and reached a new highest of $68,000 in November 2021. Then, just like that we’ve witnessed another drop. But history shows us that at the end of every dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
As we’ve seen before, fall-offs are typically followed by a prolonged bull run, which eventually breaks through the resistance created by the market’s previous highest price. This is evident in not just Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have come a long way in the last few years. With more and more businesses and industries adopting it, its usage and acceptance is growing. From banking to gaming cryptocurrency is being utilized in many ways. This growing demand could lead to more people getting involved in the market and, in turn, drive the prices up.
A rise in the interest of institutions for cryptocurrency
In the last few years we’ve noticed a growing curiosity from institutions investing in cryptocurrency. From hedge funds to banks numerous large institutions are starting to explore the possibilities in crypto currencies. The increased interest of institutions could provide more stability to the crypto market and lead to more expensive prices.
Government regulations
As the market for crypto continues to mature as it matures, governments all over the world are starting to create more favorable rules for crypto. This is likely to attract more investors and boost the acceptance of crypto in general.
A broader range of blockchain applications
The technology that underlies the majority of cryptocurrencies, blockchain is a broad range of possible applications beyond just financial transactions. For example, from supply chain management and voting, many industries are exploring ways they can utilize blockchain technology. This will increase investment and enthusiasm in crypto.
Advancements in technology
Blockchain and cryptocurrency technology is still in the early stages of development. As progress is made in areas such as security and scalability, potential of crypto assets will continue to increase. This could result in more adoption and higher prices.
Rising global economic uncertainty
With the ongoing instability in the economy caused through the COVID-19 pandemic, as well as other causes, more and more investors are beginning to look for safe haven investments like bitcoin and even gold. Since the economic outlook for the world is uncertain and uncertain, this could lead to more demand for crypto as well as more expensive prices.
Retail investors are able to earn interest
Institutional investors aren’t the only one who’s showing an interest in crypto. Retail investors, also known as individual investors are also beginning to get involved in the cryptocurrency market. As more and more everyday people become aware of crypto and the best ways to invest in it, this could lead to an increase in demand and consequently higher prices.
Growing awareness and acceptance of crypto
As the crypto market grows increasing numbers of people are beginning to learn about and appreciate it. As understanding and acceptance grows of crypto, this could lead to increasing numbers of people purchasing as well as holding the crypto that can increase prices.
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Decentralized finance (DeFi) is a rapidly growing area of the crypto market, which allows the provision of financial services created on top of blockchain technology. As DeFi continues to grow and more projects and platforms are launched, it could result in increased use and increased prices for crypto.
Developments in crypto payment methods
As the market for crypto continues to grow, more and more companies are beginning accepting crypto payments as a method of payment. This could lead to increased use of crypto in everyday transactions, and a rise in prices.
Increased investment from sovereign wealth funds
The sovereign wealth fund, also known as government-owned instruments for investing, are starting to explore cryptocurrency as a possible asset class. As more funds dedicate a part of their assets to digital currencies, this could lead to increased demand and increased prices.
Cryptocurrency is used for cross-border payments
One of the major benefits of crypto is its ability to make fast and cheap cross-border payments. As more individuals and businesses start to utilize cryptocurrency for international transactions, this could lead to increased demand and higher prices.
Increasing numbers of crypto ATM’s
With the amount of crypto ATM’s continue to grow it will be more convenient for people to buy and keep cryptocurrency, which can boost demand and increase prices.
Security tokens are developed for development
Security tokens, which are digital assets that signify ownership in an asset like stock or real estate is a fast-growing segment of the cryptocurrency market. With the increasing number of security tokens being issued and traded, it can lead to a higher demand and consequently higher prices for crypto.
More adoption by merchants
With the increasing number of retailers begin accepting crypto as a form of payment, it makes it easier for people to use and hold cryptocurrency, which will boost demand and increase prices.
So, will crypto grow in 2023? It’s only time to find out. But with these factors in mind, it’s likely that the crypto market could be able to see a rebound in 2023. And for those who are in it for the long-term, being patient and disciplined is crucial.