It’s been a rough journey for the cryptocurrency market through 2022. In November, the market had dipped by 70% from its previous peak on November 20, 2021. When things were getting worse and down, the FTX crash turned them even worse. What is the likelihood that the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has experienced many dips over the years. Every time, it has bounced back with a huge rally.
For example, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for more than a year before reaching a bottom of $150. However, in 2017 it broke that record and reached a new high of $19,600. Fast forward to 2018, it was trading at $3,100. In 2020, it broke that resistance and reached a new peak of $68,000 in the month of November 2021. Then, just like that we’ve seen another dip. But history shows us that after 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 typically followed by a lengthy bull run, which eventually surpasses the resistance created by the market’s previous highest price. This is evident in more than Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have progressed a lot in recent years. With more and more companies and industries taking to it, its usage and acceptance is rising. From banking to gaming, crypto is being used in a variety of ways. This growing demand could lead to more people getting involved in the crypto market which could boost prices.
A rise in the interest of institutions for crypto
In recent times we’ve noticed a growing interest from institutional investors in cryptocurrency. From banks to hedge funds, many large institutions are now exploring the possibilities of crypto assets. The increased interest of institutions could bring more stability to the crypto market and result in higher prices.
Government regulations
As the market for crypto grows as it matures, governments all over the world are starting to create more favorable rules for crypto. This is likely to attract more investors as well as increase the acceptance of crypto in general.
More use cases for blockchain
The technology that underlies many cryptocurrencies, blockchain, offers a variety of potential use cases that go beyond financial transactions. In addition to supply chain management, voting and other systems and more industries are exploring ways they can benefit from blockchain technology, which could drive more investment and interest in crypto.
Advancements in technology
Crypto and blockchain technology are still in the early stages of development. As advancements continue to be made in areas such as scalability and security, the potential of crypto assets will continue to grow. This could lead to more use and increase in prices.
Rising global economic uncertainty
Due to the constant instability in the economy caused through the COVID-19 pandemic, as well as other causes, more and more investors are looking for safe haven assets like bitcoin and even gold. As the global economic situation is uncertain it could result in more demand for crypto as well as higher prices.
Retail investors are able to earn interest
Institutional investors aren’t the only people who are interested in crypto. Retail investors, also known as individual investors are also beginning to invest in the crypto market. With increasing numbers of people learn about crypto and the best ways to invest in it, this could lead to increased demand and higher prices.
A growing number of people are becoming aware of and accepting crypto
As the market for crypto grows increasing numbers of people are starting to learn about and appreciate the concept. As understanding and acceptance of cryptocurrency grows it could result in increasing numbers of people purchasing and holding crypto, which could raise prices.
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Financial decentralization (DeFi) is a rapidly growing area of the crypto market that allows finance services developed on top of blockchain technology. As DeFi expands and more platforms and projects are launched, it could result in increased use and increased prices for crypto.
The development of crypto payment methods
As the market for crypto is growing as more and more businesses are starting accepting crypto payments as a form of payment. This could lead to increased use of crypto in everyday transactions and higher prices.
Increased investment from sovereign wealth funds
The sovereign wealth fund, also known as government-owned investments, are now beginning to show interest in crypto as a potential asset class. As more funds dedicate a part of their portfolio to crypto, this could result in a rise in demand and more expensive prices.
Utilization of crypto to make cross-border payments
One of the major benefits of crypto is the ability to facilitate swift and affordable cross-border transactions. As more and more people and businesses are beginning to make use of crypto for international transactions, this could lead to increased demand and higher costs.
The number of ATMs that accept crypto is increasing.
With the amount of ATMs that accept crypto continue to grow it will be more convenient for people to buy and keep cryptocurrency, which can drive up demand and prices.
Development of security tokens
Security tokens, also known as digital assets that are used to represent ownership in an asset like stock or real estate is a fast-growing area of the crypto market. With the increasing number of security tokens being created and traded, it could lead to increased demand, and thus higher prices for crypto.
Merchants are more likely to adopt the concept.
As more and more merchants start accepting cryptocurrency as a method of payment, this will make it easier for people to use and hold crypto, which can boost demand and increase prices.
So, is crypto likely to rise in 2023? Only time will tell. But with these factors in mind, it’s likely that the crypto market could have a rebound by 2023. For those committed to the long run, being patient and disciplined is crucial.