It’s been a difficult ride for the crypto market through 2022. As of November the market had dropped by more than 70 percent from the previous high in November 2021. And just when things were looking down, the FTX crash turned them more dire. 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 its fair share of drops in the past. And every time, it has bounced back by a massive rally.
For example, in 2013, Bitcoin reached a peak of $1,160. Then it fell for a full year before reaching a bottom of $150. However, in 2017, it broke that record and hit a record highest of $19,600. Fast forward to 2018, the price was at $3,100. And in the year 2020 it struck through the resistance and hit a new peak of $68,000 in the month of November 2021. 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
Similar to what we’ve witnessed before, fall-offs are typically followed by a prolonged bull run that eventually surpasses the resistance created by the previous market’s highest price. This is evident in more than Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has made significant progress in the last few years. With more and better companies and industries embracing it, its usage and acceptance is growing. From finance to gaming the use of crypto is increasing in a variety of ways. And this growing use case can lead to more people being involved in the market which could increase the price.
The rise in interest of institutions in cryptocurrency
In the last few years we’ve witnessed a rising demand from investors of institutional scale in cryptocurrency. From hedge funds to banks, many large institutions are beginning to investigate the potential of crypto assets. This increased interest from institutions could bring more stability to the crypto market and result in more expensive prices.
As the market for crypto is maturing and mature, governments across the globe are starting to create more favorable rules for cryptocurrency. This is likely to attract more investors as well as increase the mainstream adoption of crypto.
More use cases for blockchain
The technology that underlies the majority of cryptocurrencies, blockchain has a wide range of possible applications that go beyond financial transactions. From supply chain management to voting systems, more and more industries are starting to explore how they can utilize blockchain technology. This could drive more investment and interest in crypto.
Advancements in technology
Blockchain and cryptocurrency technology is still in the beginning stages of development. As advancements continue to be made in areas like scalability and security, the potential of cryptocurrency assets will continue to expand. This could result in more use and increase in prices.
Global economic uncertainty is growing
With the ongoing economic uncertainty brought on due to the COVID-19 pandemic as well as other factors, more and more investors are looking for safe haven investments like bitcoin and even gold. Because the global economic climate remains uncertain, this could lead to more demand for crypto as well as increased prices.
Interest from retail investors
Institutional investors aren’t the only one who’s showing an interest in cryptocurrency. Retail investors, or individual investors are also beginning to invest in the cryptocurrency market. With increasing numbers of everyday people learn about cryptocurrency and investing in it this could result in increased demand and higher prices.
The growing awareness and acceptance of cryptocurrency
As the crypto market continues to mature as more and more people are beginning to learn about and appreciate the concept. As the awareness and acceptance grows of crypto it could result in more people buying as well as holding the crypto that can increase prices.
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Financial decentralization (DeFi) is a rapidly growing area of the crypto market that enables the provision of financial services developed on top of blockchain technology. As DeFi expands and more platforms and projects are launched, it could result in increased use and higher prices for crypto.
The development of crypto payment methods
As the crypto market continues to grow as more and more businesses are beginning accepting crypto payments as a form of payment. This could lead to increased use of crypto in everyday transactions and higher prices.
More investment from sovereign wealth funds
The sovereign wealth fund, also known as government-owned investments, are beginning to look at cryptocurrency as a possible asset class. As more of these funds devote a percentage of their portfolio to crypto, this could increase demand and more expensive prices.
Cryptocurrency is used for cross-border payments
One of the main advantages of crypto is its ability to facilitate quick and inexpensive cross-border payments. As more businesses and individuals begin to use crypto for international transactions, it could result in increased the demand for it and a rise in prices.
The number of ATMs that accept crypto is increasing.
As the number of ATMs that accept crypto continue to grow it will be easier for consumers to purchase and hold crypto, which could boost demand and increase prices.
Development of security tokens
Security tokens, which are digital assets that represent ownership of an asset, such as stocks or real estate, are a rapidly growing area of the crypto market. As more security tokens are created and traded, it could result in a rise in demand and consequently higher prices for crypto.
A greater adoption rate by merchants
In the event that more merchants start accepting crypto as a form of payment, this will make it easier for people to utilize and store crypto, which can boost demand and increase prices.
So, will crypto increase in 2023? The only way to know is time. However, with these aspects in mind, it’s possible that the crypto market will see a recovery in 2023. For those looking to invest for the long-term patience and discipline is crucial.