It’s been a rough ride for the crypto market until 2022. In November the market was down by more than 70% from its previous peak on November 20, 2021. Just when the market was getting worse and down, the FTX crash turned things even more dire. The question is, can the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin, has seen many dips in the past. And 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 over a year before hitting a low of $150. In 2017 it broke that record and hit a record record high of $19,600. Then, in 2018, and it was trading at $3,100. In the year 2020 it struck through that resistance, and reached a record high of $68,000 in November 2021. Just like that, we’ve witnessed another drop. However, history has shown us that after each dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
As we’ve seen in the past, dips are typically followed by a long 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 made significant progress in the last few years. With more and better companies and industries taking to it, its usage and acceptance is growing. From gaming to finance, crypto is being used in a myriad of ways. And this growing use case could result in increasing participation in the market and, in turn, increase the price.
Increased institutional interest in crypto
In recent years we’ve noticed a growing demand from investors of institutional scale in cryptocurrency. From hedge funds to banks numerous large institutions are now exploring the possibilities in crypto currencies. The increased interest of institutions could provide more stability to the market for crypto and could lead to greater prices.
As the crypto market continues to mature as it matures, governments all over the world are starting to create more favorable regulations for crypto. This will help draw more investors and boost the mainstream adoption of crypto.
More use cases for blockchain
The technology that is the basis of many cryptocurrency, blockchain, offers a variety of potential use cases that go beyond financial transactions. For example, from supply chain management and voting, many and more industries are beginning to look at ways they can utilize blockchain technology, which could increase investment and enthusiasm in crypto.
Blockchain technology and cryptography are still in the early stages of development. As advancements continue to be made in areas like security and scalability, potential of crypto assets will continue to increase. This could lead to greater acceptance and higher prices.
Rising global economic uncertainty
In the current instability in the economy caused through the COVID-19 pandemic and other factors many investors are looking for safe haven assets like gold and crypto. Because the global economic climate remains uncertain it could result in increased demand for crypto and higher prices.
Interest from retail investors
The institutional investors aren’t alone in people who are interested in crypto. Retail investors, or even individual investors are also beginning to invest in the cryptocurrency market. In the future, as more people become aware of crypto and how to invest in it this could result in an increase in demand and consequently higher prices.
Growing awareness and acceptance of crypto
As the crypto market grows as more and more people are beginning to learn about and understand it. As awareness and acceptance grows of crypto, it will lead to more people purchasing as well as holding the crypto that can increase prices.
Financial decentralization (DeFi) is a rapidly growing area of the crypto market that allows financial services to be developed on top of blockchain technology. As DeFi continues to grow and more projects and platforms are launched, it could lead to increased adoption and increased prices for crypto.
The development of crypto payment methods
As the crypto market is growing as more and more businesses are beginning to accept crypto as a form of payment. This could lead to an increase in the usage of crypto in daily transactions, and a rise in prices.
More investment from sovereign wealth funds
The sovereign wealth fund, also known as government-owned instruments for investing, are now beginning to look at cryptocurrency as a possible asset class. As more of these funds devote a percentage of their portfolio to crypto, it could increase demand and more expensive prices.
Use of crypto for cross-border payments
One of the main advantages of crypto is the capability to perform swift and affordable cross-border transactions. As more individuals and businesses start to utilize cryptocurrency for international transactions it could result in increased demand and higher prices.
Increasing numbers of crypto ATM’s
The number of ATMs that accept crypto continue to grow it will be easier for individuals to purchase and keep crypto, which will boost demand and increase prices.
The development of security tokens
Security tokens, or digital assets that are used to represent ownership of an asset, such as real estate or stock is a fast-growing sector of the crypto market. As more security tokens are created and traded, it could lead to increased demand and higher costs for cryptocurrency.
Merchants are more likely to adopt the concept.
With the increasing number of retailers begin accepting crypto as a means of payment, this will make it more convenient for customers to use and hold crypto, which could drive up demand and prices.
So, will crypto increase in 2023? Only time will tell. However, with these aspects being considered, it’s possible that the cryptocurrency market will have a rebound by 2023. And for those who are looking to invest for the long-term patience and discipline will be key.