It’s been a difficult journey for the cryptocurrency market in 2022. By November the market was down by 70% from its previous peak on November 20, 2021. And just when things were getting worse after the FTX crash turned them more dire. The question is, can the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has had many dips in the past. And every time, it has bounced back with a huge rise.
For example, in 2013, Bitcoin reached a peak of $1,160, then fell for over a year before hitting a low of $150. However, in 2017, it broke the record and hit a record highest of $19,600. Then, in 2018, it was trading at $3,100. And in 2020, the price broke through the resistance and reached a new high of $68,000 in November 2021. Just like that, we’ve witnessed another drop. But history shows us that after each dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen before, fall-offs tend to be followed by a long bull run that eventually surpasses the resistance created by the market’s previous highest price. This pattern is evident not only in Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has progressed a lot in recent years. With more and more companies and industries taking to the technology, its use and acceptance is growing. From gaming to finance cryptocurrency is being utilized in a myriad of ways. And this growing use case can lead to more people being involved in the market which could boost prices.
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 banks to hedge funds and even large corporations are beginning to investigate the potential for crypto-based assets. This increased interest from institutions can bring stability to the crypto market and lead to greater prices.
Regulations of the government
As the market for crypto continues to mature, governments around the world are beginning to develop 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 technology that is the basis of the majority of cryptocurrencies, blockchain is a broad range of potential use cases that go beyond financial transactions. For example, from supply chain management and voting, many industries are starting to explore how they can utilize blockchain technology. This could stimulate more investment and excitement in cryptocurrency.
Technologies are constantly evolving.
Blockchain technology and cryptography are at the very beginning of development. As advancements continue to be made in areas like security and scalability, potential of crypto assets will grow. This could lead to more adoption and higher prices.
Global economic uncertainty is growing
In the current economic uncertainty caused due to the COVID-19 pandemic and other factors increasing numbers of investors are starting to look for safe haven investments like gold and crypto. Because the global economic climate is uncertain it could result in more demand for crypto as well as more expensive prices.
Interest from retail investors
The institutional investors aren’t alone in ones showing interest in crypto. Retail investors, or individual investors, are also starting to get involved in the market for crypto. As more and more everyday people learn about 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 cryptocurrency
As the market for crypto is maturing, more and more people are starting to learn about and understand the concept. As understanding and acceptance grows of crypto, it will lead to increasing numbers of people purchasing 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 finance services built 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 market for crypto continues to grow increasing numbers of companies are beginning accepting crypto payments as a form of payment. This could lead to increased usage of crypto in daily transactions, and a rise in prices.
More investment from sovereign wealth funds
The sovereign wealth fund, also known as state-owned instruments for investing, are starting to show interest in cryptocurrency as a possible asset class. As more of these funds allocate a portion or their entire portfolios to cryptocurrency, this could result in a rise in demand and more expensive prices.
Cryptocurrency is used for cross-border payments
One of the biggest benefits of crypto is the capability to perform quick and inexpensive cross-border payments. As more individuals and businesses begin to use cryptocurrency for international transactions this could lead to increased demand and higher prices.
The number of ATMs that accept crypto is increasing.
The number of crypto ATM’s increase, it will become easier for individuals to purchase and hold cryptocurrency, which can increase demand and price.
Development of security tokens
Security tokens, also known as digital assets that are used to represent ownership of an asset, such as stock or real estate is a fast-growing sector of the crypto market. As more security tokens are created and traded, this could lead to increased demand and higher rates for the crypto.
More adoption by merchants
With the increasing number of businesses begin accepting cryptocurrency as a method of payment, it 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? The only way to know is time. But with these factors in mind, it’s possible that the cryptocurrency market will have a rebound by 2023. If you’re looking to invest for the long run Being patient and disciplined is crucial.