It’s been a difficult ride for the crypto market through 2022. In November, the market had dipped by more than 70% from its previous peak at the end of November. When things were getting worse and down, the FTX crash turned things more dire. The question is, can the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has experienced its fair share of dips over the years. Each time, it’s rebounded by a massive rally.
In 2013, for instance, Bitcoin reached a peak of $1,160. It then plummeted for a full year before reaching a bottom of $150. But, in 2017, it broke the record and hit a record high of $19,600. Then, in 2018, and it was trading at $3,100. In 2020, it broke through the resistance and hit a new high of $68,000 in November 2021. And just like that, we’ve seen another dip. 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 previously, dips are usually followed by a long bull run that finally breaks through the resistance created by the previous high price. This pattern can be seen in not just Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has come a long way in the last few years. With more and better companies and industries adopting it, its usage and acceptance is increasing. From banking to gaming, crypto is being used in many ways. And this growing use case could lead to more people getting involved in the crypto market, which in turn could boost prices.
The rise in interest of institutions in cryptocurrency
In recent times we’ve witnessed a rising interest from institutional investors in crypto. From banks to hedge funds and even large corporations are now exploring the possibilities for crypto-based assets. The increasing interest from institutions could provide more stability to the market for crypto and result in higher prices.
Regulations from the Government
As the crypto market grows and mature, governments across the globe are starting to create more favorable regulations for crypto. This is likely to attract more investors as well as increase 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 possible applications beyond the realm of financial transactions. In addition to supply chain management, voting and other systems industries are beginning to look at ways they can utilize blockchain technology, which could increase investment and enthusiasm in crypto.
Technologies are constantly evolving.
Crypto and blockchain technology are still in the early stages of development. As progress is made in areas like security and scalability, the potential of crypto assets will expand. This could result in more acceptance and higher prices.
Uncertainty in the global economy
In the current economic uncertainty brought on through the COVID-19 pandemic, as well as other causes increasing numbers of investors are beginning to look for safe haven investments like cryptocurrency and gold. Since the economic outlook for the world is uncertain it could result in more demand for crypto as well as more expensive prices.
Interest from retail investors
Investors from institutions aren’t the only people who are interested in crypto. Retail investors, or even individual investors, are also starting to invest in the cryptocurrency market. As more and more everyday people become aware of crypto and how to invest in it this could result in more demand and higher prices.
The growing awareness and acceptance of cryptocurrency
As the market for crypto continues to mature increasing numbers of people are starting to learn about it and comprehend it. As the awareness and acceptance grows of crypto, it will lead to increasing numbers of people purchasing and holding crypto, which can increase prices.
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Financial decentralization (DeFi) is an area that is rapidly expanding in the crypto market that allows financial services to be built on top of blockchain technology. As DeFi continues to grow and more projects and platforms come online, this could result in increased use and more expensive prices for crypto.
Advances in crypto-based payment methods
As the market for crypto continues to grow increasing numbers of companies are starting using crypto to be a means of payment. This could lead to an increase in the usage of crypto in daily transactions, and a rise in prices.
Increased investment from sovereign wealth funds
These funds are government-owned investment vehicles, are beginning to show interest in crypto as a potential asset class. As more funds devote a percentage or their entire portfolios to cryptocurrency, it could result in a rise in demand and more expensive prices.
Cryptocurrency is used for payment across borders
One of the main advantages of crypto is the ability to make swift and affordable cross-border transactions. As more businesses and individuals start to utilize cryptocurrency for international transactions this can lead to a rise in demand and higher prices.
Increasing numbers of crypto ATM’s
As the number of crypto ATM’s continue to increase it will be more convenient for individuals to purchase and hold crypto, which will increase demand and price.
Security tokens are developed for development
Security tokens, or digital assets that are used to represent ownership of an asset, such as stock or real estate is a fast-growing area of the crypto market. Since more and more security tokens will be created and traded, it can lead to a higher demand and consequently higher rates for the crypto.
Merchants are more likely to adopt the concept.
With the increasing number of merchants accept crypto as a means of payment, it will make it more convenient for customers to use and hold cryptocurrency, which will drive up demand and prices.
So, will crypto rise in 2023? Only time will tell. However, with these aspects to consider, it’s likely that the crypto market could have a rebound by 2023. If you’re looking to invest for the long haul, being patient and disciplined will be key.