It’s been a rough experience for the crypto market in 2022. In November the market was down by 70 percent from the previous high at the end of November. And just when things were going downhill, 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 seen many dips in the past. And every time, it’s rebounded by a massive rally.
For example, in 2013, Bitcoin reached a peak of $1,160. Then it fell for more than a year before reaching a bottom of $150. In 2017, it broke that record and hit a record high of $19,600. Fast forward to 2018, it was trading at $3,100. And in 2020, the price broke through the resistance and hit 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 previously, dips are typically followed by a long bull run that eventually surpasses the resistance created by the previous high price. This pattern can be seen not only in Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has progressed a lot in recent years. With more and better companies and industries embracing it, its usage and acceptance is increasing. From banking to gaming cryptocurrency is being utilized in a variety of ways. And this growing use case could lead to more people being involved in the market and, in turn, increase the price.
The rise in interest of institutions in crypto
In the last few years we’ve noticed a growing interest from institutional investors in crypto. From banks to hedge funds numerous large institutions are beginning to investigate the potential of crypto assets. The increasing interest from institutions could provide more stability to the market for crypto and result in greater prices.
Government regulations
As the crypto market grows and mature, governments across the globe are beginning to develop more favorable rules for cryptocurrency. This is likely to attract more investors and increase the mainstream adoption of crypto.
More use cases for blockchain
The underlying technology behind the majority of cryptocurrencies, blockchain offers a variety of potential use cases that go beyond financial transactions. In addition to supply chain management, voting and other systems companies are starting to explore how they can make use of blockchain technology. This will stimulate more investment and excitement in crypto.
Advancements in technology
Blockchain and cryptocurrency technology is still in the beginning stages of development. As progress is made in areas like security and scalability, potential of crypto assets will grow. This could result in more acceptance and higher prices.
Global economic uncertainty is growing
With the ongoing economic uncertainty brought on through the COVID-19 pandemic, as well as other causes many investors are starting to look for safe haven assets such as cryptocurrency and gold. As the global economic situation remains uncertain, this could lead to more demand for crypto as well as higher prices.
Retail investors are able to earn interest
The institutional investors aren’t alone in people who are interested in cryptocurrency. Retail investors, or individual investors, are also starting to invest in the cryptocurrency market. With increasing numbers of everyday people are educated about crypto and the best ways to invest in it, this could lead to an increase in demand and consequently higher prices.
A growing number of people are becoming aware of and accepting cryptocurrency
As the crypto market is maturing increasing numbers of people are beginning to learn about and appreciate it. As the awareness and acceptance grows of crypto it could result in more people purchasing as well as holding the crypto that could raise prices.
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Financial decentralization (DeFi) is an area that is rapidly expanding in the crypto market, which allows financial services to be developed upon blockchain technology. As DeFi continues to grow and more projects and platforms are launched, it will lead to a rise in adoption and more expensive prices for crypto.
Developments in crypto payment methods
As the crypto market is growing as more and more businesses 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 an increase in the cost of transactions.
The increased investment of sovereign wealth funds
The sovereign wealth fund, also known as state-owned instruments for investing, are now beginning to explore crypto as a potential asset class. As more funds dedicate a part of their assets to digital currencies, this could increase demand and more expensive prices.
Cryptocurrency is used for cross-border payments
One of the major benefits of cryptocurrency is its ability to facilitate swift and affordable cross-border transactions. As more businesses and individuals start to utilize cryptocurrency for international transactions, it could result in increased demand and higher costs.
The number of ATMs that accept crypto is increasing.
The number of ATMs for crypto continue to grow it will be more convenient for individuals to purchase and store crypto, which could boost demand and increase prices.
Security tokens are developed for development
Security tokens, which are digital assets that signify ownership of an asset, like stock or real estate are rapidly expanding sector of the crypto market. As more security tokens are issued and traded, it could result in a rise in demand, and thus higher costs for cryptocurrency.
A greater adoption rate by merchants
As more and more businesses begin accepting crypto as a form of payment, this will make it more convenient for people to hold and use crypto, which can boost demand and increase prices.
So, will crypto rise in 2023? The only way to know is time. However, with these aspects in mind, it’s likely that the cryptocurrency market will have a rebound by 2023. For those in it for the long-term patience and discipline will be key.